Tesla
$TSLA 2Q25 Earnings
- Rev $22.5b -12% ↘️🟠
- GP $3.9b -15% ↘️🟠 margin 17% -71 bps ↘️🔴
- Adj EBITDA $3.4b -7% ↘️🟠 margin 15% 71 bps ✅
- EBIT $923m -42% ↘️🟠 margin 4% -219 bps ↘️🔴
- NG Net Inc $1.4b -23% ↘️🟠 margin 6% -91 bps ↘️🔴
- Net Inc $1.2b -16% ↘️🟠 margin 5% -28 bps ↘️🔴
- OCF $2.5b -30% ↘️🟠 margin 11% -287 bps ↘️🔴
- FCF $146m -89% ↘️🟠 margin 1% -461 bps ↘️🔴
Revenue by Segment
- Automotive sales $15.8b -15% ↘️🟠
- Automotive rev $16.7b -16% ↘️🟠
- Energy gen & storage $2.8b -7% ↘️🟠
- Services $3b 17% ↗️🟢
Tesla TTM Revenue by Segment
Tesla TTM Gross Profit by Segment
GP Profitability by Segment
Automotive Sales
- Rev $15.8b -14% ↘️🟠
- GP $2.2b -7% ↘️🟠 margin 14% 105 bps ✅
Automotive Leasing
- Rev $0.4b -5% ↘️🟠
- GP $0.2b -3% ↘️🟠 margin 48% 108 bps ✅
Automotive Revenues
- Rev $16.7b -16% ↘️🟠
- GP $2.9b -22% ↘️🟠 margin 17% -127 bps ↘️🔴
Energy Gen & Storage
- Rev $2.8b -7% ↘️🟠
- GP $0.8b 14% ↗️🟢 margin 30% 578 bps ✅
Services
- Rev $3b 17% ↗️🟢
- GP $0.2b -1% ➡️🟡 margin 5% -95 bps ✅
Production
- Model 3/Y 396.8K 3% ↗️🟢
- Others 13.4K -45% ↘️🟠
- Total 410.2K -0% ➡️🟡
Deliveries (lower)
- Model 3/Y 373.7K -12% ↘️🟠
- Others 10.4K -52% ↘️🟠
- Total 384.1K -13% ↘️🟠
Tesla TTM Production
Biz Metrics
- Storage deployed 9.6GWh 2% ↗️🟢
- Tesla locations 1,454 13% ↗️🟢
- Mobile Svc Fleet 1,684 -11% ↘️🟠
- Supercharger stations 7,377 14% ↗️🟢
- Supercharger connectors 70,228 18% ↗️🟢
- Inventory Days 24 ↗️🟠 (rising)
Notable Milestones
- Launched Robotaxi service in Austin focusing on camera-only architecture
- Delivered first customer vehicle fully autonomously
- Deployed first Megapacks from Megafactory Shanghai
- First builds of more affordable model in June with volume production in 2H25
- Continued development of Semi and Cybercab, volume production in 2026
- Robotaxi/Cybercab will continue to pursue a revolutionary “unboxed” manufacturing strategy, scheduled for volume production starting in 2026.
1 | Austin Robotaxi to expand even bigger and longer, beyond even Waymo in the next few weeks
We were able to successfully launch robotaxi, so providing our rst drives with no one in the driver seat with paying customers in Austin. And as some may have noted, we've already expanded our service area in Austin. It's bigger and longer. And it's going to get even bigger and longer. We were expecting to really greatly increase the Austin service area to well in excess of what competitors are doing. And that's hopefully in a week or so, 2 weeks?
2 | Thus far more than 7,000 miles in Austin, no notable safety critical incidents, service well received and continue to expand on it.
