Tesla reported second-quarter results showing revenue growth but a sharp squeeze on profitability, as heavy spending on artificial intelligence, robotics and robotaxi expansion outpaced gains from higher vehicle sales. Total revenue rose 26 percent year over year to $28.2 billion, driven by a 25 percent increase in deliveries, but the company's profit margin collapsed to just 1.4 percent from previous double-digit levels, disappointing investors hoping strong sales would translate into stronger earnings.

The core electric vehicle business brought in $20.5 billion, up 23 percent, while regulatory credit income—once a crucial profit cushion—shrank to just $146 million after US credits were scrapped in 2025. Services revenue doubled to $4.6 billion, helped by Tesla's shift of its Full Self-Driving system to a monthly subscription. Operating expenses jumped 47 percent to $4.4 billion and capital expenditure grew 142 percent to $5.8 billion, leaving free cash flow negative at $1.1 billion. Net profit came in at $1.1 billion, down 5 percent year on year, as Tesla continued pouring money into AI, humanoid robots and robotaxi rollouts rather than new vehicle models, with humanoid robot production expected to begin later this year.