filings.toolsItem 1. FINANCIAL STATEMENTS
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Item 1. FINANCIAL STATEMENTS
Tesla, Inc.
Consolidated Balance Sheets
(in millions, except per share data)
(unaudited)
| June 30, 2026 | December 31, 2025 | ||||||||||
| Assets | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | 15,219 | $ | 16,513 | |||||||
| Short-term investments | 28,305 | 27,546 | |||||||||
| Accounts receivable, net | 4,087 | 4,576 | |||||||||
| Inventory | 13,752 | 12,392 | |||||||||
| Prepaid expenses and other current assets | 7,395 | 7,615 | |||||||||
| Total current assets | 68,758 | 68,642 | |||||||||
| Operating lease vehicles, net | 4,253 | 4,912 | |||||||||
| Energy generation and storage systems, net | 4,510 | 4,604 | |||||||||
| Property, plant and equipment, net | 47,255 | 40,643 | |||||||||
| Operating lease right-of-use assets | 6,386 | 6,027 | |||||||||
| Digital assets | 674 | 1,008 | |||||||||
| Deferred tax assets | 7,235 | 6,925 | |||||||||
| Other non-current assets | 9,453 | 5,045 | |||||||||
| Total assets | $ | 148,524 | $ | 137,806 | |||||||
| Liabilities | |||||||||||
| Current liabilities | |||||||||||
| Accounts payable | $ | 15,324 | $ | 13,371 | |||||||
| Accrued liabilities and other | 15,256 | 13,279 | |||||||||
| Deferred revenue | 3,427 | 3,424 | |||||||||
| Current portion of debt and finance leases | 1,418 | 1,640 | |||||||||
| Total current liabilities | 35,425 | 31,714 | |||||||||
| Debt and finance leases, net of current portion | 7,924 | 6,736 | |||||||||
| Deferred revenue, net of current portion | 4,073 | 3,631 | |||||||||
| Other long-term liabilities | 13,583 | 12,860 | |||||||||
| Total liabilities | 61,005 | 54,941 | |||||||||
| Commitments and contingencies (Note 11) | |||||||||||
| Redeemable noncontrolling interests in subsidiaries | 54 | 58 | |||||||||
| Equity | |||||||||||
| Stockholders’ equity | |||||||||||
| Preferred stock; $0.001 par value; 100 shares authorized; no shares issued and outstanding | — | — | |||||||||
| Common stock; $0.001 par value; 6,000 shares authorized; 3,949 and 3,751 shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively | 4 | 3 | |||||||||
| Additional paid-in capital | 45,859 | 42,770 | |||||||||
| Accumulated other comprehensive income | 401 | 361 | |||||||||
| Retained earnings | 40,594 | 39,003 | |||||||||
| Total stockholders’ equity | 86,858 | 82,137 | |||||||||
| Noncontrolling interests in subsidiaries | 607 | 670 | |||||||||
| Total liabilities and equity | $ | 148,524 | $ | 137,806 |
The accompanying notes are an integral part of these consolidated financial statements.
Tesla, Inc.
Consolidated Statements of Operations
(in millions, except per share data)
(unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Revenues | |||||||||||||||||||||||
| Automotive sales | $ | 20,006 | $ | 15,787 | $ | 35,479 | $ | 28,712 | |||||||||||||||
| Automotive regulatory credits | 146 | 439 | 526 | 1,034 | |||||||||||||||||||
| Automotive leasing | 364 | 435 | 745 | 882 | |||||||||||||||||||
| Total automotive revenues | 20,516 | 16,661 | 36,750 | 30,628 | |||||||||||||||||||
| Energy generation and storage | 3,139 | 2,789 | 5,547 | 5,519 | |||||||||||||||||||
| Services and other | 4,581 | 3,046 | 8,326 | 5,684 | |||||||||||||||||||
| Total revenues | 28,236 | 22,496 | 50,623 | 41,831 | |||||||||||||||||||
| Cost of revenues | |||||||||||||||||||||||
| Automotive sales | 16,866 | 13,567 | 29,482 | 25,028 | |||||||||||||||||||
| Automotive leasing | 187 | 228 | 383 | 467 | |||||||||||||||||||
| Total automotive cost of revenues | 17,053 | 13,795 | 29,865 | 25,495 | |||||||||||||||||||
| Energy generation and storage | 2,499 | 1,943 | 3,955 | 3,888 | |||||||||||||||||||
| Services and other | 3,933 | 2,880 | 7,332 | 5,417 | |||||||||||||||||||
| Total cost of revenues | 23,485 | 18,618 | 41,152 | 34,800 | |||||||||||||||||||
| Gross profit | 4,751 | 3,878 | 9,471 | 7,031 | |||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| Research and development | 2,371 | 1,589 | 4,317 | 2,998 | |||||||||||||||||||
| Selling, general and administrative | 1,982 | 1,366 | 3,815 | 2,617 | |||||||||||||||||||
| Restructuring and other | — | — | — | 94 | |||||||||||||||||||
| Total operating expenses | 4,353 | 2,955 | 8,132 | 5,709 | |||||||||||||||||||
| Income from operations | 398 | 923 | 1,339 | 1,322 | |||||||||||||||||||
| Interest income | 422 | 392 | 856 | 792 | |||||||||||||||||||
| Interest expense | (81) | (86) | (173) | (177) | |||||||||||||||||||
| Other income, net | 590 | 320 | 55 | 201 | |||||||||||||||||||
| Income before income taxes | 1,329 | 1,549 | 2,077 | 2,138 | |||||||||||||||||||
| Provision for income taxes | 201 | 359 | 458 | 528 | |||||||||||||||||||
| Net income | 1,128 | 1,190 | 1,619 | 1,610 | |||||||||||||||||||
| Net income attributable to noncontrolling interests and redeemable noncontrolling interests in subsidiaries | 14 | 18 | 28 | 29 | |||||||||||||||||||
| Net income attributable to common stockholders | $ | 1,114 | $ | 1,172 | $ | 1,591 | $ | 1,581 | |||||||||||||||
| Net income per share of common stock attributable to common stockholders | |||||||||||||||||||||||
| Basic | $ | 0.34 | $ | 0.36 | $ | 0.49 | $ | 0.49 | |||||||||||||||
| Diluted | $ | 0.32 | $ | 0.33 | $ | 0.45 | $ | 0.45 | |||||||||||||||
| Weighted average shares used in computing net income per share of common stock | |||||||||||||||||||||||
| Basic | 3,237 | 3,223 | 3,235 | 3,220 | |||||||||||||||||||
| Diluted | 3,540 | 3,519 | 3,538 | 3,520 |
The accompanying notes are an integral part of these consolidated financial statements.
Tesla, Inc.
Consolidated Statements of Comprehensive Income
(in millions)
(unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Net income | $ | 1,128 | $ | 1,190 | $ | 1,619 | $ | 1,610 | |||||||||||||||
| Other comprehensive income (loss): | |||||||||||||||||||||||
| Foreign currency translation adjustment | 78 | 585 | 61 | 836 | |||||||||||||||||||
| Unrealized net loss on short-term investments, net of tax | (11) | (3) | (21) | (8) | |||||||||||||||||||
| Total other comprehensive income | 67 | 582 | 40 | 828 | |||||||||||||||||||
| Comprehensive income | 1,195 | 1,772 | 1,659 | 2,438 | |||||||||||||||||||
| Less: Comprehensive income attributable to noncontrolling interests and redeemable noncontrolling interests in subsidiaries | 14 | 18 | 28 | 29 | |||||||||||||||||||
| Comprehensive income attributable to common stockholders | $ | 1,181 | $ | 1,754 | $ | 1,631 | $ | 2,409 |
The accompanying notes are an integral part of these consolidated financial statements.
Tesla, Inc.
Consolidated Statements of Redeemable Noncontrolling Interests and Equity
(in millions)
(unaudited)
| Three Months Ended June 30, 2026 | Redeemable Noncontrolling Interests | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income | Retained Earnings | Total Stockholders’ Equity | Noncontrolling Interests in Subsidiaries | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of March 31, 2026 | $ | 57 | 3,755 | $ | 3 | $ | 44,299 | $ | 334 | $ | 39,480 | $ | 84,116 | $ | 629 | $ | 84,745 | |||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for equity incentive awards and acquisitions, net of transaction costs | — | 194 | 1 | 322 | — | — | 323 | — | 323 | |||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | 1,222 | — | — | 1,222 | — | 1,222 | |||||||||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interests | (3) | — | — | — | — | — | — | (32) | (32) | |||||||||||||||||||||||||||||||||||||||||||||||
| Buy-outs of noncontrolling interests | (2) | — | — | 2 | — | — | 2 | (2) | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Shareholder settlement, net of $4 tax | — | — | — | 14 | — | — | 14 | — | 14 | |||||||||||||||||||||||||||||||||||||||||||||||
| Net income | 2 | — | — | — | — | 1,114 | 1,114 | 12 | 1,126 | |||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | 67 | — | 67 | — | 67 | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2026 | $ | 54 | 3,949 | $ | 4 | $ | 45,859 | $ | 401 | $ | 40,594 | $ | 86,858 | $ | 607 | $ | 87,465 |
| Six Months Ended June 30, 2026 | Redeemable Noncontrolling Interests | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income | Retained Earnings | Total Stockholders’ Equity | Noncontrolling Interests in Subsidiaries | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2025 | $ | 58 | 3,751 | $ | 3 | $ | 42,770 | $ | 361 | $ | 39,003 | $ | 82,137 | $ | 670 | $ | 82,807 | |||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for equity incentive awards and acquisitions, net of transaction costs | — | 198 | 1 | 683 | — | — | 684 | — | 684 | |||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | 2,315 | — | — | 2,315 | — | 2,315 | |||||||||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interests | (5) | — | — | — | — | — | — | (86) | (86) | |||||||||||||||||||||||||||||||||||||||||||||||
| Buy-outs of noncontrolling interests | (2) | — | — | 2 | — | — | 2 | (2) | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Shareholder settlement, net of $27 tax | — | — | — | 89 | — | — | 89 | — | 89 | |||||||||||||||||||||||||||||||||||||||||||||||
| Net income | 3 | — | — | — | — | 1,591 | 1,591 | 25 | 1,616 | |||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | 40 | — | 40 | — | 40 | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2026 | $ | 54 | 3,949 | $ | 4 | $ | 45,859 | $ | 401 | $ | 40,594 | $ | 86,858 | $ | 607 | $ | 87,465 |
Tesla, Inc.
