Earnings Recap — Q2 FY2026
CY Q3 2026 · Reported July 22, 2026 · Beat 4 of last 7 quarters
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Tesla's massive CapEx cycle and expansion into AI compute, semiconductor fab, and energy storage underscore its role as a key player in the AI infrastructure buildout. The company's focus on distributed AI compute via megapods at superchargers and its partnership with SpaceX for data center power smoothing highlight the growing intersection of energy storage and AI infrastructure. Tesla's investments in Optimus and robotaxi will drive demand for advanced chips, memory, and power electronics, potentially benefiting suppliers like TSMC, Samsung, and Micron.
Tesla delivered record Q2 volumes with strong sequential growth across all regions, exiting the quarter with its largest order backlog since 2023. FSD paid customers reached nearly 1.5 million globally, with subscription attach rates rising as the purchase option is removed. Energy storage deployments grew 53% sequentially to 13.5 GWh, but energy gross margins fell to 20.4% due to a $240 million warranty true-up and non-repeating tariff benefits. Automotive gross margins (ex-credits) declined to 16.3%, roughly flat when adjusting for prior quarter one-time benefits. Free cash flow was negative as CapEx more than doubled sequentially, and the company secured up to $30 billion in debt capacity to fund its expansion.
Management emphasized a massive investment cycle, with CapEx expected to exceed $25 billion in 2026 and grow for the next two to three years to fund robotaxi fleet expansion, Optimus production, semiconductor fab, solar manufacturing, and AI compute. They expect operating expenses, largely R&D, to continue growing. They secured debt facilities allowing up to $30 billion in borrowings to accelerate investments. Robotaxi expansion is expected to continue at a double-digit weekly growth rate in unsupervised miles, with time to launch new cities trending towards zero. Optimus production will follow a long, flat initial S-curve due to supply chain newness. Energy business margins are expected to normalize in the mid-to-low 20% range long term.
“So, yes, it's been a great quarter. We achieved record Q2 deliveries. Model Y, I believe it is now, I think it's the best-selling car of any kind in the world and is setting records across the board.”
on Record deliveries and Model Y success
“So, for the car, it's sort of pixels in or photons in and controls out. The same thing is true for Optimus and Digital Optimus. It's photons in, controls out.”
on AI approach for Optimus
“We have driven more than 380,000 miles of unsupervised robotaxi now across six cities in two different states. We have had zero notable incidents.”
on Robotaxi safety record
On Optimus, given the lack of supply chain, are you seeing suppliers willing to invest alongside you to set up domestic manufacturing?
Elon Musk confirmed suppliers like Samsung, TSMC, and Panasonic are making massive investments in fabs and battery production. Karn Budhiraj added that Samsung's fab will be significantly dedicated to future projects, and Tesla will in-source where partners aren't available. Elon also thanked Micron for memory allocation.
What milestones should investors watch for robotaxi scaling, and would you consider third-party distribution partnerships?
Elon Musk said Tesla will remain vertically integrated, expecting demand to outstrip supply. The key constraint is the 'March of 9s' of reliability, targeting 99.999% reliability before scaling.
Why not scale up in one or two cities before adding more cities, and what's the roadblock to higher vehicle numbers?
Ashok Elluswamy explained the strategy is to prove the stack's generality across cities, and growth is exponential but early. Vaibhav Taneja added they're working out operational kinks in a controlled manner. Elon noted Cybercab needs accumulated driving data specific to its chassis before large deployment.