A maker of electric vehicles and clean-energy products. Its automotive line includes the Model 3, Y, S, and X, the Cybertruck, and the Tesla Semi, sold directly to buyers through its website and company-owned stores. Its energy arm sells the Powerwall home battery, the Megapack for utilities, and solar systems including the Solar Roof. Founded in 2003 and named after inventor Nikola Tesla, the company launched its Robotaxi ride-hailing service in June 2025 using Model Y vehicles.
Q2 2026 revenue rose 26% to $28.2B but energy storage gross margin fell to 20.4% from 30.3%.
Energy storage fell to 20.4% from 30.3% a year earlier, reversing a long climb. rose 26% to $28.2B on a 27% increase in automotive sales, while declined 5% to $1.1B as R&D expense rose 49% to $2.4B and SG&A rose 45% to $2.0B. The quarter shows auto volume recovering while the higher-margin storage business compressed.
Key takeaways
Energy generation and storage fell to 20.4% from 30.3% on higher costs and unfavorable warranty adjustments, after reaching 29.8% for FY2025.
Total grew 26% to $28.2B, driven by a 27% increase in automotive sales revenue from a 25% rise in cash deliveries and a 50% increase in services and other revenue.
fell 5% to $1.1B as R&D expenses rose 49% to $2.4B and SG&A rose 45% to $2.0B, both heavily impacted by AI program costs and a $283M increase in tied to the 2025 CEO Performance Award.
Section summaries
Management's Discussion and Analysis
Q2 2026 revenue rose 26% to $28.2B on higher deliveries and services, while net income fell 5% to $1.1B amid surging R&D and SG&A costs.
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Total grew 26% to $28.2B, driven by a 27% jump in automotive sales revenue from a 25% increase in cash deliveries and a 50% surge in services and other revenue.
Automotive dipped to 16.9% from 17.2% due to lower .
nearly doubled to $8.6B for the first half of 2026, but more than doubled to $8.3B for AI compute infrastructure and factory expansion.
The company expects 2026 to exceed $25B and warns that evolving tariffs and trade policies pose a risk to cost structure and demand, especially for the energy business.
What changed
Q2 2026 total against the 21.1% Q1 2026 level: the MD&A shows automotive gross margin at 16.9% and energy storage at 20.4%, with the storage margin down from 30.3% a year earlier rather than holding the prior-quarter strength.
Energy generation and storage sustainability: after reaching 29.8% in FY2025 and 39.5% in Q1 2026, it fell to 20.4% in Q2 2026 on higher costs and warranty adjustments.
Full-year 2026 against the guided exceedance of $25B: the company reiterated the exceed-$25B guide and first-half capex more than doubled to $8.3B.
Automotive trajectory: at 16.9% in Q2 2026, down from 17.2% a year earlier, as regulatory credit remained lower; Q1 2026's 21.1% was aided by one-time warranty and tariff benefits that rolled off.
Energy storage trend: Q1 2026 fell 12% to $2.41B; the Q2 MD&A does not state the storage revenue figure but reports from higher costs.
What to watch
Q3 2026 energy storage to see if the 20.4% level recovers or marks a step-down from the FY2025 29.8%.
Full-year 2026 against the guided exceedance of $25B as AI compute and manufacturing spending proceeds.
Automotive in Q3 2026 as one-time Q1 benefits remain absent and tariff costs develop.
Impact of evolving U.S. tariffs and trade policy on energy business cost structure and demand.
Automotive dipped to 16.9% from 17.2% due to lower , while energy storage gross margin fell sharply to 20.4% from 30.3% on higher costs and unfavorable warranty adjustments.
R&D expenses soared 49% to $2.4B and SG&A jumped 45% to $2.0B, both heavily impacted by AI program costs and a $283M increase in tied to the 2025 CEO Performance Award.
nearly doubled to $8.6B for the first half, but more than doubled to $8.3B, largely for AI compute infrastructure and factory expansion.
The company expects 2026 to exceed $25B and warns that evolving tariffs and trade policies pose a significant risk to its cost structure and demand, especially for the energy business.
Quantitative and Qualitative Disclosures About Market Risk
Foreign Currency Risk We transact business globally in multiple currencies and hence have foreign currency risks related to our revenue, costs of revenue and operating expenses denominated in currencies other than the U.S. dollar (primarily the Chinese yuan and euro in relation…
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Foreign Currency Risk
We transact business globally in multiple currencies and hence have foreign currency risks related to our revenue, costs of revenue and operating expenses denominated in currencies other than the U.S. dollar (primarily the Chinese yuan and euro in relation to our current year operations). In general, we are a net receiver of currencies other than the U.S. dollar for our foreign subsidiaries. Accordingly, changes in exchange rates affect our operating results as expressed in U.S. dollars as we do not typically hedge foreign currency risk.
We have also experienced, and will continue to experience, fluctuations in our net income as a result of gains (losses) on the settlement and the re-measurement of monetary assets and liabilities denominated in currencies that are not the local currency (primarily consisting of our intercompany and cash and cash equivalents balances).
We considered the historical trends in foreign currency exchange rates and determined that it is reasonably possible that adverse changes in foreign currency exchange rates of 10% for all currencies could be experienced in the near-term. These changes were applied to our total monetary assets and liabilities denominated in currencies other than our local currencies at the balance sheet date to compute the impact these changes would have had on our net income before income taxes. These changes would have resulted in a gain or loss of $1.64 billion at June 30, 2026 and $1.70 billion at December 31, 2025, assuming no foreign currency hedging.
For a description of our material pending legal proceedings, see Note 11, Commitments and Contingencies, to the consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
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For a description of our material pending legal proceedings, see Note 11, Commitments and Contingencies, to the consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Our operations and financial results are subject to various risks and uncertainties, including the factors discussed in Part I, Item 1A, Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2025, which could adversely affect our business, financial cond…
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Our operations and financial results are subject to various risks and uncertainties, including the factors discussed in Part I, Item 1A, Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2025, which could adversely affect our business, financial conditions and future results.