Overview

Tesla’s latest quarterly performance highlights a robust rebound in its automotive segment, which continues to dominate roughly 70% of the company’s revenue and underpins its broader strategic initiatives in artificial intelligence and robotics.

Vehicle Deliveries

In the second quarter, Tesla delivered 480,126 vehicles, surpassing sell‑side expectations by 18% and representing the strongest quarterly growth rate since the third quarter of 2023. This surge positions the company on track for its first annual delivery increase since 2023.

Forecasts and Targets

Morgan Stanley upgraded its vehicle delivery outlook, projecting 1.67 million deliveries for 2026 and 1.86 million for 2027. The firm also raised its second‑quarter adjusted earnings estimate to $0.69 per share, above the consensus of $0.49, and expects an automotive gross margin (excluding regulatory credits) of 18.1%, broadly in line with market expectations. Barclays, meanwhile, forecast adjusted earnings of $0.55 per share for the quarter, beating the consensus of $0.47, but warned of a sequential decline in automotive margins due to higher raw‑material costs and the absence of favorable one‑time items, while still deeming the margins “healthy.”

Both analysts maintained Equal Weight ratings on the stock. Morgan Stanley increased its price target to $417 from $415, attributing only $47 of the uplift to the automotive business. Barclays lifted its target to $370 from $360, which remained below Tesla’s market price at the time of publication.

Capital Spending and Cash Flow

Morgan Stanley estimates Tesla’s 2026 capital spending will total $26.8 billion, accompanied by a free‑cash‑flow burn of $11.4 billion, underscoring the need for tangible returns from the company’s physical AI investments.

Robotaxi Fleet Outlook

Barclays estimates Tesla currently operates 30 to 50 robotaxi vehicles in Austin, with smaller fleets in Dallas, Houston, and Miami, many of which still rely on safety monitors. Morgan Stanley projects the robotaxi fleet to expand to 1,500 supervised and unsupervised vehicles by year‑end, with anticipated launches in Phoenix, Orlando, Tampa, and Las Vegas.

Analyst Ratings

Despite the positive automotive momentum, both firms concluded that the improvements may not be sufficient for a major re‑rating of Tesla’s valuation, given the substantial capital outlays and ongoing need for evidence that AI‑related projects will generate sustainable returns.