Tesla, Inc.

Previous wording

We are focused on bringing artificial intelligence into the real world, through products and services like FSD (Supervised) and Robotaxi, as well as working to develop and commercialize AI robots (including Optimus). We intend to leverage our current operations, in which we design, develop, manufacture, sell and lease high-performance fully electric vehicles and energy generation and storage systems that increasingly deliver AI-related and enhanced software and services to our customers, to achieve that objective.

Current wording

We are focused on bringing SI into the real world, through products and services like FSD (Supervised) and Robotaxi, as well as working to develop and commercialize SI robots (including Optimus). We intend to leverage our current operations, in which we design, develop, manufacture, sell and lease high-performance fully electric vehicles and energy generation and storage systems that increasingly deliver SI-related and enhanced software and services to our customers, to achieve that objective.

Previous wording

In 2026, we produced approximately 860 thousand consumer vehicles and delivered approximately 838 thousand consumer vehicles through the second quarter. We are focused on profitable growth and scale, further improving and deploying our FSD (Supervised) capabilities, including future autonomous capabilities through our purpose-built Robotaxi product, Cybercab, advancing our battery and AI compute technologies and expanding our global infrastructure. We have continued to expand and refine our Robotaxi service after its June 2025 launch, capitalizing on our AI investments and scalable mobility infrastructure to advance a service-driven business model.

Current wording

In 2026, we produced approximately 1.32 million consumer vehicles and delivered approximately 1.32 million consumer vehicles through the third quarter. We are focused on profitable growth and scale, further improving and deploying our FSD (Supervised) capabilities, including future autonomous capabilities through our purpose-built Robotaxi product, Cybercab, advancing our battery and SI compute technologies and expanding our global infrastructure. Since launching our Robotaxi service in June 2025, we have continued to expand and refine our product and operations - including the rollout of Cybercab in September 2026, capitalizing on our SI investments and scalable mobility infrastructure to advance a service-driven business model.

Previous wording

In 2026, we deployed 22.3 GWh of energy storage products through the second quarter. We are focused on ramping the production, increasing the market penetration of our energy storage products and developing our solar manufacturing and battery technologies.

Current wording

In 2026, we deployed 36.0 GWh of energy storage products through the third quarter. We are focused on ramping the production, increasing the market penetration of our energy storage products and developing our solar manufacturing and battery technologies.

Previous wording

During the three and six months ended June 30, 2026, we recognized total revenues of $28.24 billion and $50.62 billion, respectively, representing increases of $5.74 billion and $8.79 billion, respectively, compared to the same periods in the prior year. During the three and six months ended June 30, 2026, our net income attributable to common stockholders was $1.11 billion and $1.59 billion, respectively, representing a decrease of $58 million and an increase of $10 million, respectively, compared to the same periods in the prior year. We continue to ramp production and build and optimize our manufacturing capacity, expand our operations while focusing on further cost reductions and operational efficiencies, including through vertical integration of our battery and semiconductor supply chains, to enable increased deliveries and deployments of our products. We are also investing heavily in research and development to accelerate our AI, software and fleet-based profits for further revenue growth, which will negatively impact our profitability during this phase.

Current wording

During the three and nine months ended September 30, 2026, we recognized total revenues of $28.05 billion and $78.67 billion, respectively, representing a decrease of $49 million and an increase of $8.74 billion, respectively, compared to the same periods in the prior year. During the three and nine months ended September 30, 2026, our net income attributable to common stockholders was $787 million and $2.38 billion, respectively, representing decreases of $586 million and $576 million, respectively, compared to the same periods in the prior year. We continue to ramp production and build and optimize our manufacturing capacity, expand our operations while focusing on further cost reductions and operational efficiencies, including through vertical integration of our battery and semiconductor supply chains, to enable increased deliveries and deployments of our products. We are also investing heavily in research and development to accelerate our SI, software and fleet-based profits for further revenue growth, which will negatively impact our profitability during this phase.

Previous wording

We ended the second quarter of 2026 with $43.52 billion in cash and cash equivalents and short-term investments, representing a decrease of $535 million from the end of 2025. Our cash flows provided by operating activities were $8.63 billion during the six months ended June 30, 2026, compared to $4.70 billion during the same period ended June 30, 2025, representing an increase of $3.94 billion. Capital expenditures amounted to $8.28 billion during the six months ended June 30, 2026, compared to $3.89 billion during the same period ended June 30, 2025, representing an increase of $4.40 billion. Overall growth has allowed our business to generally fund itself. As we make critical high-value investments in our AI initiatives and expand manufacturing capabilities, including for our semiconductor, Optimus and solar operations, we intend to manage the business such that we maintain a strong balance sheet and sufficient liquidity, which may include additional funding.

Current wording

We ended the third quarter of 2026 with $45.45 billion in cash and cash equivalents and short-term investments, representing an increase of $1.39 billion from the end of 2025. Our cash flows provided by operating activities were $14.90 billion during the nine months ended September 30, 2026, compared to $10.93 billion during the same period ended September 30, 2025, representing an increase of $3.96 billion. Capital expenditures amounted to $13.01 billion during the nine months ended September 30, 2026, compared to $6.13 billion during the same period ended September 30, 2025, representing an increase of $6.88 billion. Overall growth has allowed our business to generally fund itself. As we make critical high-value investments in our SI initiatives and expand manufacturing capabilities, including for our semiconductor, Optimus and solar operations, we intend to manage the business such that we maintain a strong balance sheet and sufficient liquidity, which may include additional funding.

