Tesla designs, makes and sells electric cars, mainly Model 3 and Model Y, plus grid-scale Megapack and home Powerwall battery systems. Buyers are consumers and fleets worldwide, utilities and commercial energy users; it also runs a small paid robotaxi service in Texas and Florida. [S10][S21]
Sources through 2026-09-22 · Report dated 2026-09-23
Business details
How it makes money
In Q2 2026, vehicle sales and leasing produced 73% of revenue ($20.52bn), energy storage and solar 11% ($3.14bn), and services such as charging, insurance, repairs and software 16% ($4.58bn). [S10]
What drives results
Vehicle deliveries (480,126 in Q2 2026, up 25%) and automotive gross margin excluding regulatory credits (16.3% in Q2 2026) set most of gross profit. [S10][S18]
Energy storage deployments (13.5 GWh in Q2 2026) and storage pricing, which management says is falling as competition increases. [S7]
Capital spending, guided above $25bn for 2026, which turned Q2 2026 free cash flow negative at about -$1.09bn. [S7][S9]
Key dependencies
Battery cells and electronic components from outside suppliers; management called both bottlenecks in Q2 2026, and a supplier cell defect caused energy warranty charges. [S7][S8]
Regulatory permission for driverless operation, which management says is granted city by city and state by state with no federal framework. [S12]
Tesla's trailing operating margin of 4.1% is below General Motors' 6.6%, yet its economic market value is about $1.35 trillion. Nearly all of that is a claim on robotaxis and humanoid robots; the robotaxi fleet is in the hundreds and Optimus has no disclosed external sales.
Valuing a company by valuing each business separately and adding them up, rather than applying one multiple to the whole.
In this report: Tesla's core vehicle and energy business and its robotaxi and robot ventures have different economics; separating them shows the core is worth about $28 per share.
Biggest risk
That autonomy works but only at a scale that earns back its cost. In the base case, 500,000 robotaxis and 500,000 robots a year by 2035 add about $2 per share after a $25bn-a-year investment programme.
Vehicles were 73% of Q2 2026 revenue, energy storage 11% and services 16%. Revenue rose 26% on 25% more deliveries, but operating income fell 57% to $398m and free cash flow was -$1.09bn.
Emissions credits that carmakers exceeding environmental standards sell to carmakers that fall short, recorded as almost pure profit.
In this report: Tesla's credit revenue fell to $146m in Q2 2026 from $439m a year earlier, removing high-margin income as other makers build their own EVs.
What the analysis price requires
At $378.90 the economic enterprise value is about $1.32 trillion. At an 11.5% discount rate that requires roughly $120bn to $145bn of after-tax operating profit by 2035, 35 to 40 times the trailing level.
A valuation model that works backward from a share price to find combinations of growth, margins, and other assumptions consistent with that price.
In this report: Working backwards from Tesla's $1.32 trillion economic enterprise value shows it needs about $120bn to $145bn of after-tax operating profit by 2035, against $3.4bn today.
The weighted average required return of a company's debt and equity providers, used to discount cash flows to the firm.
In this report: Almost all of Tesla's value in the bull case arrives after 2032, so the discount rate changes the bull value by about $45 per share for each 1.5 points.
Our assessment
Avoid. Bear $11, base $31, bull $332, probability-weighted $84. The core business is worth about $28. The price needs the bull case with near certainty; this holds for discount rates from 10% to 13%.
The multiple of profit assumed for a business at the end of a forecast period, used to estimate its value at that date.
In this report: The robotaxi and robot businesses are still growing in 2035, so their value depends on the multiple applied then: 22x in the base case and 30x in the bull case.
What matters most
Robotaxi fleet scale by 2035 is the widest uncertainty: plausible outcomes span 20,000 to 5 million vehicles, with no historical base rate, and value arrives late so the discount rate amplifies it.
Automotive gross margin ex credits (16.3% in Q2 2026) decides whether the investment programme is funded from operations; 200bp of core margin is worth about $6 per share.
The sensitivity of operating profit to changes in revenue when some operating costs are fixed.
In this report: Tesla's factories are largely fixed cost, so delivery swings move gross margin; rising AI spending has reversed the leverage, with operating income falling while revenue rose 26% in Q2 2026.
What it could be worth
Present-value estimates at 2026-09-23 from a sum-of-the-parts model with explicit annual forecasts for 2027 to 2035, a core Gordon terminal value and exit multiples on 2035 new-business profit, discounted at an 11.5% WACC.
Scenarios are conditional estimates, not promised returns.
Bear · USD 11.3000
Driverless operation stays geofenced, the fleet reaches about 40,000 vehicles, Optimus stalls, AI spending is cut after roughly $30bn, and core margins stay near 6%.
Assumption
Base · USD 30.5000
Autonomy scales to 500,000 robotaxis and Optimus to 500,000 units a year by 2035, but $9bn to $14bn of annual AI capex absorbs most of what they earn.
Assumption
Bull · USD 332.0000
Tesla becomes the dominant platform: 5 million robotaxis, 4 million robots a year and an 11% core margin by 2035, valued at 30 times after-tax profit, with six CEO award tranches vesting.
Assumption
A reduction in an existing shareholder's percentage ownership when the number of shares increases.
In this report: Reported shares include 423.7m unearned CEO award shares that only vest in a bull outcome; ordinary dilution from employee equity is about 0.5% a year.
A compensation award that pays the holder only the increase in share price above a set level, rather than the full share value.
In this report: The CEO's 2025 award withholds $334.09 of value per vesting share, so it dilutes outside holders only in outcomes where the price is well above that level.
What would change the view
Paid robotaxi fleet: above 25,000 vehicles by end-2027 with profitable unit economics would weaken the Avoid view; under 2,000 by mid-2027 would support it.
Not read directly: the Q2 2026 shareholder deck and 10-Q narrative, stock-based compensation history, debt maturities, credit ratings, warranty and capitalised-software notes, and succession planning. Regional delivery mix is a Barclays estimate. Robotaxi fleet size, Optimus status and Waymo metrics rely on secondary sources. Terafab ownership, funding split and IP terms are undisclosed. Robotaxi and Optimus unit economics at scale have no base rate and are assumptions.
Sources (47)
S1Tesla Forms 10-K (FY2020 to FY2025) and 10-Q (Q2 2026), platform-verified XBRLTesla, Inc. / SEC EDGAR · filing · 2026-07-23 · read 2026-09-23