Consolidated Statements of Redeemable Noncontrolling Interests and Equity
(in millions)
(unaudited)
| Three Months Ended June 30, 2025 | Redeemable Noncontrolling Interests | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive (Loss) Income | Retained Earnings | Total Stockholders’ Equity | Noncontrolling Interests in Subsidiaries | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of March 31, 2025 | $ | 62 | 3,220 | $ | 3 | $ | 39,456 | $ | (424) | $ | 35,618 | $ | 74,653 | $ | 703 | $ | 75,356 | |||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for equity incentive awards | — | 4 | — | 215 | — | — | 215 | — | 215 | |||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | 692 | — | — | 692 | — | 692 | |||||||||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interests | (2) | — | — | — | — | — | — | (23) | (23) | |||||||||||||||||||||||||||||||||||||||||||||||
| Net income | 1 | — | — | — | — | 1,172 | 1,172 | 17 | 1,189 | |||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | 582 | — | 582 | — | 582 | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2025 | $ | 61 | 3,224 | $ | 3 | $ | 40,363 | $ | 158 | $ | 36,790 | $ | 77,314 | $ | 697 | $ | 78,011 |
| Six Months Ended June 30, 2025 | Redeemable Noncontrolling Interests | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive (Loss) Income | Retained Earnings | Total Stockholders’ Equity | Noncontrolling Interests in Subsidiaries | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2024 | $ | 63 | 3,216 | $ | 3 | $ | 38,371 | $ | (670) | $ | 35,209 | $ | 72,913 | $ | 704 | $ | 73,617 | |||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for equity incentive awards | — | 8 | — | 528 | — | — | 528 | — | 528 | |||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | 1,354 | — | — | 1,354 | — | 1,354 | |||||||||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interests | (4) | — | — | — | — | — | — | (34) | (34) | |||||||||||||||||||||||||||||||||||||||||||||||
| Shareholder settlement, net | — | — | — | 110 | — | — | 110 | — | 110 | |||||||||||||||||||||||||||||||||||||||||||||||
| Net income | 2 | — | — | — | — | 1,581 | 1,581 | 27 | 1,608 | |||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | 828 | — | 828 | — | 828 | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2025 | $ | 61 | 3,224 | $ | 3 | $ | 40,363 | $ | 158 | $ | 36,790 | $ | 77,314 | $ | 697 | $ | 78,011 |
The accompanying notes are an integral part of these consolidated financial statements.
Tesla, Inc.
Consolidated Statements of Cash Flows
(in millions)
(unaudited)
| Six Months Ended June 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Cash Flows from Operating Activities | |||||||||||
| Net income | $ | 1,619 | $ | 1,610 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation, amortization and impairment | 3,209 | 2,880 | |||||||||
| Stock-based compensation | 2,181 | 1,208 | |||||||||
| Inventory write-downs | 187 | 248 | |||||||||
| Foreign currency transaction net unrealized loss | 599 | 54 | |||||||||
| Deferred income taxes | (301) | 9 | |||||||||
| SpaceX equity investment unrealized gain | (1,005) | — | |||||||||
| Digital assets unrealized loss (gain) | 334 | (159) | |||||||||
| Non-cash interest and other operating activities | 33 | 73 | |||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Accounts receivable | 377 | 601 | |||||||||
| Inventory | (1,663) | (2,407) | |||||||||
| Operating lease vehicles | 260 | 65 | |||||||||
| Prepaid expenses and other assets | (1,028) | (1,137) | |||||||||
| Accounts payable, accrued and other liabilities | 3,341 | 1,333 | |||||||||
| Deferred revenue | 491 | 318 | |||||||||
| Net cash provided by operating activities | 8,634 | 4,696 | |||||||||
| Cash Flows from Investing Activities | |||||||||||
| Purchases of property and equipment excluding finance leases, net of sales | (8,282) | (3,886) | |||||||||
| Purchase of SpaceX equity investment | (2,002) | — | |||||||||
| Purchases of short-term investments | (16,281) | (13,500) | |||||||||
| Proceeds from maturities of short-term investments | 15,621 | 12,791 | |||||||||
| Purchase of intangible assets | (7) | — | |||||||||
| Net cash used in investing activities | (10,951) | (4,595) | |||||||||
| Cash Flows from Financing Activities | |||||||||||
| Proceeds from issuances of debt | 4,679 | 3,050 | |||||||||
| Repayments of debt | (3,922) | (4,129) | |||||||||
| Debt issuance costs | (4) | (1) | |||||||||
| Proceeds from exercises of stock options and other stock issuances, net of issuance costs | 468 | 528 | |||||||||
| Principal payments on finance leases | (37) | (67) | |||||||||
| Proceeds received from directors in shareholder settlement | — | 277 | |||||||||
| Recovery (payment) of legal fees associated with shareholder settlement | 116 | (176) | |||||||||
| Distributions paid to noncontrolling interests in subsidiaries | (91) | (36) | |||||||||
| Net cash provided by (used in) financing activities | 1,209 | (554) | |||||||||
| Effect of exchange rate changes on cash and cash equivalents and restricted cash | (83) | 151 | |||||||||
| Net decrease in cash and cash equivalents and restricted cash | (1,191) | (302) | |||||||||
| Cash and cash equivalents and restricted cash, beginning of period | 17,616 | 17,037 | |||||||||
| Cash and cash equivalents and restricted cash, end of period | $ | 16,425 | $ | 16,735 | |||||||
| Supplemental Non-Cash Investing and Financing Activities | |||||||||||
| Acquisitions of property and equipment included in liabilities | $ | 2,633 | $ | 1,639 | |||||||
| Leased assets obtained in exchange for operating lease liabilities | $ | 886 | $ | 784 | |||||||
| Leased assets obtained in exchange for finance lease liabilities | $ | 97 | $ | — |
The accompanying notes are an integral part of these consolidated financial statements.
Tesla, Inc.
Notes to Consolidated Financial Statements
(unaudited)
Note 1 – Summary of Significant Accounting Policies
Unaudited Interim Financial Statements
The consolidated financial statements of Tesla, Inc. (“Tesla”, the “Company”, “we”, “us” or “our”), including the consolidated balance sheet as of June 30, 2026, the consolidated statements of operations, the consolidated statements of comprehensive income and the consolidated statements of redeemable noncontrolling interests and equity for the three and six months ended June 30, 2026 and 2025, and the consolidated statements of cash flows for the six months ended June 30, 2026 and 2025, as well as other information disclosed in the accompanying notes, are unaudited. The consolidated balance sheet as of December 31, 2025 was derived from the audited consolidated financial statements as of that date. The interim consolidated financial statements and the accompanying notes should be read in conjunction with the annual consolidated financial statements and the accompanying notes contained in our Annual Report on Form 10-K for the year ended December 31, 2025.
The interim consolidated financial statements and the accompanying notes have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for a fair statement of the results of operations for the periods presented. The consolidated results of operations for any interim period are not necessarily indicative of the results to be expected for the full year or for any other future years or interim periods.
Revenue Recognition
Revenue by source
The following table disaggregates our revenue by major source (in millions):
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Automotive sales | $ | 20,006 | $ | 15,787 | $ | 35,479 | $ | 28,712 | |||||||||||||||
| Automotive regulatory credits | 146 | 439 | 526 | 1,034 | |||||||||||||||||||
| Energy generation and storage sales | 2,998 | 2,646 | 5,303 | 5,267 | |||||||||||||||||||
| Services and other | 4,581 | 3,046 | 8,326 | 5,684 | |||||||||||||||||||
| Total revenues from sales and services | 27,731 | 21,918 | 49,634 | 40,697 | |||||||||||||||||||
| Automotive leasing | 364 | 435 | 745 | 882 | |||||||||||||||||||
| Energy generation and storage leasing | 141 | 143 | 244 | 252 | |||||||||||||||||||
| Total revenues | $ | 28,236 | $ | 22,496 | $ | 50,623 | $ | 41,831 |
Automotive Segment
Automotive Sales
Deferred revenue related to internet connectivity, access to our Full Self-Driving (“FSD”) (Supervised) features and their ongoing maintenance, free Supercharging programs and over-the-air software updates primarily on automotive sales amounted to $4.05 billion and $3.87 billion as of June 30, 2026 and December 31, 2025, respectively.
