Tesla stock slides after mixed Q2 earnings, with $25 billion in capex spending lined up

Tesla (TSLA) shares fell early Thursday after the EV pioneer reported mixed second quarter results that missed Wall Street expectations. However, its cash burn rate was less than expected. Investors may be looking for more on its physical AI build-outs.

Tesla reported Q2 revenue of $28.24 after the closing bell on Wednesday, versus the $26.32 billion expected per Bloomberg consensus, up 26% from a year ago. Tesla posted adjusted earnings per share (EPS) of $0.33 compared with the $0.50 estimated. Adjusted EBITDA came in at $3.273 billion, versus $4.0 billion expected.

Tesla stock slid about 6% in premarket trading on Thursday as investors weighed the earnings miss alongside the revenue beat.

Tesla said Optimus production remains on track for later this year. “The initial Optimus builds will be used in our Optimus Academy for training data collection and further functionality development,” the company said in a statement, but did not indicate when the latest version of Optimus would be revealed.

Tesla also confirmed that its Robotaxi rollout hit seven major metro areas. “We expanded the unsupervised operation area in Austin and launched unsupervised rides in Miami, Orlando, and Tampa in July,” the company said. “Preparation for expansion of our Robotaxi service to additional U.S. metros continued, including testing, permitting and first responder training.”

“We’ll continue to scale very rapidly with Robotaxi — more than 10% growth in miles driven per week,” but safety considerations will limit its growth, CEO Elon Musk said on the earnings call.

Full-self driving active subscriptions climbed to 1.48 million, up 56% from a year ago, Tesla said.

Tesla’s free cash flow burn continued in the quarter, though less than expected, coming in at -$1.09 billion versus -$3.64 billion estimated, with analysts expecting full-year capital expenditures to hit $25.16 billion. Musk added that 2026 would be a “massive cap-ex” years, and CFO Vaibhav Taneja confirmed Tesla Capex would be “more than $25 billion” this year.

Tesla is spending aggressively on capital expenditures across several fronts at once: Optimus humanoid robot production, AI data center build-out, and Cybercab production ramp-up. Those are the bets that justify Tesla’s rich valuation, but they are also consuming cash right as the auto business is improving.

Tesla and Musk’s other company, SpaceX, collaborate on certain projects like Terafab and AI initiatives, which has led to speculation the two companies may merge. When asked about it, Musk said while there was “overlap” across the two companies, “we can’t talk about combining companies on an earnings call. It’s got to be done with the appropriate process.”

The revenue jump comes after Tesla reported a blowout delivery quarter. The EV maker reported Q2 deliveries of 480,126, up 25% year over year and easily topping Bloomberg consensus estimates of 397,466. Energy storage deployments came in at 13.5 GWh, more than 50% above the first quarter’s 8.8 GWh.

Several catalysts powered the spike in sales.

The new Model Y is now fully ramped, versus a year ago when the changeover at the factory depressed production. Tesla has also been competing hard on price around the world, and buyers have responded. 

And then there’s the Elon Musk effect, or the fading of it. Tesla’s CEO still spouts off controversial takes and political positions, but his DOGE initiative in the White House is over, and buyers appear to be looking beyond or ignoring his recent past.

Deepwater Investment’s Gene Munster added that the end of “the EV winter that started in March of 2024” is a factor, while noting that high gas prices and the fading DOGE headwinds also lifted sales.

Tesla’s sales across its important territories are trending in different directions. In the US, the expiration of the federal EV tax credit has hit hard — Cox Automotive sees Tesla’s US sales down 20% on the loss of the incentive. 

Europe went the other way, with Greater Europe registrations up nearly 108% in May and EU registrations more than doubling. “International strength is doing the heavy lifting with Europe acting as the standout driver and China providing further support,” Deutsche Bank’s Edison Yu wrote.

Pras Subramanian is the lead auto reporter for Yahoo Finance. You can follow him on X and on Instagram.

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