Tesla revenue hit a quarterly record, but operating profit fell 57 percent and free cash flow went negative

Record revenue did not mean record profit. Tesla reported second-quarter revenue of $28.2bn, up 26 percent from a year earlier and the highest in its history, on record second-quarter deliveries of more than 480,000 vehicles. Operating income fell 57 percent, to $398m, and operating margin narrowed to 1.4 percent from 4.1 percent. GAAP net income was $1.1bn, down 5 percent, and diluted earnings per share were $0.32.

The cash statement shows why. Capital spending more than doubled, to $5.8bn, up 142 percent, as Tesla built out factories, battery capacity and its robotaxi and Optimus programs. Operating cash flow rose 85 percent, to $4.7bn, but it did not cover the spending, and free cash flow came in at negative $1.1bn, down from positive $146m a year earlier and negative for the first time in years. Tesla still held $43.5bn in cash and investments.

Tesla framed the quarter as investment. It said it is in its largest period of spending, and it passed $100bn in revenue over the trailing twelve months for the first time. The energy storage business returned to growth, and the services unit reached record profit. What the numbers describe is a company choosing to spend now, with deliveries and revenue at records and margins and cash bearing the cost of the build.