Previous wording

We are focused on growing and optimizing our manufacturing capacity, which includes capacity for manufacturing newer vehicle models and future vehicles utilizing aspects of our next generation platform, while maximizing production rate and efficiency at our Gigafactories. The next phase of production growth will be initiated by advances in autonomy and the introduction of new products, including those built on our next generation vehicle platform, as well as our ability to efficiently manufacture and rapidly scale our own cells that we are developing to have high-volume output, lower capital and production costs and longer range. In the first half of 2026, we made significant progress towards these objectives as we began production of Cybercab, as well as ramps across our new battery and material factories, including cathode material and lithium refining in Texas. Our goals are to improve vehicle performance, decrease production costs and increase affordability and customer awareness. We are also capitalizing on our strengths in real-world AI data to advance the development of Optimus, a general purpose, autonomous humanoid robot, as we make preparations and investments in large-scale production.

Current wording

We are focused on growing and optimizing our manufacturing capacity, which includes capacity for manufacturing newer vehicle models and future vehicles utilizing aspects of our next generation platform, while maximizing production rate and efficiency at our Gigafactories. The next phase of production growth will be initiated by advances in autonomy and the introduction of new products, including those built on our next generation vehicle platform, as well as our ability to efficiently manufacture and rapidly scale our own cells that we are developing to have high-volume output, lower capital and production costs and longer range. In the third quarter of 2026, we continued to progress towards these objectives through the launches of Cybercab and the Tesla Semi, along with production ramps across our new battery and material factories, including cathode material and lithium refining in Texas. We are focused on improving vehicle performance, decreasing production costs and increasing affordability and customer awareness. Leveraging our autonomy-enabled products, our goal is to redefine and lead transportation across all modes, advancing toward a future of safer, more accessible, efficient and sustainable mobility. We are also capitalizing on our strengths in real-world SI data to advance the development of Optimus, a general purpose, autonomous humanoid robot, as we make preparations and investments in large-scale production.

Previous wording

These plans are subject to uncertainties inherent in establishing and ramping manufacturing operations, which may be exacerbated by new product and manufacturing technologies we introduce, the number of concurrent international projects, any industry-wide component constraints, labor shortages and any future impact from events outside of our control. For example, changes to fiscal and trade policy with respect to tariffs, export controls and other restrictions may impact our global supply chain cost structure and availability, affecting not only vehicle production, but also facility expansions. Moreover, we have set ambitious technological targets with our plans for battery cells as well as for iterative manufacturing and design improvements for our vehicles.

Current wording

These plans are subject to uncertainties inherent in establishing and ramping manufacturing operations, which may be exacerbated by new product and manufacturing technologies we introduce, the number of concurrent international projects, any industry-wide component constraints, labor shortages and any future impact from events outside of our control. For example, changes to fiscal and trade policy with respect to tariffs, export controls and other restrictions may impact our global supply chain cost structure and availability, affecting not only vehicle production, but also facility expansions. Furthermore, scaling autonomy operations presents significant challenges due to evolving regulations, the resources required for SI inference and training, and operational and infrastructure support required, any of which could adversely affect our timelines and results. Moreover, we have set ambitious technological targets with our plans for battery cells as well as for iterative manufacturing and design improvements for our vehicles.

Previous wording

Automotive and AI Enabled Products—Demand, Sales and Deliveries and Supporting Infrastructure

Current wording

Automotive and SI Enabled Products—Demand, Sales and Deliveries and Supporting Infrastructure

Previous wording

Our cost reduction efforts, cost innovation strategies, and additional localized procurement and manufacturing are key to our vehicles’ affordability and have allowed us to competitively price our vehicles. We will also continue to generate demand by improving our vehicles’ performance and functionality, including through product offerings and features utilizing artificial intelligence such as FSD (Supervised) and other software, and delivering new vehicles and vehicle options. In addition, we believe the launch of our Robotaxi service unlocks the potential for significant business growth to advance a service-driven business model. We will continue to improve safety and profitability while scaling the network. In addition, we have been increasing awareness, and expanding our vehicle financing programs, including attractive leasing terms for our customers. We will also continue to work on developing our robotics offerings.

Current wording

Our cost reduction efforts, cost innovation strategies, and additional localized procurement and manufacturing are key to our vehicles’ affordability and have allowed us to competitively price our vehicles. We will also continue to generate demand by improving our vehicles’ performance and functionality, including through product offerings and features utilizing super intelligence, and delivering new vehicles and vehicle options. Our FSD (Supervised) technology serves as a key growth driver and product differentiator, with cumulative miles driven having increased exponentially in 2026. The launch of our Robotaxi service and introduction of Cybercab further unlocks the potential for significant business growth to advance a service-driven business model leveraging the same technology. This initiates a compounding, positive feedback loop, whereby fleet growth generates more data that further improves our technology, driving additional fleet growth, and we plan to scale future production accordingly. We will continue to improve safety and profitability while scaling the network. In addition, we have been increasing awareness, and expanding our vehicle financing programs, including attractive leasing terms for our customers. We will also continue to work on developing our robotics offerings.

