Revenue rose 26% year-over-year to $28.2B, and trailing twelve-month revenue passed $100B for the first time. Deliveries of 480,126 were a Q2 record, up 25%, with record deliveries across South Korea, Australia, Japan, Portugal and several smaller markets. Services and other grew 50% to $4.6B and is now Tesla's fastest-growing line. Two things temper the headline. The comparison quarter was weak — Q2 2025 revenue was $22.5B, itself a decline — so part of this is recovery rather than new ground. And the mix inside the number moved against Tesla: regulatory credits fell 67% to $146M, average selling price declined, and roughly $0.5B of the increase was a currency tailwind rather than volume or price.

This is the quarter's real story. Operating income fell 57% to $398M on 26% more revenue, taking operating margin to 1.4% from 4.1% a year ago. Gross margin slipped to 16.8%. Automotive gross margin excluding regulatory credits fell to 16.3% from 19.2% in Q1. Energy was the sharpest move: gross margin collapsed to 20.4% from 39.5%, driven by warranty charges tied to a vendor cell issue — though the Q1 comparison was itself inflated by one-time tariff recognitions, so the underlying deterioration is smaller than the two prints suggest. Operating expenses rose 47%, with R&D up to $2.4B and stock-based compensation at $1.15B. The headline $1,114M of GAAP net income reads like a recovery and mostly isn't: $763M of it is an after-tax mark on Tesla's SpaceX stake and $274M a tax item, leaving roughly $77M attributable to everything the company actually does.

Tesla holds $43.5B in cash and short-term investments against $9.3B of debt and finance leases, leaving roughly $34B net cash and $86.9B of stockholders' equity. Nothing about the balance sheet is fragile. What changed this quarter is the direction of travel: capital expenditure more than doubled to $5.8B, $3.3B higher than Q1 and well beyond the $2–3.5B per quarter Tesla had run for two years. Free cash flow was negative $1.1B, the first negative quarter since early 2024, and cash fell $1.2B. That is a choice rather than a problem — the spend is going into battery capacity, Megafactory Texas, Optimus lines and AI compute. But a company funding a build-out of this size out of a shrinking profit line has less room for error than the cash balance alone implies.

Measured against what Tesla said three months ago, the quarter delivers. Cybercab entered production at Gigafactory Texas. Model YL launched in the US. Megafactory Texas is nearing completion, Semi remains on track in Nevada, and first-generation Optimus lines are being installed at Fremont after the Model S and X lines were decommissioned. The inventory build flagged last quarter reversed: days of supply fell from 27 to 15 as deliveries outran production. The qualifications are real but narrower than usual. The energy warranty charge came from a supplier cell defect, which is a supply-chain control question rather than a factory one. And operating expenses growing 47% against 26% revenue growth is a cost discipline the company has not yet demonstrated it can hold.

This is where Tesla is genuinely unusual, and it moved forward on every front. Active FSD subscriptions reached 1.48 million, up 56% year-over- year, with over 55% of new North American deliveries attaching a subscription and regulatory approvals added in Lithuania, Estonia, Denmark and Belgium. Robotaxi now runs in seven US metros, with unsupervised rides launched in Miami, Orlando and Tampa. Cybercab, the purpose-built vehicle for that fleet, is in production. Behind the customer-facing bets sits vertical integration most carmakers wouldn't attempt: in-house lithium refining and cathode production in Texas, LFP cells in Nevada, a semiconductor fab in Austin, and AI training compute more than doubled in the first half to over 200MW across Cortex 1 and 2. None of it earns meaningfully today. All of it is closer than a year ago.

Trailing twelve-month diluted GAAP earnings are $1.08 a share, on net income of $3.8B — down from $5.9B a year ago. Whatever multiple you believe Tesla deserves, the denominator has shrunk by a third over four quarters while the numerator has not. The share count compounds the problem: the exercise of the reinstated 2018 CEO Performance Award added shares during the quarter, and the 10-Q cover reports 3.95 billion shares outstanding against a diluted weighted average of 3.54 billion used for EPS. Which figure you use changes market capitalisation by roughly 12%, and any valuation quoted without saying which one it used should be treated as unfinished. On either count, the price is not underwritten by current earnings. It is underwritten by a forecast.