Financial Analysis

Commitments and Contingencies Legal Proceedings Litigation Relating to 2018 CEO Performance Award On June 4, 2018, a purported Tesla stockholder filed a putative class and derivative action in the Delaware Court of Chancery against Elon Musk and the members of Teslas board of directors as then constituted, alleging corporate waste, unjust enrichment and that such board members breached their fiduciary duties by approving the 2018 CEO Performance Award. Trial was held November 14-18, 2022. On January 30, 2024, the Court issued an opinion finding that the 2018 CEO Performance Award should be rescinded. Plaintiffs counsel filed a brief seeking a fee award of 29,402,900 Tesla shares, plus expenses of $1,120,115.50. Tesla opposed the fee request, and at Teslas 2024 Annual Meeting of Stockholders, 72% of the disinterested voting shares of Tesla, excluding shares owned by Mr. Musk and Kimbal Musk, voted to ratify the 2018 CEO Performance Award. Because Teslas disinterested stockholders voted to ratify the 2018 CEO Performance Award, Mr. Musk and the other director defendants, joined by Tesla, filed a brief seeking to revise the Courts January 30, 2024 opinion. On December 2, 2024, the Court issued an opinion denying the motion to revise the Courts January 30, 2024 opinion and awarded Plaintiffs counsel fees in the amount of $345 million. A final judgment was entered by the Court, and the director defendants and Tesla appealed the decisions to the Delaware Supreme Court. Tesla and th …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

Debt 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 The following is a summary of our debt and finance leases as of December 31, 2024 (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 4 3 7 4.70-5.75% March 2025-January 2031 Total recourse debt 4 3 7 5,000 Non-recourse debt: Automotive Asset-backed Notes 2,255 2,059 4,329 3.45-6.57% September 2025-June 2035 China Working Capital Facility 2,740 2,740 1.92 % April 2025 (2) Energy Asset-backed Notes 54 434 493 4.80-6.25% December 2025-June 2050 Cash Equit …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

The following table disaggregates our revenue by major source (in millions): Year Ended December 31, 2025 2024 2023 Automotive sales $ 65,821 $ 72,480 $ 78,509 Automotive regulatory credits 1,993 2,763 1,790 Energy generation and storage sales 12,270 9,564 5,515 Services and other 12,530 10,534 8,319 Total revenues from sales and services 92,614 95,341 94,133 Automotive leasing 1,712 1,827 2,120 Energy generation and storage leasing 501 522 520 Total revenues $ 94,827 $ 97,690 $ 96,773

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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): December 31, 2025 December 31, 2024 Fair Value Level I Level II Level III Fair Value Level I Level II Level III Certificates of deposit and time deposits $ 14,600 $ $ 14,600 $ $ 12,767 $ $ 12,767 $ Commercial paper 5,617 5,617 3,919 3,919 U.S. government securities 7,321 7,321 3,620 3,620 Corporate debt securities 8 8 118 118 Money market funds 1,890 1,890 1,753 1,753 Digital assets 1,008 1,008 1,076 1,076 Total $ 30,444 $ 2,898 $ 27,546 $ $ 23,253 $ 2,829 …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

Income Taxes Our income before provision for (benefit from) income taxes for the years ended December 31, 2025, 2024 and 2023 was as follows (in millions): Year Ended December 31, 2025 2024 2023 Domestic $ 4,766 $ 2,292 $ 3,196 Noncontrolling interest and redeemable noncontrolling interest 61 62 (23) Foreign 451 6,636 6,800 Income before income taxes $ 5,278 $ 8,990 $ 9,973 A provision for (benefit from) income taxes of $1.42 billion, $1.84 billion and $(5.00) billion has been recognized for the years ended December 31, 2025, 2024 and 2023, respectively. The components of the provision for (benefit from) income taxes for the years ended December 31, 2025, 2024 and 2023 consisted of the following (in millions): Year Ended December 31, 2025 2024 2023 Current: Federal $ $ $ 48 State 5 45 57 Foreign 1,295 1,315 1,243 Total current 1,300 1,360 1,348 Deferred: Federal 434 831 (5,246) State 21 (49) (653) Foreign (332) (305) (450) Total deferred 123 477 (6,349) Total provision for (benefit from) income taxes $ 1,423 $ 1,837 $ (5,001) Upon adoption of ASU 2023-09, Improvements to Income Tax Disclosures, as described in Note 2, Summary of Significant Accounting Policies , the reconciliation of taxes at the federal statutory rate to our provision for (benefit from) income taxes for the year ended December 31, 2025 was as follows (in millions, except for percentages): Amount Percent U.S. federal statutory tax rate $ 1,108 21.0 % Foreign tax effects China Statutory tax rate difference bet …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