Previous wording

As our vehicle production increases, we must work constantly to similarly increase vehicle delivery capability so that it does not become a bottleneck on our total deliveries. As we expand our manufacturing operations and vehicle lineup globally, we will also have to continue to increase and staff our delivery, servicing and charging infrastructure accordingly, maintain our vehicle reliability and optimize our Supercharger locations to ensure cost effectiveness and customer satisfaction. In particular, as other automotive manufacturers have announced their adoption of NACS and agreements with us to utilize our Superchargers, we must correspondingly expand our network in order to ensure adequate availability to meet customer demands. We have also begun deploying public Megachargers in preparation for the production of Tesla Semi. In addition, we remain focused on continued enhancements of the capability and efficiency of our servicing operations. In tandem with the launch of our Robotaxi business, we are focused on developing and optimizing dedicated infrastructure, including in relation to vehicle cleaning and maintenance, charging, security, teleoperations and fleet management, to ensure service quality as we continue to scale.

Current wording

As our vehicle production increases, we must work constantly to similarly increase vehicle delivery capability so that it does not become a bottleneck on our total deliveries. As we expand our manufacturing operations and vehicle lineup globally, we will also have to continue to increase and staff our delivery, servicing and charging infrastructure accordingly, maintain our vehicle reliability and optimize our Supercharger locations to ensure cost effectiveness and customer satisfaction. We have also begun deploying public Megachargers in preparation for the production and ramp of Tesla Semi. In addition, we remain focused on continued enhancements of the capability and efficiency of our servicing operations. In tandem with the launch of our Robotaxi business, we are focused on developing and optimizing dedicated infrastructure, including in relation to vehicle cleaning and maintenance, charging, security, teleoperations and fleet management, to ensure service quality as we continue to scale.

Previous wording

The long-term success of this business is dependent upon incremental volume growth. We continue to increase the production and capabilities of our energy storage products to meet high levels of demand, including the ramps of our Megafactories in Shanghai and Lathrop, California, and the construction of a new Megafactory near Houston, Texas. In 2025, we introduced Megapack 3 and Megablock, our next-generation industrial storage product, and began manufacturing a new residential retrofit solar panel. For Megapack, energy storage deployments can vary meaningfully quarter to quarter depending on the timing of specific project milestones and logistics. As these product lines grow, we will have to maintain adequate battery cell supply for our energy storage products. At the same time, changes in government and economic incentives or tariffs may also impact our sales, cost structure and the competitive landscape. For instance, import tariffs by the US government and the provisions of the OBBBA could significantly increase battery cell expenses and impact costs for our consumers, negatively impacting consumer demand. Despite these challenges, as AI infrastructure drives rapid load growth, we see opportunities for our energy storage products to stabilize the grid, shift energy when it is needed most and provide additional power capacity.

Current wording

The long-term success of this business is dependent upon incremental volume growth. We continue to increase the production and capabilities of our energy storage products to meet high levels of demand, including the ramps of our Megafactories in Shanghai and Lathrop, California, and the construction of a new Megafactory near Houston, Texas, which began production in the third quarter of 2026. In 2025, we introduced Megapack 3 and Megablock, our next-generation industrial storage product, and began manufacturing a new residential retrofit solar panel. For Megapack, energy storage deployments can vary meaningfully quarter to quarter depending on the timing of specific project milestones and logistics. As these product lines grow, we will have to maintain adequate battery cell supply for our energy storage products. In the third quarter of 2026, we shipped the first Megapack with LFP cells manufactured at Gigafactory Nevada, further advancing our efforts to localize supply chains. At the same time, changes in government and economic incentives or tariffs may also impact our sales, cost structure and the competitive landscape. For instance, import tariffs by the US government and the provisions of the One Big Beautiful Bill Act (the “OBBBA”) could significantly increase battery cell expenses and impact costs for our consumers, negatively impacting consumer demand. Despite these challenges, as SI infrastructure drives rapid load growth, we see opportunities for our energy storage products to stabilize the grid, shift energy when it is needed most and provide additional power capacity.

Previous wording

To support our businesses in clean energy and transport and autonomous robots, we are investing in and developing the necessary infrastructure. We continue to expand Cortex, our onsite training clusters at Gigafactory Texas, to provide sufficient compute resources for the development of our AI products and services, and are expanding our scope of manufacturing to include semiconductor and solar fabrication. We are focused on exploring opportunities independently and with strategic partners to develop bespoke and scalable solutions, including through vertical integration, to optimize for cost, functionality, efficiency and safety.

Current wording

To support our businesses in clean energy and transport and autonomous robots, we are investing in and developing the necessary infrastructure. We continue to expand Cortex, our onsite training clusters at Gigafactory Texas, to provide sufficient compute resources for the development of our SI products and services, and are expanding our scope of manufacturing to include semiconductor and solar fabrication. We are focused on exploring opportunities independently and with strategic partners to develop bespoke and scalable solutions, including through vertical integration, to optimize for cost, functionality, efficiency and safety.

