Tesla Q2 Earnings Call Highlights

Tesla said Q2 delivered record quarterly deliveries and a rebound in demand across regions, with Model Y setting records in several markets. Executives also said Full Self-Driving is becoming a major demand driver where it is approved, with future growth expected to come mainly from subscriptions. Margins were pressured by warranty charges, tariff changes, pricing, and higher financing costs. Automotive gross margin excluding credits fell to 16.3%, while energy gross margin dropped sharply even as energy storage deployments hit 13.5 GWh, Tesla’s second-largest quarter in that business. Tesla emphasized a large capital spending build-out tied to Robotaxi, Optimus, semiconductors, AI compute and manufacturing expansion. The company expects CapEx to exceed $25 billion in 2026 and rise further over the next few years as it scales these initiatives. Tesla executives used the company’s second-quarter 2026 earnings webcast to highlight record quarterly deliveries, rising interest in Full Self-Driving, rapid energy storage growth and a major multiyear capital spending cycle tied to autonomy, robotics, semiconductor capacity and manufacturing expansion. Elon Musk said Tesla had “a great quarter” and achieved record second-quarter deliveries. He said the Model Y continues to set records and described Full Self-Driving, or FSD, as a significant demand driver in markets where it is approved. “For a lot of people, they’re actually buying Tesla Full Self-Driving with a car attached, as opposed to a car with FSD,” Musk said, adding that Tesla expects demand to increase as FSD gains approval in additional countries. Vaibhav Taneja said the second quarter continued a demand recovery that began late in the first quarter. Tesla posted sequential delivery growth of 60% in the Americas, 27% in APAC and 12% in EMEA, he said. Model Y also set records in several markets, including the Netherlands, Australia and New Zealand. Taneja said Tesla exited the quarter with its largest order backlog since 2023 and is focused on increasing production across its factories. He cautioned that production growth will be limited by supply chain constraints, including batteries and electronic components. FSD was a recurring focus of the call. Taneja said about 55% of North American deliveries had an FSD subscription enabled at the time of delivery in the second quarter. He said FSD attach rates reached nearly 1.5 million paid customers globally, with 55% coming from upfront purchases and 45% from subscriptions. Tesla expects future FSD monetization growth to come primarily from subscriptions, he said, as the company has removed the purchase option in most markets. Automotive gross margin excluding regulatory credits declined sequentially to 16.3% from 19.2%. Taneja said the first quarter had benefited from a $230 million warranty true-down and tariff relief that did not repeat in the second quarter. Adjusting for those first-quarter benefits, automotive gross margin excluding credits would have been approximately flat, he said. Taneja also said commodity price increases and interest rate changes continued to add costs. Higher interest rates raised the cost of subvention programs, which are recognized upfront as a revenue offset and negatively affected automotive margins. Tesla’s energy business deployed 13.5 GWh of energy storage in the quarter, up 53% sequentially and the company’s second-largest quarter for the business.