{"slug": "tesla-s-revenues-are-up-but-profits-squeezed-as-musk-spends-on-ai", "title": "Tesla's revenues are up, but profits squeezed as Musk spends on AI", "summary": "Tesla's Q2 2026 revenues rose 26% to $28.2 billion, but operating expenses surged 47% to $4.4 billion, squeezing net income to $1.1 billion—down 5% year over year—as CEO Elon Musk spends heavily on AI. The company's profit margin fell to 1.4%, its lowest in recent history, as automotive regulatory credits were abolished in the U.S. in 2025.", "body_md": "Tesla posted its financial statement for the second quarter of the year this afternoon. Earlier in July, we learned that the American automaker had had [a good quarter in terms of sales](https://arstechnica.com/cars/2026/07/tesla-sales-increase-by-25-in-q2-2026/), growing 25 percent year over year. Fans hoping that sales increase would result in a plenty profitable Tesla may be disappointed, though. Revenues are up but so are expenses, and the company’s once-enviable double-digit profit margin has fallen to just 1.4 percent.\n\nTesla brought in $20.5 billion from its electric vehicle business, a 23 percent increase year over year, and just $146 million came from automotive regulatory credits. Credits have been a key to Tesla’s profitability in previous challenging quarters, but they were abolished in the United States [with Musk’s blessing](https://arstechnica.com/cars/2024/11/trump-team-puts-ev-tax-credit-on-the-block-tesla-is-on-board-report/) in 2025.\n\nThere was growth from its energy and storage business, which grew 13 percent year over year to revenues of $3.1 billion, but the most growth was in Tesla’s services, which doubled, bringing in $4.6 billion. Tesla’s shift from a one-time purchase [to a monthly subscription](https://arstechnica.com/cars/2026/01/tesla-wants-recurring-revenue-discontinues-autopilot-in-favor-of-fsd/) for its much-criticized FSD partially automated driver assist—something tied to CEO Elon Musk’s [gargantuan remuneration package](https://arstechnica.com/tech-policy/2025/11/elon-musk-wins-tesla-pay-vote-that-could-make-him-a-1-trillion-man/)—was a big help here.\n\nOverall, total revenues were up 26 percent, to $28.2 billion.\n\nBut the cost of doing business went up more. Tesla’s operating expenses went up 47 percent to $4.4 billion, and income from those operations fell by 57 percent year over year to $398 million. The company is still profitable—it generated $1.1 billion for the quarter, but that’s 5 percent less than the same three months last year.", "url": "https://wpnews.pro/news/tesla-s-revenues-are-up-but-profits-squeezed-as-musk-spends-on-ai", "canonical_source": "https://arstechnica.com/cars/2026/07/teslas-revenues-are-up-but-profits-squeezed-as-musk-spends-on-ai/", "published_at": "2026-07-22 21:15:19+00:00", "updated_at": "2026-07-22 21:25:13.775621+00:00", "lang": "en", "topics": ["artificial-intelligence", "autonomous-vehicles", "ai-infrastructure"], "entities": ["Tesla", "Elon Musk", "FSD"], "alternates": {"html": "https://wpnews.pro/news/tesla-s-revenues-are-up-but-profits-squeezed-as-musk-spends-on-ai", "markdown": "https://wpnews.pro/news/tesla-s-revenues-are-up-but-profits-squeezed-as-musk-spends-on-ai.md", "text": "https://wpnews.pro/news/tesla-s-revenues-are-up-but-profits-squeezed-as-musk-spends-on-ai.txt", "jsonld": "https://wpnews.pro/news/tesla-s-revenues-are-up-but-profits-squeezed-as-musk-spends-on-ai.jsonld"}}