Tesla Inc

Automotive momentum + demand driver from FSD (good / important) - Tesla delivered record Q2 deliveries with sequential growth across regions: Americas +60%, APAC +27%, EMEA +12%. - Model Y set/led multiple country records (e.g., Netherlands, Australia, New Zealand). - FSD is a key demand catalyst: in North America ~55% of deliveries had FSD subscription enabled at delivery. - FSD attach improving to ~1.5 million paid customers globally; mix is ~55% upfront purchases / 45% subscriptions. - Forecast / expectation: Tesla expects subscription monetization to be the main growth driver going forward (notably because they removed the purchase option in most markets).

Margins: auto down sequentially; energy down more sharply (bad / monitor) - Automotive gross margin (ex-regulatory credits) fell sequentially from 19.2% to 16.3%. - Management attribution: Q1 benefits (~$230M from warranty true-downs + tariff relief) did not repeat in Q2; ex-credit margin excluding those prior benefits is “approximately flat.” - Additional pressure: commodity price increases and interest-rate subvention costs (subvention costs recognized upfront as revenue offset, so rising rates increase cost). - Energy gross margin dropped from 39.5% to 20.4% despite strong deployments: - Energy deployments: 13.5 GWh in Q2 (+53% sequential; second-largest quarter). - Margin hit from ~$240M warranty true-up (legacy vendor cell issues), Q1 tariff benefits (>$200M) didn’t repeat, and industrial storage ASPs declining amid competition. - Outlook: Energy long-term expected to normalize to mid- to low-20% gross margins.

Robotaxi scaling: exponential miles growth, strong safety claims, but regulatory + reliability gating (surprising + risks) - Tesla claims impeccable safety: >380,000 miles unsupervised across 6 cities in 2 states, with zero notable incidents (reports allegedly only when other actors impacted stationary cars). - Scale expectation: continued double-digit week-over-week growth in unsupervised miles; management expects high compound growth through the rest of 2026. - City rollout strategy: expanding to additional cities rather than concentrating in 1–2 because they want to validate a generalizable stack and “work kinks” before larger scale. - Key scaling milestone framing: Tesla says the constraint is the “March of 9s” reliability target (seeking extremely high operational reliability like 99.999%)—not demand. - Risk/uncertainty: while safety is emphasized, expansion is still constrained by state-level regulatory approaches and the need to avoid over/under-regulation; investors should treat deployment pace as contingent on permitting and performance.