Tesla's second quarter 2026 revenue grew 26% on record deliveries, but operating margin contracted sharply to 1.4%.

Tesla reported record second quarter deliveries, driving a 26% year-over-year revenue increase to $28.2 billion, while GAAP EPS was $0.32. However, profitability declined significantly due to a sharp increase in operating expenses and lower vehicle average selling prices, and the company posted negative free cash flow for the quarter.

Key Highlights

• Vehicle deliveries reached a record 480,126 for the quarter, an increase of 25% compared to the same period last year.
• Automotive gross margin excluding regulatory credits was 16.3%, missing analyst estimates of 18.2% and contracting from 19.2% in the prior quarter.
• Operating margin fell to 1.4% from 4.1% a year ago, as operating expenses rose 47% YoY, driven by investments in AI and other R&D projects.
• The company reported negative free cash flow of $1.1 billion, a sharp reversal from the prior year, following a surge in capital expenditures to $5.8 billion.