Previous wording

Our capital expenditures are typically difficult to project beyond the short-term given the number and breadth of our core projects at any given time, and may further be impacted by uncertainties in future global market conditions and shifting global trade and fiscal policy. We are simultaneously developing and ramping new products, building or ramping manufacturing facilities on three continents, piloting the development and manufacture of new battery cell technologies, expanding our Supercharger network and investing in autonomy, robotics and other artificial intelligence enabled training and products and its supporting infrastructure, and the pace of our capital spend may vary depending on overall priority among projects, the pace at which we meet milestones, production adjustments to and among our various products, increased capital efficiencies and the addition of new projects. We are focused on long-term growth opportunities through critical, high-value investments. We currently expect our capital expenditures to be in excess of $25 billion in 2026, driven by our AI initiatives, including investments in compute infrastructure and data centers, the expansion and ramp of our manufacturing and R&D production lines and facilities, and growth in our fleet of company-operated AI-enabled assets and our retail, service and charging footprint. We believe this strategy will position our Company for further growth as we make investments in a capital efficient manner.

Current wording

Our capital expenditure projections are subject to variability given the number and breadth of our projects at any given time. Changes in, among other things, global market conditions, trade and fiscal policies, and strategic timing and direction, may necessitate adjustments to our project timelines, potentially impacting our capital expenditure expectations. We are focused on long-term growth opportunities through critical, high-value investments. We are simultaneously developing and ramping new products, building or ramping manufacturing facilities on three continents, piloting the development and manufacture of new battery cell technologies, expanding our Supercharger network and investing in autonomy, robotics and other super intelligence enabled training and products and its supporting infrastructure, and the pace of our capital spend may vary depending on overall priority among projects, the pace at which we meet milestones, production adjustments to and among our various products, increased capital efficiencies and the addition of new projects. We currently expect our capital expenditures to be in excess of $20 billion in 2026, driven by our SI initiatives, including investments in compute infrastructure and data centers, the expansion and ramp of our manufacturing and R&D production lines and facilities, and growth in our fleet of company-operated SI-enabled assets and our retail, service and charging footprint. We believe this strategy will position our Company for further growth as we make investments in a capital efficient manner.

Previous wording

Our business has generally been consistently generating cash flow from operations in excess of our level of capital spend, and with better working capital management resulting in shorter days sales outstanding than days payable outstanding, our sales growth is also generally facilitating positive cash generation. We have and will continue to utilize such cash flows, among other things, to invest in autonomy and robotics, further vertically integrate our supply chain, expand our product roadmap and provide financing options to our customers. At the same time, periods of heightened levels of capital expenditures due to capital-intensive projects and other potential variables such as rising material prices and increases in supply chain and labor expenses resulting from changes in global trade conditions and labor availability, will necessitate additional funding beyond our operating cash flow.

Current wording

Our business has generally been consistently generating cash flow from operations in excess of our level of capital spend, and with better working capital management resulting in shorter days sales outstanding than days payable outstanding, our sales growth is also generally facilitating positive cash generation. We have and will continue to utilize such cash flows, among other things, to invest in autonomy and robotics, further vertically integrate our supply chain, expand our product roadmap and provide financing options to our customers. At the same time, periods of heightened levels of capital expenditures due to capital-intensive projects and other potential variables such as rising material prices and increases in supply chain and labor expenses resulting from changes in global trade conditions and labor availability, will necessitate additional funding beyond our operating cash flow. For example, in September 2026, we entered into three credit agreements providing aggregate commitments of $30 billion, which afford us additional flexibility to support our planned investments, as described above.

Previous wording

Automotive sales revenue increased $6.77 billion, or 24%, in the six months ended June 30, 2026 as compared to the six months ended June 30, 2025, due to an increase of approximately 18% in cash deliveries, in part from bringing down all of our vehicle factories simultaneously for the changeover to the New Model Y in the prior period. Additionally, there was a higher average selling price per unit primarily driven by sales mix and a positive impact from the weakening of the United States dollar when compared to foreign currencies year over year and an increase from higher revenue from FSD (Supervised) subscriptions in the current period.

Current wording

Automotive sales revenue increased $6.50 billion, or 13%, in the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025, due to an increase of approximately 10% in cash deliveries, in part from bringing down all of our vehicle factories simultaneously for the changeover to the New Model Y in the prior period, partially offset by fewer Model S and Model X deliveries after the product sunset in mid-2026. Additionally, there was a positive impact from the weakening of the United States dollar when compared to foreign currencies year over year and an increase from higher revenue from FSD (Supervised) subscriptions in the current period.

Previous wording

Automotive regulatory credits revenue decreased $293 million, or 67%, in the three months ended June 30, 2026 as compared to the three months ended June 30, 2025. Automotive regulatory credits revenue decreased $508 million, or 49%, in the six months ended June 30, 2026 as compared to the six months ended June 30, 2025. Fluctuations in automotive regulatory credits are impacted by our supply of credits, subject to changes in regulation, production and sales. Recent governmental and regulatory actions have restricted certain regulatory credit programs tied to our products. Furthermore, we are impacted by the demand for credits by other automobile manufacturers.