Deferred revenue is equivalent to the total transaction price allocated to the performance obligations that are unsatisfied, or partially unsatisfied, as of the balance sheet date. Revenue recognized from the deferred revenue balances as of December 31, 2025 and 2024 was $468 million and $428 million for the six months ended June 30, 2026 and 2025, respectively. Of the total deferred revenue balance as of June 30, 2026, we expect to recognize $962 million of revenue in the next 12 months. The remaining balance will be recognized at the time of transfer of control of the product or over the performance period.
We have financing receivables on our consolidated balance sheets related to loans we provide for financing our automotive deliveries. As of June 30, 2026 and December 31, 2025, we had current net financing receivables of $241 million and $247 million, respectively, in Accounts receivable, net, and $466 million and $554 million, respectively, in Other non-current assets for the long-term portion.
We offer resale value guarantees to our commercial banking partners in connection with certain vehicle leasing programs. Under these programs, we originate the lease with our end customer and immediately transfer the lease and the underlying vehicle to our commercial banking partner, with the transaction being accounted for as a sale under ASC 606, Revenue from Contracts with Customers.
We receive upfront payment for the vehicle, do not bear casualty and credit risks during the lease term, and we provide a guarantee capped to a limit if they are unable to sell the vehicle at or above the vehicle’s contractual or determined residual value at the end of the lease term. We estimate a guarantee liability in accordance with ASC 460, Guarantees and record it within other liabilities on our consolidated balance sheets. On a quarterly basis, we assess the estimated market value of vehicles sold under these programs to determine whether there have been changes to the amount of expected resale value guarantee liabilities. As we accumulate more data related to the resale values of our vehicles or as market conditions change, there may be material changes to their estimated values. The total recorded guarantee liabilities on vehicles sold under these programs were immaterial as of June 30, 2026 and December 31, 2025. Our maximum exposure on the guarantees we provide if they are unable to sell the vehicle at or above the vehicle’s contractual residual value at the end of the lease term was $4.07 billion and $3.45 billion as of June 30, 2026 and December 31, 2025, respectively.
Automotive Regulatory Credits
As of June 30, 2026, total transaction price allocated to performance obligations that were unsatisfied or partially unsatisfied for contracts with an original expected length of more than one year was $287 million. Of this amount, we expect to recognize $220 million in the next 12 months and the rest over the remaining performance obligation period. Changes in regulations on automotive regulatory credits may significantly impact our remaining performance obligations and revenue to be recognized under these contracts. Recent governmental and regulatory actions have restricted certain regulatory credit programs tied to our products.
Automotive Leasing Revenue
Direct Sales-Type Leasing Program
Lease receivables relating to sales-type leases are presented on the consolidated balance sheets as follows (in millions):
| June 30, 2026 | December 31, 2025 | ||||||||||
| Gross lease receivables | $ | 167 | $ | 259 | |||||||
| Unearned interest income | (7) | (14) | |||||||||
| Allowance for expected credit losses | (3) | (5) | |||||||||
| Net investment in sales-type leases | $ | 157 | $ | 240 | |||||||
| Reported as: | |||||||||||
| Prepaid expenses and other current assets | $ | 105 | $ | 130 | |||||||
| Other non-current assets | 52 | 110 | |||||||||
| Net investment in sales-type leases | $ | 157 | $ | 240 |
Energy Generation and Storage Segment
Energy Generation and Storage Sales
We record as deferred revenue any non-refundable amounts that are primarily related to prepayments from customers, which is recognized as revenue as or when the performance obligations are satisfied. As of June 30, 2026 and December 31, 2025, deferred revenue related to such customer payments amounted to $2.31 billion and $2.04 billion, respectively, mainly due to contractual payment terms. Revenue recognized from the deferred revenue balances as of December 31, 2025 and 2024 was $1.12 billion and $944 million for the six months ended June 30, 2026 and 2025, respectively. We have elected the practical expedient to omit disclosure of the amount of the transaction price allocated to remaining performance obligations for contracts with an original expected contract length of one year or less and the amount that we have the right to invoice when that amount corresponds directly with the value of the performance to date. As of June 30, 2026, total transaction price allocated to performance obligations that were unsatisfied or partially unsatisfied for contracts with an original expected length of more than one year was $10.05 billion. Of this amount, we expect to recognize $4.56 billion in the next 12 months and the rest over the remaining performance obligation period. Changes in government and economic incentives or tariffs may impact the transaction price or our ability to execute these existing contracts.
We have financing receivables on our consolidated balance sheets related to loans we provide for financing our energy products. As of June 30, 2026 and December 31, 2025, we had current net financing receivables of $41 million and $38 million, respectively, in Accounts receivable, net, and $695 million and $731 million, respectively, in Other non-current assets for the long-term portion.
Income Taxes
We are subject to income taxes in the U.S. and in many foreign jurisdictions. Significant judgment is required in determining our provision for income taxes, our deferred tax assets and liabilities and any valuation allowance recorded against our net deferred tax assets that are not more likely than not to be realized. We monitor the realizability of our deferred tax assets taking into account all relevant factors at each reporting period. In completing our assessment of realizability of our deferred tax assets, we consider our history of income (loss) measured at pre-tax income (loss) adjusted for permanent book-tax differences on a jurisdictional basis, volatility in actual earnings, excess tax benefits related to stock-based compensation in recent prior years and impacts of the timing of reversal of existing temporary differences. We also rely on our assessment of the Company’s projected future results of business operations, including uncertainty in future operating results relative to historical results, volatility in the market price of our common stock and its performance over time, variable macroeconomic conditions impacting our ability to forecast future taxable income, and changes in business that may affect the existence and magnitude of future taxable income. Our valuation allowance assessment is based on our best estimate of future results considering all available information.
Our provision for income taxes for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter, we update our estimate of the annual effective tax rate, and if our estimated tax rate changes, we make a cumulative adjustment.
Net Income per Share of Common Stock Attributable to Common Stockholders
The following table presents the reconciliation of net income attributable to common stockholders to net income used in computing basic and diluted net income per share of common stock (in millions):
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Net income attributable to common stockholders | $ | 1,114 | $ | 1,172 | $ | 1,591 | $ | 1,581 | |||||||||||||||
| Less: Buy-outs of noncontrolling interest | (2) | — | (2) | — | |||||||||||||||||||
| Net income used in computing basic and diluted net income per share of common stock | $ | 1,116 | $ | 1,172 | $ | 1,593 | $ | 1,581 |
Restricted stock awards will be excluded from the computation of diluted weighted average shares until the shares have been deemed to be earned. The following table presents the reconciliation of basic to diluted weighted average shares used in computing net income per share of common stock attributable to common stockholders (in millions):
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Weighted average shares used in computing net income per share of common stock, basic | 3,237 | 3,223 | 3,235 | 3,220 | |||||||||||||||||||
| Add: Stock-based awards | 303 | 296 | 303 | 300 | |||||||||||||||||||
| Weighted average shares used in computing net income per share of common stock, diluted | 3,540 | 3,519 | 3,538 | 3,520 |
The following table presents the potentially dilutive shares that were excluded from the computation of diluted net income per share of common stock attributable to common stockholders, because their effect was anti-dilutive (in millions):
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Stock-based awards | 12 | 15 | 9 | 14 |
Restricted Cash
Our total cash and cash equivalents and restricted cash, as presented in the consolidated statements of cash flows, was as follows (in millions):
| June 30, 2026 | December 31, 2025 | June 30, 2025 | December 31, 2024 | ||||||||||||||||||||
| Cash and cash equivalents | $ | 15,219 | $ | 16,513 | $ | 15,587 | $ | 16,139 | |||||||||||||||
| Restricted cash included in prepaid expenses and other current assets | 496 | 389 | 559 | 494 | |||||||||||||||||||
| Restricted cash included in other non-current assets | 710 | 714 | 589 | 404 | |||||||||||||||||||
| Total as presented in the consolidated statements of cash flows | $ | 16,425 | $ | 17,616 | $ | 16,735 | $ | 17,037 |
SpaceX Equity Investment
We are presumed to have significant influence over our equity method investment in SpaceX under ASC 323, Equity Method Investments and Joint Ventures, as our CEO also serves as the CEO of SpaceX but as we do not have control over the investee, we have elected the fair value option in accordance with ASC 825, Financial Instruments, to provide a more relevant measure of the investment’s current economic value to financial statement users. The fair value is determined on a quarterly basis in accordance with ASC 820, Fair Value Measurement, based on market observable inputs. The equity investment is presented within Other non-current assets on our consolidated balance sheet. Realized and unrealized gains and losses are recorded to Other income, net in our consolidated statement of operations. See Note 13, Related Party Transactions, for further information regarding our equity investment.
Accounts Receivable and Allowance for Doubtful Accounts
Depending on the day of the week on which the end of a fiscal quarter falls, our accounts receivable balance may fluctuate as we are waiting for certain customer payments to clear through our banking institutions and receipts of payments from our financing partners, which can take up to approximately two weeks based on the contractual payment terms with such partners. Our accounts receivable balances associated with sales of energy storage products are dependent on billing milestones and payment terms negotiated for each contract, and our accounts receivable balances associated with our sales of regulatory credits are dependent on contractual payment terms.
Financing Receivables
As of June 30, 2026 and December 31, 2025, the vast majority of our financing receivables were at current status with an immaterial balance being past due. As of June 30, 2026 and December 31, 2025, the majority of our financing receivables, excluding MyPower notes receivable, were originated from 2022 through 2025.