We have more than 7,000 miles operating in Austin area. It's just because service is new, we have a handful of vehicles right now, but then we are trying to expand the service in terms of both the area and also the number of vehicles, both in Austin and other locations. So far, there's no notable safety critical incidents. Sometimes we have our own restrictions as to -- for example, we restrict our speed limit to 40 miles per hours. And if the vehicle wants to go on like higher speed roads, we can stop the vehicle, but those are out of convenience as opposed to safety critical nature. So far, the service has been really well received, and we continue to expand on it.
3 | Getting regulatory permission to launch in San Francisco, Nevada, Arizona, Florida, goal is to get them and roll them out to half the US by year-end
And we're getting the regulatory permission to launch in the Bay Area, Nevada, Arizona, Florida, and a number of other places. So as we get the approvals and we prove out safety, then we will be launching autonomous ride-hailing in most of the country. And I think we'll probably have autonomous ride-hailing in probably half the population of the U.S. by the end of the year.
That's at least our goal, subject to regulatory approvals. I think we'll technically be able to do it. So assuming we get regulatory approvals, it's probably addressing half of the population in the U.S. by the end of the year.
4 | Wanting to be very cautious, safety is of the highest concern
But we are being very cautious. We don't want to take any chances. And so we're going to go cautiously. But the service areas and the number of vehicles in operation will increase at a hyper-exponential rate.
We're certainly getting there. I think it will be available for incentivized personal use by the end of this year in certain geographies. We're just being very careful about it.
This is not something which we want to rush. We want to make sure that everything is safe before we make it available broadly.
5 | Can design Cybercab to not need to have as much acceleration,gentler ride, more optimised design point, and Optimus can serve, clean and do maintenance with automatic charging, reducing the operating cost of Cybercab
Well, the Cybercab, which is really optimized for autonomy, that, I think, has got probably sub-$0.30 per mile potential over time, maybe $0.25….So we've produced the top-end speed, which means we can use more efficient tires. We don't need as much acceleration. We don't need as much -- take breaks to sort of -- we want stopping distance, but we're not expecting it to be heavily used. It's a gentle ride. Essentially, if you design it for a gentle ride and then you have a much more optimized design point. So that's why it seems probable we could achieve that. Especially, Optimus is serving, cleaning up the car and doing maintenance and stuff. And doing automatic charging. So I think it's going to -- the actual cost per mile of Cybercab will be very low.
6 | No approval for supervised FSD in Europe, think sales can rise if Tesla gets it
And it's worth noting that we do not actually yet have approval for supervised FSD in Europe. So our sales in Europe, we think, will improve significantly once we are able to give customers the same experience that they have in the U.S. This is, I think, a very important point to convey. And we've been working with our main country regulator, which is the Netherlands. And I think we're close to getting approval with the Netherlands, then it's got to go to the EU. It's quite Kafka-esque. In fact, Kafka had no idea that something like the EU could exist beyond Kafka-esque challenges with bureaucracy. But we will get the approvals. And I think we'll get -- some people in Europe will have an experience similar to that of the U.S. in most of Europe this year, hopefully, at least partly in this quarter.
7 | Similarly for China as well, getting regulatory approvals will unlock customer demand
And then we also have some regulatory challenges in China, which we're hoping to unblock shortly where we -- because we also cannot provide supervised FSD in China currently, but we hope to unblock that soon. That's also -- that's another major -- it really is the single biggest demand driver.
8 | Autonomy is what amplifies the value of a physical product to stratospheric levels
So this is really -- as you can tell, this is very much sort of autonomy is the story. Like we need the physical product, without which you cannot have autonomy. But once you have a physical product, you need -- the autonomy is what amplifies the value to stratospheric levels.
9 | Recent focus on Austin Robotaxi pushed back the production release of autopilot
Because of our focus on Austin with no one in the driver seat, the production release of autopilot is actually several months behind what people experience on a robotaxi in Austin. So now we have the robotaxi launched, we'll be adding back those elements so that there will be a step-change improvement in the autopilot experience for people outside of Austin.