Current wording

Automotive regulatory credits revenue decreased $304 million, or 73%, in the three months ended September 30, 2026 as compared to the three months ended September 30, 2025. Automotive regulatory credits revenue decreased $812 million, or 56%, in the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025. Fluctuations in automotive regulatory credits are impacted by our supply of credits, subject to changes in regulation, production and sales. Recent governmental and regulatory actions have restricted certain regulatory credit programs tied to our products.

Previous wording

Services and other revenue increased $1.54 billion, or 50%, in the three months ended June 30, 2026 as compared to the three months ended June 30, 2025. Services and other revenue increased $2.64 billion, or 46%, in the six months ended June 30, 2026 as compared to the six months ended June 30, 2025. These increases were primarily due to increases in used vehicle sales volume and average selling price, non-warranty maintenance services and collision revenue and paid Supercharging sessions.

Current wording

Services and other revenue increased $1.13 billion, or 33%, in the three months ended September 30, 2026 as compared to the three months ended September 30, 2025. Services and other revenue increased $3.77 billion, or 41%, in the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025. These increases were primarily due to increases in used vehicle sales volume and average selling price, non-warranty maintenance services and collision revenue, and paid Supercharging sessions.

Previous wording

Energy generation and storage revenue increased $350 million, or 13%, in the three months ended June 30, 2026 as compared to the three months ended June 30, 2025, primarily due to an increase in Megapack deployments, partially offset by a lower average selling price per Megapack unit and a decrease in Powerwall deployments.

Current wording

Energy generation and storage revenue decreased $534 million, or 16%, in the three months ended September 30, 2026 as compared to the three months ended September 30, 2025. Energy generation and storage revenue decreased $506 million, or 6%, in the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025. These decreases were primarily due to tariff refunds for certain Megapack customers, a lower average selling price per Megapack unit, a decrease in Powerwall deployments, and a decrease in solar retrofit cash deployments, partially offset by an increase in Megapack deployments.

Previous wording

Cost of automotive sales revenue increased $4.45 billion, or 18%, in the six months ended June 30, 2026 as compared to the six months ended June 30, 2025, due to the increase in deliveries year over year as discussed above. Average cost per unit was relatively consistent due to unfavorable sales mix and a negative impact from the weakening of the United States dollar when compared to foreign currencies year over year, offset by favorable impacts related to warranty adjustments and tariffs.

Current wording

Cost of automotive sales revenue increased $3.66 billion, or 9%, in the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025, due to the increase in deliveries year over year as discussed above. Average cost per unit was relatively consistent due to favorable impacts from tariffs and warranty adjustments, offset by an unfavorable impact from the weakening of the United States dollar when compared to foreign currencies year over year.

Previous wording

Cost of services and other revenue increased $1.05 billion, or 37%, in the three months ended June 30, 2026 as compared to the three months ended June 30, 2025. Cost of services and other revenue increased $1.92 billion, or 35%, in the six months ended June 30, 2026 as compared to the six months ended June 30, 2025. These increases were primarily due to increases in used vehicle sales volume, cost related to non-warranty maintenance services and collision revenue and cost of paid Supercharging sessions.

Current wording

Cost of services and other revenue increased $762 million, or 25%, in the three months ended September 30, 2026 as compared to the three months ended September 30, 2025. Cost of services and other revenue increased $2.68 billion, or 31%, in the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025. These increases were in alignment with the increases in services and other revenue as discussed above.

Previous wording

Gross margin for total automotive decreased from 17.2% to 16.9% in the three months ended June 30, 2026 as compared to the three months ended June 30, 2025. Gross margin for total automotive increased from 16.8% to 18.7% in the six months ended June 30, 2026 as compared to the six months ended June 30, 2025. The fluctuations are primarily due to the changes in automotive sales revenue and cost of automotive sales revenue and a decrease in regulatory credits revenue, as discussed above.

Current wording

Gross margin for total automotive increased from 17.0% to 18.5% in the three months ended September 30, 2026 as compared to the three months ended September 30, 2025. Gross margin for total automotive increased from 16.9% to 18.7% in the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025. The increases were primarily due to the fluctuations in automotive sales revenue and cost of automotive sales revenue, partially offset by a decrease in regulatory credits revenue, as discussed above.

Previous wording

Gross margin for total automotive & services and other segment increased from 15.4% to 16.4% in the three months ended June 30, 2026 as compared to the three months ended June 30, 2025. Gross margin for total automotive & services and other segment increased from 14.9% to 17.5% in the six months ended June 30, 2026 as compared to the six months ended June 30, 2025. The changes in gross margin were primarily due to the changes in automotive sales gross margin, as discussed above, as well as from an improvement in services and other gross margin.

Current wording

Gross margin for total automotive & services and other segment increased from 16.1% to 18.0% in the three months ended September 30, 2026 as compared to the three months ended September 30, 2025. Gross margin for total automotive & services and other segment increased from 15.4% to 17.7% in the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025. The increases in gross margin were primarily due to the increases in automotive sales gross margin, as discussed above, as well as from an improvement in services and other gross margin.