As of June 30, 2026 and December 31, 2025, the total outstanding balance of MyPower customer notes receivable, net of allowance for expected credit losses, was $240 million and $241 million, respectively, of which immaterial amounts were due in the next 12 months. As of June 30, 2026 and December 31, 2025, the allowance for expected credit losses was $18 million and $26 million, respectively.
Concentration of Risk
Credit Risk
Financial instruments that potentially subject us to a concentration of credit risk consist of cash, cash equivalents, short-term investments, restricted cash, accounts receivable and other finance receivables. Our cash and short-term investments balances are primarily on deposit at high credit quality financial institutions or invested in highly rated, investment-grade securities. These deposits are typically in excess of insured limits. As of June 30, 2026 and December 31, 2025, no entity represented 10% or more of our total receivables balance.
Supply Risk
We are dependent on our suppliers, including single source suppliers, and the inability of these suppliers to deliver necessary components of our products in a timely manner at prices, quality levels and volumes acceptable to us, or our inability to efficiently manage these components from these suppliers, could have a material adverse effect on our business, prospects, financial condition and operating results.
Warranties
Accrued warranty activity consisted of the following (in millions):
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Accrued warranty - beginning of period | $ | 8,472 | $ | 7,214 | $ | 8,607 | $ | 6,716 | |||||||||||||||
| Warranty costs incurred | (504) | (398) | (972) | (790) | |||||||||||||||||||
| Net changes in liability for pre-existing warranties, including expirations and foreign exchange impact | 380 | 105 | 207 | 452 | |||||||||||||||||||
| Provision for warranty | 615 | 591 | 1,121 | 1,134 | |||||||||||||||||||
| Accrued warranty - end of period | $ | 8,963 | $ | 7,512 | $ | 8,963 | $ | 7,512 |
Recent Accounting Pronouncements
Recently issued accounting pronouncements not yet adopted
In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses (Subtopic 220-40). The ASU requires the disaggregated disclosure of specific expense categories, including purchases of inventory, employee compensation, depreciation, and amortization, within relevant income statement captions. This ASU also requires disclosure of the total amount of selling expenses along with the definition of selling expenses. The ASU is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Adoption of this ASU can either be applied prospectively to consolidated financial statements issued for reporting periods after the effective date of this ASU or retrospectively to any or all prior periods presented in the consolidated financial statements. Early adoption is also permitted. We are currently evaluating the provisions of this ASU and expect this ASU will likely result in the required additional disclosures being included in our consolidated financial statements, once adopted.
In September 2025, the FASB issued ASU No. 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The ASU simplifies the capitalization guidance by removing all references to prescriptive and sequential software development stages (referred to as “project stages”) throughout ASC 350-40. The ASU is effective for annual periods beginning after December 15, 2027, and interim periods within those fiscal years. Adoption of this ASU can be applied prospectively for reporting periods after its effective date; or following a modified transition approach that is based on the status of the respective projects and whether software costs were capitalized before the date of adoption; or retrospectively to any or all prior periods presented in the consolidated financial statements. Early adoption is permitted. We are currently evaluating the provisions of this ASU and do not expect this ASU to have a material impact on our consolidated financial statements.
In December 2025, the FASB issued ASU No. 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities. The ASU establishes authoritative guidance in GAAP about accounting for government grants received by business entities, clarifies the appropriate accounting, in an effort to reduce diversity in practice, and increase consistency of application across business entities. The ASU is effective for annual reporting periods beginning after December 15, 2028, and interim reporting periods within those annual reporting periods. Adoption of this ASU can be applied on a modified prospective approach, a modified retrospective approach, or a retrospective approach. Early adoption is permitted. We are currently evaluating the provisions of this ASU and do not expect this ASU to have a material impact on our consolidated financial statements.
In December 2025, the FASB issued ASU No. 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements. The ASU clarifies interim disclosure requirements and the applicability of Topic 270. The objective of the amendments is to provide further clarity about the current interim disclosure requirements. The ASU is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Adoption of this ASU can be applied on either a prospective or a retrospective approach. Early adoption is permitted. We are currently evaluating the provisions of this ASU and do not expect this ASU to have a material impact on our consolidated financial statements.
In December 2025, the FASB issued ASU No. 2025-12, Codification Improvements. The ASU addresses thirty-three items, representing the changes to the Codification that (1) clarify, (2) correct errors, or (3) make minor improvements. Generally, the amendments in this Update are not intended to result in significant changes for most entities. The ASU is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. The adoption method of this ASU may vary, on an issue-by-issue basis. Early adoption is permitted. We are currently evaluating the provisions of this ASU and do not expect this ASU to have a material impact on our consolidated financial statements.
In May 2026, the FASB issued ASU No. 2026-02, Environmental Credits and Environmental Credit Obligations (Topic 818). The ASU establishes authoritative guidance for the accounting of environmental credits and environmental credit obligations, including recognition, measurement, presentation, and disclosure requirements, in an effort to reduce diversity in practice and increase consistency of application across reporting entities. The ASU is effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Adoption of this ASU should be applied on a retrospective basis through a cumulative-effect adjustment to the opening balance of retained earnings (or other appropriate components of equity or net assets on the balance sheet) as of the beginning of the annual reporting period of adoption, without recasting for any financial statement information before the period of adoption. Early adoption is permitted as of the beginning of an annual reporting period. We are currently evaluating the provisions of this ASU.
Recently adopted accounting pronouncements
ASU 2025-05
In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The amendments in this update provide a practical expedient permitting an entity to assume that conditions at the balance sheet date remain unchanged over the life of the asset when estimating expected credit losses for current classified accounts receivable and contract assets. We adopted this ASU on a prospective basis effective January 1, 2026 and did not elect the practical expedient permitted under this ASU. Therefore, the adoption has no impact on our consolidated financial statements.
Note 2 – Fair Value of Financial Instruments
ASC 820, Fair Value Measurement, states that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. The three-tiered fair value hierarchy, which prioritizes which inputs should be used in measuring fair value, is comprised of: (Level I) observable inputs such as quoted prices in active markets; (Level II) inputs other than quoted prices in active markets that are observable either directly or indirectly and (Level III) unobservable inputs for which there is little or no market data. The fair value hierarchy requires the use of observable market data when available in determining fair value. Our assets and liabilities that were measured at fair value on a recurring basis were as follows (in millions):
| June 30, 2026 | December 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value | Level I | Level II | Level III | Fair Value | Level I | Level II | Level III | ||||||||||||||||||||||||||||||||||||||||
| Certificates of deposit and time deposits | $ | 13,034 | $ | — | $ | 13,034 | $ | — | $ | 14,600 | $ | — | $ | 14,600 | $ | — | |||||||||||||||||||||||||||||||
| U.S. government securities | 8,254 | — | 8,254 | — | 7,321 | — | 7,321 | — | |||||||||||||||||||||||||||||||||||||||
| Commercial paper | 7,017 | — | 7,017 | — | 5,617 | — | 5,617 | — | |||||||||||||||||||||||||||||||||||||||
| SpaceX equity investment (1) | 3,007 | — | 3,007 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Money market funds | 1,871 | 1,871 | — | — | 1,890 | 1,890 | — | — | |||||||||||||||||||||||||||||||||||||||
| Digital assets (2) | 674 | 674 | — | — | 1,008 | 1,008 | — | — | |||||||||||||||||||||||||||||||||||||||
| Corporate debt securities | — | — | — | — | 8 | — | 8 | — | |||||||||||||||||||||||||||||||||||||||
| Total | $ | 33,857 | $ | 2,545 | $ | 31,312 | $ | — | $ | 30,444 | $ | 2,898 | $ | 27,546 | $ | — |
(1)The investment is classified as Level 2 within the fair value hierarchy based on observable market inputs used to estimate the $238 million discount for lack of marketability due to regulatory restrictions expiring in September 2026. For the three months ended June 30, 2026, we recorded a $1.00 billion net gain on our SpaceX equity investment. In addition, we are subject to customary sales restrictions in connection with the SpaceX initial public offering that expire in December 2026.
(2)As of June 30, 2026 and December 31, 2025, the majority of our digital assets were comprised of 11,509 units of Bitcoin held at an acquisition cost of $386 million.
Our cash, cash equivalents and short-term investments classified by security type as of June 30, 2026 and December 31, 2025 consisted of the following (in millions):
| June 30, 2026 | |||||||||||||||||||||||||||||||||||
| Adjusted Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | Cash and Cash Equivalents | Short-Term Investments | ||||||||||||||||||||||||||||||
| Cash | $ | 13,348 | $ | — | $ | — | $ | 13,348 | $ | 13,348 | $ | — | |||||||||||||||||||||||
| Certificates of deposit and time deposits | 13,037 | — | (3) | 13,034 | — | 13,034 | |||||||||||||||||||||||||||||
| U.S. government securities | 8,273 | 1 | (20) | 8,254 | — | 8,254 | |||||||||||||||||||||||||||||
| Commercial paper | 7,021 | 1 | (5) | 7,017 | — | 7,017 | |||||||||||||||||||||||||||||
| Money market funds | 1,871 | — | — | 1,871 | 1,871 | — | |||||||||||||||||||||||||||||
| Total cash, cash equivalents and short-term investments | $ | 43,550 | $ | 2 | $ | (28) | $ | 43,524 | $ | 15,219 | $ | 28,305 |
| December 31, 2025 | |||||||||||||||||||||||||||||||||||
| Adjusted Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | Cash and Cash Equivalents | Short-Term Investments | ||||||||||||||||||||||||||||||
| Cash | $ | 14,623 | $ | — | $ | — | $ | 14,623 | $ | 14,623 | $ | — | |||||||||||||||||||||||
| Certificates of deposit and time deposits | 14,598 | 2 | — | 14,600 | — | 14,600 | |||||||||||||||||||||||||||||
| U.S. government securities | 7,318 | 5 | (2) | 7,321 | — | 7,321 | |||||||||||||||||||||||||||||
| Commercial paper | 5,619 | — | (2) | 5,617 | — | 5,617 | |||||||||||||||||||||||||||||
| Money market funds | 1,890 | — | — | 1,890 | 1,890 | — | |||||||||||||||||||||||||||||
| Corporate debt securities | 8 | — | — | 8 | — | 8 | |||||||||||||||||||||||||||||
| Total cash, cash equivalents and short-term investments | $ | 44,056 | $ | 7 | $ | (4) | $ | 44,059 | $ | 16,513 | $ | 27,546 |
As of June 30, 2026 and December 31, 2025, short-term investments held and restricted for our insurance business were $286 million and $254 million, respectively.