10 | Expecting to 10X the parameter count for FSD software, but tricky because choked on memory bandwidth
On the full self-driving front, I'll continue talking about that. We have -- we're continuing to make signi cant improvements just with the software. So we're expecting to increase the parameter count. Actually, at this point, we think we can probably 10x the -- almost 10x the parameter count. Yes, roughly 10x the parameter count.
So this is actually a very tricky thing to do because, as you increase the parameter count, you get choked on memory bandwidth. But we currently think we can 10x the parameter count from what people are currently experiencing. So not just 4x, actually 10x increase in parameter count. And yes, so still a lot of improvement on the existing hardware to happen.
11 | Think Tesla is much better than Waymo which is overloaded with sensors at real-world AI
Like a clear proof point for that would be -- if you compare, say, Tesla to Waymo, Waymo has got -- the car is festooned with God knows how many sensors. And yet, isn't Google good at AI? Yes, but they're not good at real-world AI. Thus far, they have -- Tesla is actually much better than Google by far and much than anyone at real-world AI.
12 | Hardware constraints is a byte constraint, Tesla having the highest intelligence density
But the actual constraints in the hardware are how many gigabytes of RAM and how many gigabytes per second can you transfer from RAM. Therefore, it is not a parameter constraint. It is a byte constraint. And Tesla has the highest intelligence density of any AI by far. And I have a lot of insight into this with xAI. xAI is -- Grok is the smartest AI overall, but it's -- Grok 4 is a giant beast sort of at the terabyte level. And so kind of important to note, Tesla has the best intelligence density. Intelligence density will be a very big deal in the future. It is now.
13 | Energy is doing well despite tariffs and supply chain challenges
Energy is growing really well despite headwinds from tariffs and supply chain challenges. The Megapack is expanding capacity quickly, and we have upgrades to the Megapack that will make it even better. And we had record powerwall deployment again in Q2. So I think batteries are just going to be a massive thing. The scale of batteries, battery demand, I think, not that many people appreciate just how gigantic the scale of battery demand is.
14 | If US power plants were to add batteries to the the mix, they can run the power plants 24/7 at full capacity, and double the energy output of the US with just batteries
The way to think about it is that the U.S. sustained power output for the U.S. grid is around 1 terawatt but average usage is less than half a terawatt. If you add batteries to the mix, you can run the power plants 24/7 at full capacity, thus doubling -- more than doubling the energy output per year of the United States just with batteries. But that's again a big deal.
15 | Thinks once customers realised deploying battery storage is the quickest path to scale energy production, energy deployments could increase
I think Elon covered this that industrial storage will make a di erence in this drive towards AI and data center growth. The energy requirements are increasing at a rapid scale as AI applications are very energy hungry. The quickest path to scale up energy is deploying storage. This is something that our customers have started realizing.
16 | Optimus humanoid robot now in V2.5 going to V3, thinks it will be Tesla’s biggest product ever, and is very hard to solve, and has to be designed from physics first principles as nothing off the shelf that really works
Optimus, so we're evolving the Optimus design and really getting Optimus to the point where it is a phenomenal design. So we're in Optimus version 2 right now, sort of 2.5. Optimus 3 is an exquisite design, in my opinion, and will be -- as I've said many times before, I predict it will be the biggest product ever. It's a very hard problem to solve. You have to design every part of it from physics rst principles. There's nothing that's o the shelf that actually works. So you got to design every motor, gearbox, power electronics, control electronics, sensors, the mechanical elements. We also got to train Optimus to use its limb sensors with a neural net. But we'll be applying the same techniques that we applied for our car, which is essentially a 4wheel robot. And Optimus is a robot with arms and legs.
17 | Think can scale Optimus production in less than five years
So with Optimus 3, which is really the right design, it's like it doesn't have -- at this point, there's no significant flaws with the Optimus 3 design. But we are going to retool a bunch of things. So there will probably be prototypes of Optimus 3 end of this year and then scale production next year. We're going to try to scale Optimus production as fast as it's humanly possible to do, so we'll try to get to 1 million units a year as quickly as possible. We think we can get there in less than 5 years, it's my sort of -- I guess.
