Tesla’s automotive revenue share of total sales rose for the second consecutive quarter in the three months ended June 30, even as the company advances its autonomy and robotics ambitions.
Automotive revenue accounted for 72.7% of total sales in the second quarter, down from 78.0% two years ago but roughly stable over the past three quarter, according to figures published alongside the company’s earnings report on Wednesday.
Despite Wall Street’s growing view of Tesla as an autonomy and robotics company, nearly three-quarters of its revenue still comes from vehicle sales. Small-scale production of the humanoid robot Optimus is slated for later this year.
A record second quarter in deliveries and the strongest order backlog since 2023 powered the rebound, even as Chief Executive Elon Musk told investors that Full Self-Driving — not the vehicle itself — has become the primary reason customers walk into Tesla stores.
“To be honest, many customers’ primary reason for visiting our stores is FSD, the vehicle itself is merely a complementary platform,” the CEO said on Wednesday’s earnings call. “Customers at US stores have explicitly stated that they want FSD above all else and are indifferent to which vehicle model it comes with.”
More than 55% of new deliveries in North America now include an FSD subscription, a record attach rate.
From 81.6% to 72.7% in 2 Years
Tesla reported $20.52 billion in automotive revenue during the three months ended June 30, a 23.0% increase year on year.
Total revenue reached $28.24 billion, up 26.0%.
Automotive revenue posted a slower increase than the company as a whole, extending a trend that began in early 2024.
The quarterly progression of vehicle sales as a share of total revenue traces a steady decline.
From 81.6% in the first quarter of 2024, the figure fell to 78.0% in Q2, rebounded slightly to 79.5% in Q3, then dropped to 77.0% in Q4.
In the following twelve months, the share fell to 71.1%.
The nearly nine-percentage-point decline over two years reflects the growth of Tesla‘s energy and services businesses rather than a contraction of the automotive operation.
Energy generation and storage revenue rose 13% year on year to $3.14 billion in Q2.
Services and other revenue climbed 50% to $4.58 billion, boosted by FSD subscriptions — which reached 1.48 million active users at the end of the quarter — a 56.0% increase from a year earlier.
The Autonomy Thesis
The gap between what drives Tesla‘s stock and what drives its income statement continues to widen.
Cantor Fitzgerald noted earlier this year that despite Tesla‘s increasing bet on autonomy-related projects, revenue remains largely dependent on vehicle sales.
At the time, automotive revenue represented roughly 70% of total revenue — a figure that has since risen slightly.
Vehicle sales’ share of revenue is widely expected to decline meaningfully starting in 2027 — as FSD subscription revenue is growing at more than 50% annually, with the quarterly addition of roughly 200,000 subscribers in Q2 the largest on record.
Tesla‘s robotaxi service has expanded to Austin, San Francisco, Dallas, Houston, Miami, Orlando and Tampa, generating ride revenue that remains negligible but is scaling with fleet size.
Optimus humanoid robot production is set to begin later this year, with first units headed to a training academy before any commercial deployment.
Once those revenue lines reach scale, the automotive share should fall materially.
Record Deliveries
Tesla delivered 480,126 vehicles during the quarter, with Musk emphasizing on the earnings call was the company’s “best-ever Q2 delivery results.”
Chief Financial Officer Vaibhav Taneja highlighted the second quarter’s “recovery trend observed at the end of Q1,” with global vehicle demand rebounding strongly.
All major factories are operating at full capacity to meet demand. Capacity expansion, however, is constrained by supply chain bottlenecks, he warned.
“Not only batteries but also various electronic components remain in short supply,” Taneja said, noting that Tesla is signing long-term strategic agreements with key suppliers to alleviate those constraints.
Regional breakdowns showed the Americas up 60% sequentially — despite sales estimates showing monthly declines in its domestic market — Asia-Pacific up 27%, and Europe, Africa and the Middle East up 12%.
The demand surge followed FSD’s first European approval in the Netherlands in April, which triggered a wave of orders across the continent.
European customers have driven more than 50 million kilometers on the software in roughly three months across the Netherlands, Estonia, Belgium, Lithuania and Denmark.
Margin Pressure
Still, automotive gross margin excluding regulatory credits fell to 16.3% from 19.2% three months earlier, ending four consecutive quarterly increases.
The CFO attributed much of the decline to a one-time Q1 benefit of $230 million from “warranty accounting adjustments and tariff exemptions” that did not recur.
Excluding that factor, automotive gross margin “remained essentially flat,” he said, a sign that Tesla‘s pricing and cost-control strategies are holding amid rising commodity prices and higher interest rates.
Interest rate subsidies posed a separate headwind.
Tesla subsidizes buyer financing in several markets — including 0% APR on Model Y in the US — and those costs offset revenue directly.
With rates “expected to continue rising through 2026, subsidy costs will increase accordingly, further pressuring automotive gross margins,” the CFO said.
Regulatory credit revenue fell 66.7% to $146 million, contributing just 0.6 percentage points of automotive gross margin versus 1.9 points in Q1.
Capital expenditure reached $5.79 billion in the quarter, up 142% year on year, as the company invests in robotaxi infrastructure, Optimus manufacturing lines and AI compute.
Tesla described itself as being in “its largest and most exciting period of investment” and told shareholders that scaling would be “non-linear.”
As of press time, Tesla shares were trading 5% lower at $353 during the pre-market session.
