Tesla Q2 profit misses estimates as costs surge

Tesla Inc. reported a sharp decline in quarterly profit on Wednesday, July 22, 2026, missing Wall Street expectations despite a strong surge in vehicle sales, as increased spending and lower per-car earnings squeezed its bottom line.

The electric vehicle maker posted adjusted earnings of 33 cents per share for the second quarter, well below the average analyst estimate of 51 cents. Net income fell to $1.11 billion from $1.17 billion a year earlier. Revenue, however, rose 26% to $28.24 billion, exceeding forecasts.

The profit miss was driven by two primary factors: lower average selling prices due to vehicle discounts and incentives, and a significant jump in operating expenses. Operating costs surged 47% to $4.35 billion, while research and development spending alone increased about 49% to $2.37 billion. The company also reported its first quarter of negative free cash flow in more than two years, burning through $1.09 billion.

This financial pressure comes as Tesla invests heavily in future technologies like artificial intelligence, robotics, and its autonomous ride-hailing service, which are not yet generating meaningful revenue. Capital expenditures totaled $5.8 billion for...