Tesla Q2 earnings beat expectations, stock surges 8% after hours: Wall Street bullish on H2 delivery volumes

After hours on July 25, Eastern Time, Tesla (TSLA) released its Q2 2026 earnings. All key metrics beat expectations: Revenue increased 28% YoY to $27.8 billion, adjusted earnings per share (EPS) came in at $0.92, above the Wall Street consensus of $0.78. Buoyed by the news, Tesla's stock surged over 8% in after-hours trading, reclaiming the $230 level.

Key Financial Highlights

• Revenue: $27.8 billion, up 28% YoY and 12% QoQ;
• Net income: $3.1 billion, turning profitable YoY (net loss of $0.45 billion in same period last year);
• Auto gross margin: 19.8%, above market expectation of 18.5%;
• Free cash flow: $2.4 billion, compared to -$1.2 billion last year.

Record-High Deliveries

In Q2, Tesla's global deliveries reached 486,000 vehicles, up 35% YoY and 15% QoQ, setting a new quarterly record. Among them, Model 3/Y contributed 441,000 units, while Model S/X and Cybertruck combined for 45,000 units. Tesla said weekly production capacity at the Texas Gigafactory and Berlin Gigafactory reached 8,000 and 7,000 units respectively, gradually easing capacity bottlenecks.

FSD Penetration Rate Rising

On the earnings call, Musk revealed that the subscription rate for FSD V13.1 has increased to 35% (18% in the same period of 2025), with interventions per mile dropping to 0.12, approaching L4 level. With FSD subscription revenue recognized, the software business gross margin reached 78%, becoming a new profit growth engine. Additionally, Tesla has partnered with multiple insurance companies, and FSD-based insurance products now cover 20 U.S. states.

Wall Street Analyst Views

Following the earnings release, several investment banks raised Tesla's price target. Morgan Stanley reiterated its 'Overweight' rating and raised the target from $240 to $275; Goldman Sachs raised its target from $235 to $260, citing 'higher-than-expected vehicle deliveries and accelerated FSD monetization.' However, UBS remained cautious, maintaining a 'Neutral' rating, citing risks from the phase-out of U.S. EV tax credits and increased competition.

H2 Outlook

Tesla expects Q3 deliveries to be between 500,000 and 520,000 units, with the full-year 2026 delivery target unchanged at 1.85 million units. For new models, the Roadster 2.0 will begin deliveries in early 2027, while the fully autonomous Robotaxi is planned for commercial pilot operations in cities like Austin and San Francisco by the end of 2026. Investors should monitor whether Tesla can maintain delivery growth momentum amid H2 market fluctuations.

As of press time, Tesla's after-hours stock price was $232.15, up 8.3%. Market sentiment is generally optimistic, but some investors are concerned about elevated valuations (forward P/E of ~65x), and will continue to monitor delivery data and FSD deployment progress.