18 | Tesla with technological progress, might not always be on time, but they get it done eventually
So in conclusion, so far, 2025 has been a very exciting year, a lot of major milestones. We've made it clear with our demonstrable progress in autonomy that a lot of naysayers said we would not achieve. But it's worth noting that we have done what we said we're going to do. It doesn't mean we're always on time, but we get it done. Now the naysayers are sitting there with an egg on their face.
19 | Want to focus on getting unsupervised on Hardware 4 first then retrofit/upgrade those with Hardware 3
I mean what we want to do is we want to get unsupervised done on Hardware 4 rst. Once it's done, then we will go back and look at what we need to do with the Hardware 3 cars. I mean like I said, the focus is rst to get unsupervised out, and then we'll go back and see what more work we need to do.
20 | Expect to have Dojo 2 operating at scale next year with AI5 chip in volume production by year-end
we expect to have Dojo 2 operating at scale sometime next year, with scale being somewhere around 100,000 H100 equivalents. And then AI5, which is really spectacular, too -- and I don't use those words lightly, spectacular, too. The AI5 chip will hopefully be in volume production around the end of next year. That has a lot of potential.
21 | Started production of lower cost model in H1, ramp will happen next quarter instead, slower than expected
We started the production of the lower-cost model as planned in the first half of '25. However, given our focus on building and delivering as many vehicles as possible in the U.S. before the EV credit expires and the additional complexity of ramping a new product, the ramp will happen next quarter, slower than initially expected.
22 | Less confident and difficult to predict the beginning of the S-curve production ramp due to debugging, etc
The production ramp -- it's always difficult to predict the S curve of your production ramp when something has got an entire -- when everything is new because the rate of production will move as fast as the least lucky and least confident element of the entire supply chain as well as internal processes. So the more new stu that is in a product, the slower the ramp could be because of unexpected supply chain interruptions or mistakes made internally. It's much easier to predict sort of the end of the S-curve or late in the S-curve than the beginning of the S-curve. And the beginning of the S curve of the production ramp is, in any case, not really material for revenue purposes. The beginning of the S-curve, you're usually -- usually, you're always negative gross margin, and you're debugging a lot of issues.
23 | Goal of more affordable model is to make a car that everyone loves and wants at a more affordable price, but not negatively impact revenue or gross margin
As we said, we started production in June, and we're ramping quality builds and things around the quarter. And given that we started in North America and our goal is to maximize production with a higher rate. So starting Q3, we're going to keep pushing hard on our current models to avoid complexity. Unfortunately, that rolls away, we'll be ready with new, more a ordable models available for everyone in Q4. And the goal of those products was not to negatively impact revenue or gross margin, but just to make a car that everyone loves and wants at a more affordable price.
24 | In the near-term, OPEX increase with AI capex investments, employee compensation and higher AI compute depreciation, right strategy for long-term
Operating expenses also grew sequentially as we continued our investment in AI projects, including additional expenses related to employee-related costs, including higher stock-based compensation and depreciation for AI compute. Our operating expenses, especially R&D-related spend, will continue to grow. We believe even in the current environment, it is the right strategy to keep making investments in these areas to position us for the long term.
25 | Seeing some green shoots, with more test drives and uptick in FSD adoption in the US
Globally, we are seeing an increase in the number of test drives. …We started seeing an uptick in FSD adoption in North America in recent months, which is a very promising trend. And just to give you a perspective, since the launch of -- since we moved to version 12 of FSD, we've seen the adoption rates really increase.
26 | Elon Musk working on a new master plan
I'm working on a new master plan to articulate that to the Tesla team. And there will be -- there are some teething pains as you transition from a preautonomy to post-autonomy world. But I think the future vision for Tesla is incredibly exciting and will profoundly change the world in a good way. This may sound like sort of hype or whatever, but I think -- well, let's just say if we execute on that plan e ectively, which is you have to actually do that, Tesla will be the most valuable company in the world by far.