As of June 30, 2026, the majority of our short-term investments had contractual maturity dates within one year.
Disclosure of Fair Values
Our financial instruments that are not re-measured at fair value include accounts receivable, financing receivables, other receivables, accounts payable, accrued liabilities, customer deposits and debt. The carrying values of these financial instruments materially approximate their fair values.
Note 3 – Acquisition
In the second quarter of 2026, Tesla acquired an AI hardware company in an asset acquisition for $1.95 billion in Tesla common stock and equity awards, of which $1.73 billion is subject to certain service conditions and/or performance milestones dependent on the successful deployment of the company's technology and $222 million was allocated to a patent and related developed technology intangible asset. For the three months ended June 30, 2026, no stock-based compensation expense related to the performance-based awards was recognized as the performance conditions were determined to be improbable.
Note 4 – Inventory
Our inventory consisted of the following (in millions):
| June 30, 2026 | December 31, 2025 | ||||||||||
| Raw materials | $ | 4,704 | $ | 4,522 | |||||||
| Work in process | 1,764 | 1,725 | |||||||||
| Finished goods (1) | 5,929 | 4,849 | |||||||||
| Service parts | 1,355 | 1,296 | |||||||||
| Total | $ | 13,752 | $ | 12,392 |
(1)Finished goods inventory includes products-in-transit to fulfill customer orders, new vehicles, used vehicles and energy products available for sale.
We write-down inventory for any excess or obsolete inventory or when we believe that the net realizable value of inventory is less than the carrying value. During the three and six months ended June 30, 2026, we recorded write-downs of $100 million and $177 million, respectively, in Cost of revenues in the consolidated statements of operations. During the three and six months ended June 30, 2025, we recorded write-downs of $131 million and $210 million, respectively, in Cost of revenues in the consolidated statements of operations.
Note 5 – Property, Plant and Equipment, Net
Our property, plant and equipment, net, consisted of the following (in millions):
| June 30, 2026 | December 31, 2025 | ||||||||||
| Machinery, equipment, vehicles and office furniture | $ | 22,812 | $ | 20,864 | |||||||
| Land and buildings | 13,263 | 11,837 | |||||||||
| AI infrastructure | 10,823 | 6,816 | |||||||||
| Tooling | 4,979 | 4,868 | |||||||||
| Leasehold improvements | 5,028 | 4,439 | |||||||||
| Computer equipment, hardware and software | 3,423 | 3,206 | |||||||||
| Construction in progress | 8,534 | 8,786 | |||||||||
| Property, plant and equipment | 68,862 | 60,816 | |||||||||
| Less: Accumulated depreciation | (21,607) | (20,173) | |||||||||
| Property, plant and equipment, net | $ | 47,255 | $ | 40,643 |
Construction in progress is primarily comprised of ongoing construction and expansion of our facilities, equipment and tooling related to the manufacturing of our products as well as AI-related assets which have not yet been placed in service.
Depreciation expense during the three and six months ended June 30, 2026 was $1.37 billion and $2.71 billion, respectively. Depreciation expense during the three and six months ended June 30, 2025 was $1.15 billion and $2.30 billion, respectively.
Note 6 – Accrued Liabilities and Other
Our accrued liabilities and other current liabilities consisted of the following (in millions):
| June 30, 2026 | December 31, 2025 | ||||||||||
| Accrued purchases (1) | $ | 3,647 | $ | 2,577 | |||||||
| Accrued warranty reserve, current portion | 2,602 | 2,475 | |||||||||
| Customer deposits | 1,936 | 1,311 | |||||||||
| Payroll and related costs | 1,920 | 1,907 | |||||||||
| Taxes payable (2) | 1,451 | 1,594 | |||||||||
| Operating lease liabilities, current portion | 1,022 | 954 | |||||||||
| Sales return reserve, current portion | 653 | 529 | |||||||||
| Other current liabilities | 2,025 | 1,932 | |||||||||
| Total | $ | 15,256 | $ | 13,279 |
(1)Accrued purchases primarily reflects goods received and services incurred for which we had not yet been invoiced. As we are invoiced for these goods and services, this balance will reduce and accounts payable will increase.
(2)Taxes payable primarily includes value added tax, income tax, sales tax, property tax and use tax payables.
Note 7 – Other Long-Term Liabilities
Our other long-term liabilities consisted of the following (in millions):
| June 30, 2026 | December 31, 2025 | ||||||||||
| Accrued warranty reserve | $ | 6,361 | $ | 6,132 | |||||||
| Operating lease liabilities | 5,716 | 5,389 | |||||||||
| Other non-current liabilities | 1,506 | 1,339 | |||||||||
| Total other long-term liabilities | $ | 13,583 | $ | 12,860 |
Note 8 – Debt
The following is a summary of our debt and finance leases as of June 30, 2026 (in millions):
| Net Carrying Value | Unpaid Principal Balance | Unused Committed Amount (1) | Contractual Interest Rates | Contractual Maturity Date | |||||||||||||||||||||||||||||||
| Current | Long-Term | ||||||||||||||||||||||||||||||||||
| Recourse debt: | |||||||||||||||||||||||||||||||||||
| RCF Credit Agreement | $ | — | $ | — | $ | — | $ | 5,000 | Not applicable | January 2028 | |||||||||||||||||||||||||
| Other | — | 2 | 2 | — | 5.45-5.75% | March 2030-January 2031 | |||||||||||||||||||||||||||||
| Total recourse debt | — | 2 | 2 | 5,000 | |||||||||||||||||||||||||||||||
| Non-recourse debt: | |||||||||||||||||||||||||||||||||||
| Automotive Asset-backed Notes | 1,240 | 1,121 | 2,366 | — | 2.82-5.82% | June 2027-June 2035 | |||||||||||||||||||||||||||||
| China Working Capital Facility | — | 5,888 | 5,888 | — | 2.01-2.11% | September 2026-March 2027 (2) | |||||||||||||||||||||||||||||
| Energy Asset-backed Notes | 90 | 610 | 708 | — | 5.08-6.35% | June 2050-May 2052 | |||||||||||||||||||||||||||||
| Cash Equity Debt | 10 | 100 | 116 | — | 5.25% | July 2034 | |||||||||||||||||||||||||||||
| Total non-recourse debt | 1,340 | 7,719 | 9,078 | — | |||||||||||||||||||||||||||||||
| Total debt | 1,340 | 7,721 | $ | 9,080 | $ | 5,000 | |||||||||||||||||||||||||||||
| Finance leases | 78 | 203 | |||||||||||||||||||||||||||||||||
| Total debt and finance leases | $ | 1,418 | $ | 7,924 |
The following is a summary of our debt and finance leases as of December 31, 2025 (in millions):
| Net Carrying Value | Unpaid Principal Balance | Unused Committed Amount (1) | Contractual Interest Rates | Contractual Maturity Date | |||||||||||||||||||||||||||||||
| Current | Long-Term | ||||||||||||||||||||||||||||||||||
| Recourse debt: | |||||||||||||||||||||||||||||||||||
| RCF Credit Agreement | $ | — | $ | — | $ | — | $ | 5,000 | Not applicable | January 2028 | |||||||||||||||||||||||||
| Other | 1 | 2 | 3 | — | 4.70-5.75% | January 2026-January 2031 | |||||||||||||||||||||||||||||
| Total recourse debt | 1 | 2 | 3 | 5,000 | |||||||||||||||||||||||||||||||
| Non-recourse debt: | |||||||||||||||||||||||||||||||||||
| Automotive Asset-backed Notes | 1,492 | 1,745 | 3,249 | — | 2.47-6.57% | October 2026-June 2035 | |||||||||||||||||||||||||||||
| China Working Capital Facility | — | 4,288 | 4,288 | 1,429 | 2.01-2.11% | March 2026-December 2026 (2) | |||||||||||||||||||||||||||||
| Energy Asset-backed Notes | 55 | 337 | 397 | — | 5.08-6.25% | June 2050 | |||||||||||||||||||||||||||||
| Cash Equity Debt | 21 | 212 | 240 | — | 5.25-5.81% | July 2034-January 2035 | |||||||||||||||||||||||||||||
| Total non-recourse debt | 1,568 | 6,582 | 8,174 | 1,429 | |||||||||||||||||||||||||||||||
| Total debt | 1,569 | 6,584 | $ | 8,177 | $ | 6,429 | |||||||||||||||||||||||||||||
| Finance leases | 71 | 152 | |||||||||||||||||||||||||||||||||
| Total debt and finance leases | $ | 1,640 | $ | 6,736 |
(1)Refer to the notes to the consolidated financial statements included in our reporting on Form 10-K for the year ended December 31, 2025 for restrictions on draw-down or use for general corporate purposes with respect to any available committed funds under our debt facilities, as applicable.