Leases We have entered into various operating and finance lease agreements for certain of our offices, manufacturing and warehouse facilities, retail and service locations, data centers, equipment, vehicles, and energy generation and storage systems, worldwide. We determine if an arrangement is a lease, or contains a lease, at inception and record the lease in our financial statements upon lease commencement, which is the date when the underlying asset is made available for use by the lessor. We have lease agreements with lease and non-lease components, and have elected to utilize the practical expedient to account for lease and non-lease components together as a single combined lease component, from both a lessee and lessor perspective with the exception of direct sales-type leases and production equipment classes embedded in supply agreements. From a lessor perspective, the timing and pattern of transfer are the same for the non-lease components and associated lease component and, the lease component, if accounted for separately, would be classified as an operating lease. We have elected not to present short-term leases on the consolidated balance sheets as these leases have a lease term of 12 months or less at lease inception and do not contain purchase options or renewal terms that we are reasonably certain to exercise. All other lease assets and lease liabilities are recognized based on the present value of lease payments over the lease term at commencement date. Because …

LesseeOperatingLeasesTextBlock · excerpt; the full note is in the filing

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. This ASU will likely result in the required additional disclosures being included in our consolidated financial statements, once adopted. We are currently evaluating the provisions of this ASU. In July 2025, the FASB issued ASU No. 2025-05, Financial InstrumentsCredit 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 …

NewAccountingPronouncementsPolicyPolicyTextBlock · excerpt; the full note is in the filing

Related Party Transactions Tesla periodically does business with certain entities with which its CEO and directors are affiliated, such as xAI, SpaceX, The Boring Company and Redwood Materials, in accordance with our Related Person Transactions Policy. During the year ended December 31, 2025, we recognized $430 million of revenues and $285 million of cost of revenues from xAI for its purchase of our Megapack products in the ordinary course of business. Other transactions with xAI and other related parties during the year ended December 31, 2025 were immaterial. During the years ended December 31, 2024 and 2023, transactions with related parties were immaterial. In January 2026, the Company entered into an agreement with xAI to invest approximately $2 billion to acquire shares of Series E Preferred Stock of xAI. As the investment is not in-substance common stock and the fair value is not readily determinable, we will account for the equity investment using the measurement alternative in accordance with ASC 321, Investments Equity Securities . The equity investment will be initially recorded at cost on our consolidated balance sheet as a long-term investment subsequently adjusted only for observable price changes for identical or similar securities, net of any potential impairment, which will be evaluated quarterly. We will recognize any changes in the basis of the equity investment in Other (expense) income, net in the consolidated statements of operations. …

RelatedPartyTransactionsDisclosureTextBlock · excerpt; the full note is in the filing

Segment Reporting and Information about Geographic Areas Our Chief Executive Officer, as the CODM, organizes our company, manages resource allocations and measures performance among two operating and reportable segments: (i) automotive and (ii) energy generation and storage. The automotive segment includes the design, development, manufacturing, sales and leasing of electric vehicles as well as sales of automotive regulatory credits. Additionally, the automotive segment also includes services and other, which includes sales of used vehicles, non-warranty maintenance services and collision, paid Supercharging sessions, automotive insurance business revenue, part sales and retail merchandise sales. The energy generation and storage segment includes the design, manufacture, installation, sales and leasing of energy generation and storage products and related services and sales of energy generation incentives. Our CODM does not evaluate operating segments using asset or liability information. The CODM uses gross profit to allocate operating and capital resources and assesses performance of each segment by comparing actual gross profit results to historical results and previously forecasted financial information. The following table presents revenues, cost of revenues and gross profit by reportable segment (in millions): Year Ended December 31, 2025 2024 2023 Automotive segment Revenues $ 82,056 $ 87,604 $ 90,738 Cost of revenues (1) $ 68,764 $ 72,794 $ 74,219 Gross profit $ 13,29 …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

Summary of Significant Accounting Policies Principles of Consolidation The accompanying consolidated financial statements have been prepared in conformity with GAAP and reflect our accounts and operations and those of our subsidiaries in which we have a controlling financial interest. In accordance with the provisions of ASC 810, Consolidation (ASC 810), we consolidate any variable interest entity (VIE) of which we are the primary beneficiary. We have formed VIEs with financing fund investors in the ordinary course of business in order to facilitate the funding and monetization of certain attributes associated with energy generation systems and leases under our direct vehicle leasing programs. The typical condition for a controlling financial interest ownership is holding a majority of the voting interests of an entity; however, a controlling financial interest may also exist in entities, such as VIEs, through arrangements that do not involve controlling voting interests. ASC 810 requires a variable interest holder to consolidate a VIE if that party has the power to direct the activities of the VIE that most significantly impact the VIEs economic performance and the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. We do not consolidate a VIE in which we have a majority ownership interest when we are not considered the primary beneficiary. We h …

SignificantAccountingPoliciesTextBlock · excerpt; the full note is in the filing

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. …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

"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 …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

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

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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 $ 2,54 …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

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 allowa …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

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, IntangiblesGoodwill and OtherInternal-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 st …

NewAccountingPronouncementsPolicyPolicyTextBlock · excerpt; the full note is in the filing

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.

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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 revenue …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

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 res …

SignificantAccountingPoliciesTextBlock · excerpt; the full note is in the filing