Previous wording

Gross margin for energy generation and storage decreased from 30.3% to 20.4% in the three months ended June 30, 2026 as compared to the three months ended June 30, 2025. The decrease was primarily due to the changes in energy generation and storage revenue and cost of energy generation and storage revenue, as discussed above.

Current wording

Gross margin for energy generation and storage increased from 31.4% to 33.1% in the three months ended September 30, 2026 as compared to the three months ended September 30, 2025. Gross margin for energy generation and storage decreased from 30.3% to 30.2% in the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025. The changes in gross margin were primarily due to the changes in energy generation and storage revenue and cost of energy generation and storage revenue, as discussed above.

Previous wording

Research and development (“R&D”) expenses increased $782 million, or 49%, in the three months ended June 30, 2026 as compared to the three months ended June 30, 2025. R&D expenses increased $1.32 billion, or 44%, in the six months ended June 30, 2026 as compared to the six months ended June 30, 2025. These increases were primarily due to increases in costs related to AI and other programs as we continue to expand our product roadmap and technologies and increases in stock-based compensation of $189 million and $334 million, respectively.

Current wording

Research and development (“R&D”) expenses increased $1.13 billion, or 69%, in the three months ended September 30, 2026 as compared to the three months ended September 30, 2025. R&D expenses increased $2.45 billion, or 53%, in the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025. These increases were primarily due to increases in costs related to SI and other programs, such as Optimus, silicon development, battery technologies, and new vehicle programs as we continue to expand our product roadmap, and increases in stock-based compensation of $178 million and $511 million, respectively.

Previous wording

R&D expenses as a percentage of revenue increased from 7% to 8% in the three months ended June 30, 2026 as compared to the three months ended June 30, 2025. R&D expenses as a percentage of revenue increased from 7% to 9% in the six months ended June 30, 2026 as compared to the six months ended June 30, 2025. These increases were primarily due to higher R&D expenses and increases in total revenues in the current periods.

Current wording

R&D expenses as a percentage of revenue increased from 6% to 10% in the three months ended September 30, 2026 as compared to the three months ended September 30, 2025. R&D expenses as a percentage of revenue increased from 7% to 9% in the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025. These increases were primarily due to higher R&D expenses in the current periods offset by the increase in total revenues in the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025.

Previous wording

Selling, general and administrative (“SG&A”) expenses increased $616 million, or 45%, in the three months ended June 30, 2026 as compared to the three months ended June 30, 2025, driven by a $283 million increase in stock-based compensation primarily related to the 2025 CEO Performance Award, a $134 million increase in employee and labor costs, including professional services, a $109 million increase in operating expenses including litigation related expenses and a $68 million increase in facilities related expenses.

Current wording

Selling, general and administrative (“SG&A”) expenses increased $453 million, or 29%, in the three months ended September 30, 2026 as compared to the three months ended September 30, 2025, driven by a $293 million increase in stock-based compensation primarily related to the 2025 CEO Performance Award, a $144 million increase in facilities related and computer software expenses, and a $91 million increase in employee and labor costs, including professional services.

Previous wording

SG&A expenses increased $1.20 billion, or 46%, in the six months ended June 30, 2026 as compared to the six months ended June 30, 2025, driven by a $577 million increase in stock-based compensation primarily related to the 2025 CEO Performance Award, a $273 million increase in employee and labor costs, including professional services, a $196 million increase in operating expenses including litigation related expenses and a $131 million increase in facilities related expenses.

Current wording

SG&A expenses increased $1.65 billion, or 40%, in the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025, driven by a $870 million increase in stock-based compensation primarily related to the 2025 CEO Performance Award, a $357 million increase in employee and labor costs, including professional services, a $275 million increase in facilities related and computer software expenses and a $136 million increase in operating expenses including litigation related expenses.

Previous wording

Interest income increased $30 million, or 8%, in the three months ended June 30, 2026 and increased $64 million, or 8%, in the six months ended June 30, 2026 as compared to the three and six months ended June 30, 2025, respectively. The increases were primarily due to higher interest earned on our cash and cash equivalents and short-term investments due to an increase in our average portfolio balance, partially offset by a lower average interest rate.

Current wording

Interest income increased $6 million, or 1%, in the three months ended September 30, 2026 and increased $70 million, or 6%, in the nine months ended September 30, 2026 as compared to the three and nine months ended September 30, 2025, respectively. The increases were primarily due to higher interest earned on our cash and cash equivalents and short-term investments due to an increase in our average portfolio balance, partially offset by a lower average interest rate.

Previous wording

Other income, net, changed favorably by $270 million in the three months ended June 30, 2026 as compared to the three months ended June 30, 2025. Other income, net, changed unfavorably by $146 million in the six months ended June 30, 2026 as compared to the six months ended June 30, 2025. The changes were primarily due to a mark-to-market gain on our SpaceX equity investment, which we entered into in March 2026, and adjustments on our bitcoin digital assets, as well as fluctuations in foreign currency exchange rates on our intercompany balances. As our intercompany balances are significant in nature and we do not typically hedge foreign currency risk, we can experience significant fluctuations in foreign currency exchange rate gains and losses from period to period.