(2)As we have the intent and ability to refinance the loan on a long-term basis, we classify it as Debt and finance leases, net of current portion in the consolidated balance sheets.
Recourse debt refers to debt that is recourse to our general assets. Non-recourse debt refers to debt that is recourse to only assets of our subsidiaries. The differences between the unpaid principal balances and the net carrying values are due to debt discounts or deferred issuance costs. As of June 30, 2026, we were in material compliance with all financial debt covenants.
Warehouse Agreement
In the first quarter of 2026, we entered into an uncommitted revolving Loan and Security Agreement (the "Warehouse Agreement") with a syndicate of banks. Under the Warehouse Agreement, we may borrow up to $1.50 billion in total principal amount which is secured by certain financing receivables and/or beneficial interests related to certain leased vehicles. Subject to extension in accordance with the terms of the Warehouse Agreement, the ability to draw under the Warehouse Agreement expires in March 2027, and the maturity date for borrowings is the earlier of the end of the underlying lease and loan terms or March 2034. Amounts drawn under the Warehouse Agreement bear interest at a rate equal to SOFR plus 0.65% to 1.00%. As of June 30, 2026, we have no borrowings outstanding under the Warehouse Agreement.
We are subject to certain conditions and limitations, including advance rate limits, a required reserve account, various performance triggers and excess concentration limits.
Energy Asset-backed Notes
In the second quarter of 2026, we transferred certain financing receivables into a special purpose entity (“SPE”) and issued $348 million in aggregate principal amount of Energy Asset-backed Notes, backed by these financing receivables. The proceeds from issuance, net of debt issuance costs, were $344 million. The SPE is wholly owned by us and is consolidated in the financial statements. The cash flows generated by these financing receivables are used to service the principal and interest payments on the Energy Asset-backed Notes and satisfy the SPE’s expenses, and any remaining cash is distributed to us. The SPE’s assets and cash flows are not available to our other creditors, and the creditors of the SPE, including the Energy Asset-backed Note holders, have no recourse to our other assets.
Note 9 – Equity Incentive Plans
2025 CEO Interim Award
Following the Delaware Supreme Court’s decision reversing the Court of Chancery’s rescission order and reinstating the performance-based stock option award our CEO was granted by the Company on January 21, 2018 (the “2018 CEO Performance Award”), on March 18, 2026 the Court of Chancery entered a final order implementing such reversal. On April 21, 2026 the Board approved the determination that the final order and judgment allowing our CEO to exercise the 2018 CEO Performance Award in full constituted a Tornetta Decision Event (as defined in the restricted stock award granted to our CEO on August 3, 2025 (the “2025 CEO Interim Award”), resulting in the immediate forfeiture of the 96 million shares associated with the 2025 CEO Interim Award. These actions are consistent with the “no double dip” principle, which precludes Mr. Musk from getting a windfall in the event that he may exercise the 2018 CEO Performance Award. No stock-based compensation expense was recognized related to the 2025 CEO Interim Award prior to the forfeiture.
2026 Implementation Agreement
On April 21, 2026 (the “effective date”), the Board approved the Company’s entry into an agreement with our CEO (the “Implementation Agreement”) implementing a process for our CEO’s exercise of the 2018 CEO Performance Award. During the quarter ended June 30, 2026, our CEO exercised approximately 304.0 million of the stock options underlying the 2018 CEO Performance Award and elected to net settle the exercise price of his options, which amounted to approximately 17.5 million shares.
The Implementation Agreement imposed a service-based vesting condition on the restricted shares of common stock (the “Restricted Shares”) issued to our CEO upon exercise of the 2018 CEO Performance Award, requiring him to remain in continuous service as CEO or as an executive officer responsible for product development or operations (as approved by the Board’s disinterested directors) through January 19, 2028 (the “scheduled vesting date”), and commences a five-year holding period on the date the Restricted Shares vest (except in the case of death). The Implementation Agreement also provides for cooperation between the Company and our CEO to create a mutually-agreeable plan to address our CEO’s satisfaction of applicable tax obligations.
We assessed whether there is any incremental fair value that needs to be recognized as a result of the Implementation Agreement. As of the effective date, we determined that the fair value of the original stock option awards immediately before the effective date was greater than the fair value of the Restricted Shares after the effective date. The stock options underlying the 2018 CEO Performance Award were fully vested and their grant-date fair value has already been fully recognized. As such, no incremental stock-based compensation expense will be recorded during the additional service period of the award.
2025 CEO Performance Award
On September 3, 2025 (the “2025 CEO Performance Award Grant Date”), the Board of Directors granted the 2025 CEO Performance Award to our CEO, consisting of approximately 423.7 million shares of performance-based restricted stock to our CEO, which was approved on November 6, 2025 by our shareholders (the “2025 CEO Performance Award Accounting Grant Date”).
Until such time as there are no shares under the 2025 CEO Performance Award that are not earned (the “Unearned Shares”), our CEO’s Unearned Shares will vote proportionately to the votes of all other shares of our capital stock that are present and entitled to vote at any annual or special meeting (or similar action) of our shareholders (including our CEO). Generally, each of the 12 tranches of the 2025 CEO Performance Award will become “Earned Shares” upon our CEO remaining in Eligible Service (as defined below) and the certification by disinterested directors that the following have been achieved: (i) the market capitalization milestone for such tranche and (ii) any one of the twelve operational milestones (clauses (i) and (ii), together the “Performance Milestones”). Our CEO will be able to direct the vote of such Earned Shares.
| Tranche # | Number of Shares Subject to Tranche | Market Capitalization Milestones (2) | Operational Milestones | Achievement Status | ||||||||||||||||||||||
| 1 | 35,311,992 | $2.0 trillion | Achievement of any 1 of the 12 Operational Milestones | - | ||||||||||||||||||||||
| 2 | 35,311,992 | $2.5 trillion | Achievement of any 2 of the 12 Operational Milestones | - | ||||||||||||||||||||||
| 3 | 35,311,992 | $3.0 trillion | Achievement of any 3 of the 12 Operational Milestones | - | ||||||||||||||||||||||
| 4 | 35,311,992 | $3.5 trillion | Achievement of any 4 of the 12 Operational Milestones | - | ||||||||||||||||||||||
| 5 | 35,311,992 | $4.0 trillion | Achievement of any 5 of the 12 Operational Milestones | - | ||||||||||||||||||||||
| 6 | 35,311,992 | $4.5 trillion | Achievement of any 6 of the 12 Operational Milestones | - | ||||||||||||||||||||||
| 7 | 35,311,992 | $5.0 trillion | Achievement of any 7 of the 12 Operational Milestones | - | ||||||||||||||||||||||
| 8 | 35,311,992 | $5.5 trillion | Achievement of any 8 of the 12 Operational Milestones | - | ||||||||||||||||||||||
| 9 | 35,311,992 | $6.0 trillion | Achievement of any 9 of the 12 Operational Milestones | - | ||||||||||||||||||||||
| 10 | 35,311,992 | $6.5 trillion | Achievement of any 10 of the 12 Operational Milestones | - | ||||||||||||||||||||||
| 11 | 35,311,992 | $7.5 trillion | Achievement of any 11 of the 12 Operational Milestones (1) | - | ||||||||||||||||||||||
| 12 | 35,311,992 | $8.5 trillion | Achievement of all 12 of the 12 Operational Milestones (1) | - | ||||||||||||||||||||||
| Total | 423,743,904 |
(1)The 11th and 12th tranches are earned upon the later of (i) the date on which the last Performance Milestone applicable to such tranche is completed and (ii) the date on which the CEO succession framework developed by our CEO is approved by the Board of Directors.
(2)Market capitalization milestones are measured on a trailing average basis over both a six-month period and a 30-day period. Achievement may also be measured over a one-year period in connection with the deemed achievement of certain product goals.
The operational milestones generally required for any shares to become Earned Shares are defined as follows:
| Milestone # | Operational Milestones (3) | |||||||
| 1 | 20 million Tesla vehicles delivered | |||||||
| 2 | 10 million active FSD subscriptions | |||||||
| 3 | 1 million bots delivered | |||||||
| 4 | 1 million Robotaxis in commercial operation | |||||||
| 5 | $50 billion of Adjusted EBITDA | |||||||
| 6 | $80 billion of Adjusted EBITDA | |||||||
| 7 | $130 billion of Adjusted EBITDA | |||||||
| 8 | $210 billion of Adjusted EBITDA | |||||||
| 9 | $300 billion of Adjusted EBITDA | |||||||
| 10 | $400 billion of Adjusted EBITDA (4) | |||||||
| 11 | $400 billion of Adjusted EBITDA (4) | |||||||
| 12 | $400 billion of Adjusted EBITDA (4) |
(3)Adjusted EBITDA is defined as net income (loss) attributable to common stockholders before interest expense, provision (benefit) for income taxes, depreciation, amortization and impairment, stock-based compensation and digital assets gains and losses for the four consecutive quarters that immediately precede such determination date.
(4)Meeting the last three Adjusted EBITDA operational milestones requires achieving Adjusted EBITDA of $400 billion in three non-overlapping periods, each made up of four consecutive quarters.
