Earnings at Musk's Tesla fall as spending on research cuts into profit from selling cars

By — Alex Veiga, Associated Press Alex Veiga, Associated Press Leave your feedback Share Copy URL https://www.pbs.org/newshour/economy/earnings-at-musks-tesla-fall-as-spending-on-research-cuts-into-profit-from-selling-cars Email Facebook Twitter LinkedIn Pinterest Tumblr Share on Facebook Share on Twitter Earnings at Musk's Tesla fall as spending on research cuts into profit from selling cars Economy Jul 23, 2026 6:56 PM EDT Tesla said Wednesday that its profits fell last quarter as the car company run by Elon Musk shoveled more money into research and development, cutting into profits from a sharp increase in vehicle sales. The Austin, Texas, company reported second-quarter net income of $1.11 billion, or 32 cents per share. Excluding certain items, earnings were 33 cents per share, well short of the 53 cents per share forecast by Wall Street analysts, according to FactSet. Revenue rose 26% to $28.24 billion, beating analysts' forecast of $26.42 billion. While the core car business had a solid quarter, Tesla is now focused on building out the infrastructure and AI software that underpins its robotaxis and robotics businesses, which Musk has said are the future of the company. And doing so requires a lot more spending. WATCH: Tesla, Waymo executives join safety experts in testifying on future of self-driving cars Research and development spending surged about 49% from a year earlier to $2.37 billion — higher than its been going back at least four quarters. "We're investing a lot in growing the core business and really preparing for the future," Musk said during a conference call with Wall Street analysts, promising that the spending will yield "incredible returns." CFO Vaibhav Taneja told analysts that the company expects capital expenditures will increase further in the second half of this year, driving full-year spending to more than $25 billion. Taneja also forecast that spending on capital expenditures will continue growing for the next "2 to 3 years," as the company seeks to expand its fleet of robotaxis, add AI compute infrastructure and build more production capacity for its Optimus humanoid robot, among several other products. Tesla shares fell 4.1% in after-hours trading shortly. The stock ended the regular trading session 1.3% lower and is down just under 17% this year. Earlier this month, Tesla reported that it delivered 480,216 cars in the second quarter, a 25% increase from the same period last year and its second straight quarterly gain. The sales also exceeded analysts' expectations, according to a FactSet survey. Tesla's improving sales this year mark a big turnaround from a year ago, when many Europeans refused to buy the company's cars because of Musk's embrace of far-right political candidates in elections there. The vast majority of the company's vehicle deliveries last quarter were comprised of its Model Y crossover SUV and Model 3 sedan. Tesla rolled out less expensive versions of both models last year in hopes of boosting s