27 | Upside to FSD as most Tesla owners still don’t know it exists, half of then haven’t tried it once
Even if you don't believe in anything else, a car on FSD being 10x safer should be a motivator. Plus the other thing is people don't realize, even at $99 a month, it's like you're getting a personal chau eur for almost $3.33 a day. And this is by far the biggest game changer, which I know we've been talking about it because part of it is we live and breathe it,
Most people still don't know. The vast majority of people don't know it exists. And it's still like half of Tesla owners who could use it haven't tried it even once. They don't actually. And obviously, this is something we want to educate them on. So we've got to -- when they come in for service, we'll reach out to them, send them like videos of how to make it work. It's such a shocking thing. They don't think a car is capable of this. So you have to actually show them and get them comfortable with turning it on and o . It's so trivial. It's like saying you've got a cat that can sing and dance, but it just looks like an old cat. And you're like until you see the cat sing and dance and talk, like you assume it's just a cat. That's Tesla FSD. Our car is intelligent.
28 | One Big Bill affects Tesla negatively in three ways, repeal of the EV credit of $7.5K by end of Q3, and reduce the penalty to zero will impact sales of regulatory credits to other OEMs, leading to near-term revenue headwinds, and in the residential storage with early expiration of consumer credits by year end
The One Big Bill has a lot of changes that would affect our business in the near term. The first among those changes is the repeal of the IRA EV credit of $7,500 by the end of this quarter.
The bill also made changes to certain emission standards by reducing the amount of penalty to zero. This, in turn, will have an impact on the new sales of regulatory credits to other OEMs and, in turn, will lead to lower revenue. While we now plan our business around such sales, it will nonetheless impact our total revenues going forward.
The Big Bill has certain adverse impacts even for the energy business, most notably on the residential storage business due to the early expiration of consumer credits by the end of this year.
29 | Tariffs have impacted around $300m, ⅔ in automotive and ⅓ in energy
We started seeing the impact of tari s in our P&L. Sequentially, the cost of tari s increased around $300 million with approximately 2/3 of that impact in automotive and rest in energy. However, given the latency in manufacturing and sales, the full impact will come through in the following quarters, and so costs will increase in the near term. While we are doing our best to manage these impacts, we are in an unpredictable environment on the tariff front.
30 | Tesla will undergo a couple of very rough quarters with the losing of incentives in the US, and once through this transition period, thinks Tesla economics will be very compeling
Well, we're in this like weird transition period where we will lose a lot of incentives in the U.S. We have incentives actually in many other parts of the world, but we'll lose some in the U.S. Look, we're still a bit at the relatively early stages of autonomy. On the other hand, autonomy is most advanced and most available from a regulatory standpoint in the U.S. So I mean, does that mean like we could have a few rough quarters? Yes, we probably could have a few rough quarters. And I'm not saying we will, but we could, Q4, Q1, maybe Q2. But once you get to autonomy at scale in the second half of next year, certainly by the end of next year, I think I would be surprised if Tesla's economics are not very compelling.
➡️ Final Takeaways Tesla
$TSLA:
Tesla is experiencing slower near-term growth as it is in between two growth waves from Model 3, Y to next-gen lower priced vehicle (to ensure full utilization), unsupervised FSD, Cybertaxi/robotaxis, and Optimus humanoid robots, now thus the repeal of the US credits and sales of regulatory credits. 2025-2026 could well be the year of consolidation and reinflection.
Thesis still intact of high vertical integration with strong technological product with lowest manufacturing cost, strong operating leverage, manufacturing superiority, laser focused on profitability and strong FCF generation and reinvestment. Long-term higher margin software FSD/autonomy to increase current lower hardware profit margins. Lots of optionality remains, and production is hard, while they might often be late, they do still deliver through time.