The vesting date for each tranche of shares depends on when such shares become Earned Shares, which is based on the achievement of Performance Milestones. Generally, shares earned prior to the 5th anniversary of the 2025 CEO Performance Award Grant Date vest on the 7.5th anniversary, and shares that are earned after the 5th anniversary of the 2025 CEO Performance Award Grant Date vest on the 10th anniversary (each such 7.5 and 10-year period, a “Post-Milestone Service Period”), in each case our CEO must maintain continued employment either as our CEO or as an executive officer responsible for product development or operations through the applicable Post-Milestone Service Period (“Eligible Service”). Upon vesting, the vested shares will be reduced by an offset amount of $334.09 per share, unless our CEO elects to pay such amounts in cash.
Unearned Shares will be forfeited and returned upon the 10-year anniversary of the 2025 CEO Performance Award Grant Date. Unvested shares (including any Earned Shares that have not vested) will be forfeited upon cessation of Eligible Service. Any stock-based compensation expense related to forfeited shares will be reversed during the period in which such a forfeiture occurs.
Our CEO must hold shares for five years after they become Earned Shares (regardless of whether such Earned Shares vest), subject to exceptions on or after vesting for (i) a change in control, (ii) satisfying taxes due in respect of vesting or (iii) transfers for estate planning purposes that involve a mere change of form or as may be permitted by our disinterested directors in their discretion consistent with our internal policies.
Stock-based compensation expense recognition commences when an operational milestone is considered probable of achievement regardless of the progress made towards achieving the next market capitalization milestone. The probability of meeting an operational milestone is based on a subjective assessment of the product roadmap, regulatory environment, industry and adoption trends, competitive environment, macroeconomic conditions and risks, and our future financial projections, among other estimates and assumptions. These inputs, which are subjective and generally require significant judgment, are based on historical experience, as appropriate, and on various other assumptions that we believe to be reasonable under the circumstances. Changes in the accounting estimates are reasonably likely to occur from period to period. Accordingly, actual results could differ significantly from the estimates made by our management. As of June 30, 2026, we determined that the operational milestone involving the delivery of 20 million Tesla vehicles is probable over the term of the award based on our current assumptions.
Once an operational milestone is considered probable of achievement, stock-based compensation expense associated with the tranche will be recognized over the relevant Post-Milestone Service Period, which is based on the expected achievement date of the operational milestone. Changes to the expected achievement date of the operational milestone could impact the fair value of the applicable tranche of the award. By design of this award, the recognition period will be approximately 7.5 or 10 years from the 2025 CEO Performance Award Accounting Grant Date. Stock-based compensation expense associated with this award is recorded as Selling, general and administrative expense on our consolidated statement of operations.
As of June 30, 2026, based on our current estimate of the achievement date, we had unrecognized stock-based compensation expense of $9.82 billion for the operational milestone that was considered probable of achievement over the term of the award, which we expect to be recognized over 9.2 years. As of June 30, 2026, we had unrecognized stock-based compensation expense of $105.82 billion to $120.37 billion for the operational milestones that were considered not probable of achievement. For the three and six months ended June 30, 2026, we recorded stock-based compensation expense of $267 million and $527 million, respectively, related to the 2025 CEO Performance Award.
Other Performance-Based Grants
From time to time, the Compensation Committee of our Board of Directors grants certain employees performance-based restricted stock units and stock options.
As of June 30, 2026, we had unrecognized stock-based compensation expense of $3.63 billion under these grants to purchase or receive an aggregate 19.1 million shares of our common stock. For awards probable of achievement, we estimate the unrecognized stock-based compensation expense of $645 million will be recognized over a weighted-average period of 3.0 years.
For the three and six months ended June 30, 2026, we recorded $138 million and $274 million, respectively, of stock-based compensation expense related to these grants, net of forfeitures. For the three and six months ended June 30, 2025, we recorded $54 million and $92 million, respectively, of stock-based compensation expense related to these grants, net of forfeitures. Stock-based compensation expense related to these grants, net of forfeitures, is recorded primarily in Research and development in the consolidated statements of operations.
Summary Stock-Based Compensation Information
The following table summarizes our stock-based compensation expense by line item in the consolidated statements of operations (in millions):
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Cost of revenues | $ | 258 | $ | 213 | $ | 485 | $ | 422 | |||||||||||||||
| Research and development | 487 | 298 | 908 | 575 | |||||||||||||||||||
| Selling, general and administrative | 406 | 124 | 788 | 211 | |||||||||||||||||||
| Total | $ | 1,151 | $ | 635 | $ | 2,181 | $ | 1,208 |
Note 10 – Income Taxes
During the three months ended June 30, 2026, following the enactment of California Senate Bill 122 (SB 122) into law and based on the relevant weight of positive and negative evidence, including the consideration of our expected California tax liabilities, we concluded that it is more likely than not that our California deferred tax assets, other than research and development tax credits, are realizable. Accordingly, we released the valuation allowance related to these California deferred tax assets. The release of this valuation allowance and an immaterial accrual of pillar two tax resulted in a $274 million income tax benefit that was included in our provision for income taxes for the three and six months ended June 30, 2026.
Our effective tax rate was 15% and 22% for the three and six months ended June 30, 2026, respectively, compared to 23% and 25% for the three and six months ended June 30, 2025, respectively. The decreases in our 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.
Our effective tax rates for the three and six months ended June 30, 2026 and 2025 as compared to the U.S. federal statutory rate of 21% were primarily impacted by changes in the valuation allowance on our deferred tax assets, the mix of our jurisdictional earnings subject to different tax rates, tax deduction limitations on executive compensation expense, and benefits from our U.S. research and development credits and manufacturing production credits.
Note 11 – Commitments and Contingencies
Tariffs
In February 2026, the U.S. Supreme Court issued a ruling invalidating certain tariffs previously imposed under the International Emergency Economic Powers Act (IEEPA). As a result of this ruling, we may be eligible for a refund of tariffs previously paid on imported goods. As the recoverability and timing of any future refund remains uncertain, we will not recognize any receivable nor corresponding offset to expense or asset until such amounts are realized or realizable. We continue to monitor these developments and their potential impact on our results of operations, including reduction of revenue for any future potential refunds to certain energy storage customers for which a contractual obligation exists.
Legal Proceedings
Certain Derivative Lawsuits in Delaware
Before converting from a Delaware to Texas corporation on June 13, 2024, three separate derivative actions brought by purported Tesla stockholders were filed in the Delaware Court of Chancery on May 24, June 10 and June 13, 2024, purportedly on behalf of Tesla, against current and former directors regarding topics involving Elon Musk and others, X Corp. (formerly Twitter) and xAI. These suits asserted various claims, including breach of fiduciary duty and breach of contract, and sought unspecified damages and other relief. On August 6, 2024, the plaintiffs in these three actions moved to consolidate the matters into a single case. The Court consolidated two of the three cases. Tesla and the directors filed motions to dismiss, and oral argument on those motions occurred on October 22, 2025. On April 2, 2026, these cases were reassigned to a different judge. On April 13, 2026, the Court granted Tesla’s motions to dismiss and dismissed the cases. In May 2026, plaintiffs in the consolidated and coordinated cases appealed to the Delaware Supreme Court the decision granting Tesla’s motion to dismiss.
Litigation and Investigations Relating to Alleged Discrimination and Harassment
We are also subject to various lawsuits that assert claims related to alleged discrimination and harassment. For example, on February 9, 2022, the California Civil Rights Department (“CRD,” formerly “DFEH”) filed a civil complaint against Tesla in Alameda County, California Superior Court, alleging systemic race discrimination, hostile work environment and pay equity claims, among others. CRD’s amended complaint seeks monetary damages and injunctive relief. The first phase of the trial is currently set for September 21, 2026. Additionally, on June 1, 2022, the Equal Employment Opportunity Commission (“EEOC”) issued a cause finding against Tesla that closely parallels the CRD’s allegations. On September 28, 2023, the EEOC filed a civil complaint against Tesla in the United States District Court for the Northern District of California asserting claims for race harassment and retaliation and seeking, among other things, monetary and injunctive relief. The case is in discovery with no trial date set.
The Company intends to vigorously defend itself in these matters; however, we cannot predict the outcome or impact. We are unable to reasonably estimate the possible loss or range of loss, if any, associated with these claims, unless noted.
Other Litigation Related to Our Products and Services
We are also subject to various lawsuits that seek monetary and other injunctive relief. These lawsuits include proposed class actions and other consumer claims that allege, among other things, purported defects and misrepresentations related to our products and services. For example, on September 14, 2022, a proposed class action was filed against Tesla, Inc. and related entities in the U.S. District Court for the Northern District of California, alleging various claims about the Company’s driver assistance technology systems under state and federal law. This case was later consolidated with several other proposed class actions, and a Consolidated Amended Complaint was filed on October 28, 2022, which seeks damages and other relief on behalf of all persons who purchased or leased from Tesla between January 1, 2016, to the present. On March 22, 2023, the plaintiffs filed a motion for a preliminary injunction alleging that Tesla made certain statements regarding the capabilities of Full Self-Driving Capability and seeking various forms of injunction relief, and on September 30, 2023, the Court denied the plaintiffs’ motion, compelled four of five plaintiffs to arbitration, and dismissed the claims of the fifth plaintiff with leave to amend the complaint. On October 31, 2023, the remaining plaintiff filed an amended complaint, which Tesla moved to dismiss, and on May 15, 2024, the Court granted in part and denied in part Tesla’s motion. On May 6, 2025, the plaintiff filed a motion for class certification, which Tesla opposed, and on August 18, 2025, the Court certified a limited class comprised of California consumers who are not subject to an arbitration agreement. On September 1, 2025, Tesla filed a petition in the United States Court of Appeals for the Ninth Circuit for permission to appeal the class certification order, and on December 18, 2025, the Ninth Circuit granted Tesla’s petition. On January 5, 2026, the district court stayed the case pending resolution of the proceedings before the Ninth Circuit. The appeal has been fully briefed by the parties, and oral argument is set for August 31, 2026.
