Tesla Stock Faces Q2 Earnings Test as Margins and Cash Flow Take Focus

Wall Street expects Tesla’s automotive gross margin, excluding regulatory credits, to fall to about 18.1%. The measure stood at 19.2% during the previous quarter. Financing offers, vehicle incentives, and higher input costs could affect the final figure.

Free cash flow may receive closer attention. LSEG data points to negative free cash flow of about $3.3 billion for the quarter. That would mark Tesla’s first quarterly cash burn in more than two years.

Gene Munster of Deepwater Asset Management expects automotive margins to slightly exceed the Street’s estimate. He also projects about $6.7 billion in second-quarter capital spending. Munster wrote, “I expect good news,” but questioned how investors would treat higher 2027 spending.

Tesla also raised its 2026 capital expenditure plan above $25 billion in April. The spending covers data centers, vehicle plants, robotaxis, and the Optimus humanoid robot program. Investors will watch whether operating cash can finance those projects without reducing Tesla’s cash position sharply.