Tesla delivered mixed financial results for the second quarter, with revenue exceeding analyst expectations while profitability metrics fell short of forecasts. The company’s stock declined almost 3% in extended trading following the disclosure.
Total revenue reached $22.5 billion from a year earlier, reflecting a 26% increase year-over-year. However, net income contracted 5% to $1.11 billion, or 32 cents per share, compared with $1.17 billion, or 33 cents per share, in the prior-year period. The automotive division generated $20.52 billion in revenue, up 23% annually, while the energy business posted $3.14 billion in revenue with 13% growth. Services and other revenue climbed 50% to $4.58 billion.
Margin pressures emerged across the business as the company faced headwinds from competitive pricing and reduced regulatory credit revenue. Gross margin contracted to 16.8% from 17.2% a year prior, falling short of the 19.4% level expected by analysts. Operating expenses surged 47% to $4.35 billion amid heavy investment in artificial intelligence and research initiatives, causing operating margin to plunge to 1.4% from 4.1%. Free cash flow turned negative with a deficit of $1.1 billion during the quarter, versus $146 million in positive free cash flow a year earlier.
Capital expenditures more than doubled to $5.79 billion from $2.39 billion in the comparable prior-year quarter, reflecting infrastructure investments across multiple initiatives. The company’s leadership signaled plans to deploy capital toward capacity expansion, semiconductor manufacturing, battery materials, and solar operations. Management stated intentions to maintain adequate liquidity while funding the product roadmap and expansion plans.
The company is pursuing a strategic pivot toward robotics and autonomous vehicle technology, with production of the Optimus humanoid robot and the Cybercab driverless vehicle underway. Full Self-Driving subscriptions grew 56%, reaching 1.48 million active subscribers. Tesla also outlined plans for a joint chip factory with Intel and another company in Texas.
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