Current wording

Other (expense) income, net, changed unfavorably by $89 million in the three months ended September 30, 2026 as compared to the three months ended September 30, 2025. Other (expense) income, net, changed unfavorably by $235 million in the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025. The changes were primarily due to mark-to-market adjustments on our SpaceX equity investment, which we entered into in March 2026, and adjustments on our bitcoin digital assets, as well as fluctuations in foreign currency exchange rates on our intercompany balances. As our intercompany balances are significant in nature and we do not typically hedge foreign currency risk, we can experience significant fluctuations in foreign currency exchange rate gains and losses from period to period.

Previous wording

Our provision for income taxes decreased by $158 million in the three months ended June 30, 2026 and by $70 million in the six months ended June 30, 2026 as compared to the three and six months ended June 30, 2025, respectively. Our effective tax rate decreased from 23% to 15% in the three months ended June 30, 2026 and from 25% to 22% in the six months ended June 30, 2026 as compared to the three and six months ended June 30, 2025, respectively. The decreases in our provision for income taxes and effective tax rates were primarily due to the release of the valuation allowance on our California deferred tax assets other than research and development tax credits and changes in the mix of our jurisdictional earnings, partially offset by the non-deductibility of stock-based compensation expense related to the 2025 CEO Performance Award.

Current wording

Our provision for income taxes decreased by $418 million in the three months ended September 30, 2026 and by $488 million in the nine months ended September 30, 2026 as compared to the three and nine months ended September 30, 2025, respectively, primarily due to decreases in our income before income taxes and changes in the mix of our jurisdictional earnings, partially offset by the non-deductibility of stock-based compensation expense related to the 2025 CEO Performance Award. Our effective tax rate decreased from 29% to 16% in the three months ended September 30, 2026 and from 27% to 20% in the nine months ended September 30, 2026 as compared to the three and nine months ended September 30, 2025, respectively, primarily due to changes in the mix of our jurisdictional earnings, partially offset by the non-deductibility of stock-based compensation expense related to the 2025 CEO Performance Award. Additionally, the decreases in our provision for income taxes and effective tax rate for the nine months ended September 30, 2026 included the impact of a release of the valuation allowance on our California deferred tax assets other than research and development tax credits during the second quarter of 2026.

Previous wording

We generally expect to continue to generate net positive operating cash flow. The cash we generate from our core operations enables us to fund ongoing operations and production, our research and development projects for new products and technologies including our proprietary battery cells, additional manufacturing ramps at existing manufacturing facilities, the construction of future factories, and the continued expansion of our retail and service locations, body shops, Mobile Service fleet, Supercharger, energy product installation capabilities and autonomy and other artificial intelligence enabled products.

Current wording

We generally expect to continue to generate net positive operating cash flow. The cash we generate from our core operations enables us to fund ongoing operations and production, our research and development projects for new products and technologies including our proprietary battery cells, additional manufacturing ramps at existing manufacturing facilities, the construction of future factories, and the continued expansion of our retail and service locations, body shops, Mobile Service fleet, Supercharger, energy product installation capabilities and autonomy and other super intelligence enabled products.

Previous wording

In addition, because a large portion of our future expenditures will be to fund our growth, we expect that if needed we will be able to adjust our capital and operating expenditures by operating segment. For example, if our near-term manufacturing operations decrease in scale or ramp more slowly than expected, including due to global economic, tax, trade or business conditions, we may choose to correspondingly slow the pace of our capital expenditures. Finally, we continually evaluate our cash needs and the evolving nature of our business and may decide it is best to raise additional capital or seek alternative financing sources to fund the rapid growth of our business, including through drawdowns on existing or new debt facilities or financing funds. Conversely, we may also from time to time determine that it is in our best interests to voluntarily repay certain indebtedness early.

Current wording

In addition, because a large portion of our future expenditures will be to fund our growth, we expect that if needed we will be able to adjust our capital and operating expenditures by operating segment. For example, if our near-term manufacturing operations decrease in scale or ramp more slowly than expected, including due to global economic, tax, trade or business conditions, we may choose to correspondingly slow the pace of our capital expenditures. We continually evaluate our cash needs and the evolving nature of our business and may decide it is best to raise additional capital or seek alternative financing sources to fund the rapid growth of our business, including through drawdowns on existing or new debt facilities or financing funds. For example, in September 2026, we entered into three credit agreements providing aggregate commitments of $30 billion, which afford us additional flexibility to support our planned investments. Conversely, we may also from time to time determine that it is in our best interests to voluntarily repay certain indebtedness early. Accordingly, we believe that our current and potential sources of funding will provide us with adequate liquidity during the 12-month period following September 30, 2026, as well as in the long-term.

Previous wording

As discussed in and subject to the considerations referenced in Part I, Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations—Management Opportunities, Challenges and Uncertainties and 2026 Outlook—Cash Flow and Capital Expenditure Trends in this Quarterly Report on Form 10-Q, we currently expect our capital expenditures to be in excess of $25 billion in 2026 driven by our AI initiatives, including investments in compute infrastructure and data centers, the expansion and ramp of our manufacturing and R&D production lines and facilities, and growth in our fleet of company-operated AI-enabled assets and our retail, service and charging footprint. Changes in trade policy may necessitate adjustments to our project timelines, potentially impacting our capital expenditure expectations.