On August 4, 2025, a proposed class action was filed in the U.S. District Court Western District of Texas against Tesla, Inc., Elon Musk, and certain current and former Company executives. The complaint alleges that the defendants violated federal securities laws through alleged material misrepresentations in public filings regarding the effectiveness of Autopilot, Full-Self Driving (Supervised), and Robotaxi. The complaint seeks monetary damages and other relief on behalf of persons who purchased Tesla stock between April 19, 2023, and June 22, 2025. The plaintiffs filed an amended complaint on February 17, 2026, and Tesla moved to dismiss the amended complaint on April 20, 2026. The plaintiffs filed a response to the motion to dismiss on June 22, 2026.
On June 4, 2026, a proposed class action was filed in the U.S. District Court for the Northern District of California against Tesla, Inc. and related entities. The complaint alleges that Tesla made certain statements regarding the capabilities of its driver assistance technology systems. The complaint seeks damages and other relief on behalf of certain consumers who purchased or leased a Tesla vehicle.
The Company intends to vigorously defend itself in these matters; however, we cannot predict the outcome or impact. We are unable to reasonably estimate the possible loss or range of loss, if any, associated with these claims, unless noted.
Benavides v. Tesla, Inc.
On August 1, 2025, a jury in the U.S. District Court for the Southern District of Florida reached a verdict in a product liability trial relating to certain allegations regarding the use of our Autopilot technology in a 2019 accident that resulted in a fatality and injuries. The jury awarded $129 million in total compensatory damages, finding the driver 67% at fault and the Company 33% at fault. The jury also awarded $200 million in punitive damages. On September 15, 2025, the Company filed a post-trial motion for judgment as a matter of law or, in the alternative, a new trial on all issues or an amended judgment to lesser compensatory and punitive damages. On February 19, 2026, the Court denied the Company’s post-trial motions, and on July 2, 2026, the Company filed its opening brief with the U.S. Court of Appeals for the Eleventh Circuit. Although we believe that the facts and law do not justify the damages awarded, the Company has recorded an immaterial accrual.
We have experienced, and we expect to continue to face, claims and regulatory scrutiny arising from or related to misuse or claimed failures or alleged misrepresentations of new technologies that we are pioneering. We are unable to reasonably estimate the possible loss or range of loss, if any, associated with these claims, unless noted. An unfavorable outcome in some or all of these proceedings could have a material adverse impact on results of operations or cash flows for a particular period. Our view of these matters is subject to inherent uncertainties and may change in the future.
Certain Investigations and Other Matters
We regularly receive requests for information, including subpoenas, from regulators and governmental authorities such as the National Highway Traffic Safety Administration, the National Transportation Safety Board, the SEC, the Department of Justice (“DOJ”), and various local, state, federal, and international agencies. The ongoing requests for information include topics such as operations, technology (e.g., vehicle functionality, vehicle incidents, Autopilot and FSD Capability and Robotaxi), compliance, finance, data privacy, and other matters related to Tesla’s business, its personnel, and related parties. We routinely cooperate with such formal and informal requests for information, investigations, and other inquiries. To our knowledge no government agency in any ongoing investigation has concluded that any wrongdoing occurred. We cannot predict the outcome or impact of any ongoing matters. Should the government decide to pursue an enforcement action, there exists the possibility of a material adverse impact on our business, results of operations, prospects, cash flows, financial position or brand.
We are also subject to various other legal proceedings, risks and claims that arise from the normal course of business activities. If an unfavorable ruling or development were to occur in these or other possible legal proceedings, risks and claims, there exists the possibility of a material adverse impact on our business, results of operations, prospects, cash flows, financial position or brand.
Note 12 – Variable Interest Entity Arrangements
The aggregate carrying values of the variable interest entities’ assets and liabilities, after elimination of any intercompany transactions and balances, in the consolidated balance sheets were as follows (in millions):
| June 30, 2026 | December 31, 2025 | ||||||||||
| Assets | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | 85 | $ | 109 | |||||||
| Accounts receivable, net | 67 | 11 | |||||||||
| Prepaid expenses and other current assets | 271 | 198 | |||||||||
| Total current assets | 423 | 318 | |||||||||
| Operating lease vehicles, net | 370 | 456 | |||||||||
| Energy generation and storage systems, net | 2,087 | 2,177 | |||||||||
| Other non-current assets | 432 | 183 | |||||||||
| Total assets | $ | 3,312 | $ | 3,134 | |||||||
| Liabilities | |||||||||||
| Current liabilities | |||||||||||
| Accrued liabilities and other | $ | 48 | $ | 49 | |||||||
| Deferred revenue | 6 | 6 | |||||||||
| Current portion of debt and finance leases | 1,163 | 1,364 | |||||||||
| Total current liabilities | 1,217 | 1,419 | |||||||||
| Deferred revenue, net of current portion | 55 | 60 | |||||||||
| Debt and finance leases, net of current portion | 1,341 | 1,679 | |||||||||
| Total liabilities | $ | 2,613 | $ | 3,158 |
Note 13 – Related Party Transactions
Tesla periodically does business with certain entities with which its CEO and directors are affiliated, such as SpaceX, The Boring Company and Redwood Materials, in accordance with our Related Person Transactions Policy. In the three and six months ended June 30, 2026, we recognized $318 million and $405 million of revenues, respectively, and $242 million and $307 million of cost of revenues, respectively, from SpaceX for its purchase of our Megapack products in the ordinary course of business. Other transactions with SpaceX and other related parties in the three and six months ended June 30, 2026 were immaterial. Transactions with related parties were immaterial for the three and six months ended June 30, 2025.
Upon receiving the applicable regulatory approvals, the Company invested $2.00 billion in SpaceX common stock (formerly a preferred share investment in xAI) representing an ownership interest of less than 1% in March 2026. We have determined that under the applicable accounting standards, we are presumed to have significant influence over SpaceX and as such, we account for this investment using the equity method of accounting. Refer to Note 1, Summary of Significant Accounting Policies, regarding the fair value policy election in relation to the equity investment and Note 2, Fair Value of Financial Instruments, for the gain recognized on our SpaceX equity investment.
Note 14 – Segment Reporting and Information about Geographic Areas
We have two operating and reportable segments: (i) automotive and (ii) energy generation and storage. The following table presents revenues, cost of revenues and gross profit by reportable segment (in millions):
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Automotive segment | |||||||||||||||||||||||
| Revenues | $ | 25,097 | $ | 19,707 | $ | 45,076 | $ | 36,312 | |||||||||||||||
| Cost of revenues (1) | $ | 20,986 | $ | 16,675 | $ | 37,197 | $ | 30,912 | |||||||||||||||
| Gross profit | $ | 4,111 | $ | 3,032 | $ | 7,879 | $ | 5,400 | |||||||||||||||
| Energy generation and storage segment | |||||||||||||||||||||||
| Revenues | $ | 3,139 | $ | 2,789 | $ | 5,547 | $ | 5,519 | |||||||||||||||
| Cost of revenues (2) | $ | 2,499 | $ | 1,943 | $ | 3,955 | $ | 3,888 | |||||||||||||||
| Gross profit | $ | 640 | $ | 846 | $ | 1,592 | $ | 1,631 |
(1)Depreciation and amortization included in Cost of revenues for the automotive segment for the three and six months ended June 30, 2026 was $927 million and $1.94 billion, respectively. Depreciation and amortization included in Cost of revenues for the automotive segment for the three and six months ended June 30, 2025 was $891 million and $1.84 billion, respectively.
(2)Depreciation and amortization included in Cost of revenues for the energy generation and storage segment for the three and six months ended June 30, 2026 was $97 million and $192 million, respectively. Depreciation and amortization included in Cost of revenues for the energy generation and storage segment for the three and six months ended June 30, 2025 was $87 million and $170 million, respectively.
The following table presents revenues by geographic area based on the sales location of our products (in millions):
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||
| United States | $ | 13,208 | $ | 11,809 | $ | 23,885 | $ | 22,142 | |||||||||||||||||||||||||||
| China | 4,675 | 4,305 | 8,859 | 8,608 | |||||||||||||||||||||||||||||||
| Other international | 10,353 | 6,382 | 17,879 | 11,081 | |||||||||||||||||||||||||||||||
| Total | $ | 28,236 | $ | 22,496 | $ | 50,623 | $ | 41,831 |
The following table presents long-lived assets by geographic area (in millions):
| June 30, 2026 | December 31, 2025 | ||||||||||
| United States | $ | 42,213 | $ | 35,847 | |||||||
| Other international | 9,552 | 9,400 | |||||||||
| Total | $ | 51,765 | $ | 45,247 |
The following table presents inventory by reportable segment (in millions):
| June 30, 2026 | December 31, 2025 | ||||||||||
| Automotive | $ | 9,637 | $ | 9,678 | |||||||
| Energy generation and storage | 4,115 | 2,714 | |||||||||
| Total | $ | 13,752 | $ | 12,392 |
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