Tesla NASDAQ: TSLA 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.
Vehicle Demand Rebounded Across Regions
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.
Margins Reflect Warranty, Tariff and Pricing Dynamics
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. However, energy gross margin fell to 20.4% from 39.5%. Taneja attributed the decline to a roughly $240 million warranty true-up tied to vendor cell issues for legacy deployments, the absence of more than $200 million in tariff benefits recognized in the first quarter and lower average selling prices for industrial storage amid increasing competition.
Long term, Taneja said Tesla expects energy gross margins to normalize in the mid- to low-20% range. He described the energy order backlog as robust and said the company is building for existing demand as well as expected future demand from data centers and broader electrification.
Service and other gross margin improved to 14.1% from 9.2%, an all-time high, driven by higher volume and better cost management across used vehicles, Supercharging, service centers and insurance, Taneja said.
Robotaxi Expansion Centers on Safety and Reliability
Musk said Tesla is scaling Robotaxi “as fast as humanly possible” while prioritizing safety. He said the company is trying to avoid any harm as it expands the service, noting that any injury involving Robotaxi would draw significant scrutiny from regulators and the public.
Ashok, Tesla’s vice president of AI, said the Robotaxi program has driven more than 380,000 miles of unsupervised operation across six cities in two states with “zero notable incidents.” He said the fleet is already running early versions of Tesla’s V15 FSD software, with about 40% of planned major improvement tracks merged into current builds.
Taneja said Tesla has expanded its Robotaxi fleet to seven U.S. markets and expects the ramp to accelerate through the rest of the year. Musk said the constraint on growth is the “march of nines” of reliability, describing the need for increasingly high safety and reliability levels before broader scaling.
Executives said Tesla plans to keep Robotaxi vertically integrated. Musk said he does not expect demand challenges and believes the service’s economics will make demand exceed Tesla’s ability to serve it.
Optimus, Cybercab and AI Chips Drive Investment Plans
Musk said Optimus could be “the biggest product ever,” but emphasized that scaling manufacturing will be difficult because there is no established supply chain for many of the robot’s parts. He said Tesla has in-sourced a significant amount of production and is building an Optimus line in Fremont where Model S and Model X production had previously been located.
Ashok said Optimus training will use data from factory workers, dedicated demonstrations, internet video and eventually robots practicing tasks in an “Optimus Academy.” He said Tesla is applying the same end-to-end AI strategy used in FSD: “pixels in, controls out.”
Musk also discussed Tesla’s planned Terafab initiative and said the company expects to announce a location soon. He said Terafab is necessary to avoid AI chip constraints that would limit Optimus production. Tesla has placed equipment orders for a development fab in Austin intended to combine lithography mask production, logic, memory, packaging and chip testing under one roof.
On Cybercab, executives said the vehicle will use the same V15 models as other Tesla platforms. Musk said Tesla needs to accumulate driving data specific to the Cybercab chassis before putting large numbers on the road. He also said Starlink will be integrated into Cybercab and, in markets where available, Tesla vehicles generally, because Robotaxis need reliable connectivity.
CapEx to Rise as Tesla Pursues Manufacturing Build-Out
Taneja said free cash flow was negative in the quarter, largely because capital expenditures more than doubled sequentially. Tesla continues to expect 2026 CapEx of more than $25 billion, with spending set to rise further in the second half of the year.
He said CapEx will grow for the next two or three years as Tesla expands its Robotaxi fleet, Optimus production capacity, semiconductor fab investments, solar manufacturing capacity, AI compute infrastructure and automotive manufacturing. Tesla is also pursuing debt facilities that could provide borrowing capacity of up to $30 billion to accelerate those investments.
Musk said he has asked Tesla’s team to spend on CapEx “as fast as we can without it being too wasteful,” balancing capital efficiency against speed. He described the current effort as one of the fastest industrial scale-ups in modern U.S. history.
Net income in the quarter was positively affected by a $1 billion mark-to-market gain on Tesla’s SpaceX holdings, offset by about $300 million in foreign exchange losses and roughly $100 million in Bitcoin losses, Taneja said.
About Tesla (NASDAQ:TSLA)
Tesla, Inc NASDAQ: TSLA is an American company that designs, manufactures and sells electric vehicles, energy generation and energy storage products. Founded in 2003 by Martin Eberhard and Marc Tarpenning, Tesla grew into a vertically integrated mobility and clean‑energy company with Elon Musk serving as its chief executive officer. The company's stated mission is to accelerate the world's transition to sustainable energy, reflected in its combined focus on electric drivetrains, battery technology, renewable energy products and software.
Tesla's automotive business includes a lineup of battery‑electric vehicles and related services.
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