Current wording

As discussed in and subject to the considerations referenced in Part I, Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations—Management Opportunities, Challenges and Uncertainties and 2026 Outlook—Cash Flow and Capital Expenditure Trends in this Quarterly Report on Form 10-Q, we currently expect our capital expenditures to be in excess of $20 billion in 2026, driven by our SI initiatives, including investments in compute infrastructure and data centers, the expansion and ramp of our manufacturing and R&D production lines and facilities, and growth in our fleet of company-operated SI-enabled assets and our retail, service and charging footprint. Changes in, among other things, global market conditions, trade and fiscal policies, and strategic timing and direction, may necessitate adjustments to our project timelines, potentially impacting our capital expenditure expectations.

Previous wording

As of June 30, 2026, we and our subsidiaries had outstanding $9.08 billion in aggregate principal amount of indebtedness, of which $1.35 billion is current. For details regarding our indebtedness, refer to Note 8, Debt, to the consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Current wording

As of September 30, 2026, we and our subsidiaries had outstanding $9.28 billion in aggregate principal amount of indebtedness, of which $1.32 billion is current. For details regarding our indebtedness, refer to Note 8, Debt, to the consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Previous wording

As of June 30, 2026, we had $15.22 billion and $28.31 billion of cash and cash equivalents and short-term investments, respectively. Balances held in foreign currencies had a U.S. dollar equivalent of $3.80 billion and consisted primarily of euros and Chinese yuan. We had $5.00 billion of unused committed credit amounts as of June 30, 2026. For details regarding our indebtedness, refer to Note 8, Debt, to the consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Current wording

As of September 30, 2026, we had $17.85 billion and $27.59 billion of cash and cash equivalents and short-term investments, respectively. Balances held in foreign currencies had a U.S. dollar equivalent of $5.97 billion and consisted primarily of euros and Chinese yuan. As of September 30, 2026, we had $30.00 billion of unused committed amounts under our senior unsecured credit facilities. For details regarding our indebtedness, refer to Note 8, Debt, to the consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Previous wording

Net cash provided by operating activities increased by $3.94 billion to $8.63 billion during the six months ended June 30, 2026 from $4.70 billion during the six months ended June 30, 2025. This increase was primarily due to favorable changes in net operating assets and liabilities of $3.01 billion and an increase in net income excluding non-cash expenses, gains and losses of $933 million.

Current wording

Net cash provided by operating activities increased by $3.96 billion to $14.90 billion during the nine months ended September 30, 2026 from $10.93 billion during the nine months ended September 30, 2025. This increase was primarily due to favorable changes in net operating assets and liabilities of $3.51 billion and an increase in net income excluding non-cash expenses, gains and losses of $451 million.

Previous wording

Net cash flows from investing activities and their variability across each period related primarily to capital expenditures, which were $8.28 billion and $3.89 billion for the six months ended June 30, 2026 and 2025, respectively, mainly for global AI and operational infrastructure and factory expansion, as well as machinery and equipment as we expand and enhance our product roadmap. We also purchased $660 million and $709 million of short-term investments, net of proceeds from maturities and sales, for the six months ended June 30, 2026 and 2025, respectively. Additionally, we invested $2.00 billion in SpaceX common stock during the six months ended June 30, 2026. Refer to Note 13, Related Party Transactions, for additional information regarding the equity investment.

Current wording

Net cash flows from investing activities and their variability across each period related primarily to capital expenditures, which were $13.01 billion and $6.13 billion for the nine months ended September 30, 2026 and 2025, respectively, mainly for global SI and operational infrastructure and factory expansion, as well as machinery and equipment as we expand and enhance our product roadmap. We also had net proceeds from maturities of short-term investments of $95 million for the nine months ended September 30, 2026, compared to net purchases of short-term investments of $2.82 billion for the nine months ended September 30, 2025, respectively. Additionally, we invested $2.00 billion in SpaceX common stock during the nine months ended September 30, 2026. Refer to Note 13, Related Party Transactions, for additional information regarding the equity investment.

Previous wording

Net cash flows from financing activities changed by $1.76 billion to $1.21 billion net cash inflows during the six months ended June 30, 2026 from $554 million net cash outflows during the six months ended June 30, 2025. The change was primarily due to a $1.63 billion increase in proceeds from issuances of debt and a $207 million decrease in repayments of debt. See Note 8, Debt, to the consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for further details regarding our debt obligations. The increase was partially offset by a $60 million decrease in proceeds from exercises of stock options and other stock issuances, net of issuance costs.

Current wording

Net cash flows from financing activities changed by $1.11 billion to $1.54 billion net cash inflows during the nine months ended September 30, 2026 from $429 million net cash inflows during the nine months ended September 30, 2025. The change was primarily due to a $1.60 billion increase in proceeds from issuances of debt, offset by a decrease of $258 million proceeds from exercise of stock options and other stock issuance, and a $156 million increase in repayments of debt. See Note 8, Debt, to the consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for further details regarding our debt obligations.