Tesla 2Q margins under pressure; Goldman maintains Neutral and lowers target price

Overview

This report is Goldman Sachs' review of Tesla Inc. (TSLA)'s 2Q26 results. Goldman noted that Tesla's 2Q revenue performance was relatively solid, but margins and EPS were clearly below expectations, mainly due to declines in Automotive and Energy gross margins and rising opex. The report believes the market will focus more on Tesla's commercial and technological progress in key markets such as FSD, robotaxi, Optimus, EV, and energy, as well as the pressure these investments place on near- to medium-term earnings and free cash flow.

Core views

Goldman maintains its Neutral rating on TSLA. The core view is that Tesla may still benefit over the long term from large market opportunities in autonomous driving, robotics, EVs, and energy, but the near- to medium-term path of profitability and FCF improvement is weaker than previously expected; competition, ongoing R&D needs, higher capital spending, and an already fairly full valuation limit upside in the stock.

Analysis framework

The report uses actual 2Q26 results versus Goldman, FactSet market expectations, and company-compiled consensus as the main line of analysis, breaking down revenue, gross margin, EBIT, EPS, FCF, and segment performance across Automotive, Energy, Services, and others; it also incorporates management commentary on FSD, robotaxi, Optimus, battery, AI compute, and capex/opex to update 2026-2028 earnings forecasts and the EPS-multiple-based target price.

Methodology notes

• Valuation methodsEPS multiple valuation

  150X applied to updated Q5-Q8E EPS including SBC

  Goldman applies an unchanged 150X valuation multiple to updated Q5-Q8E EPS including SBC, deriving a 12-month target price of $360; the upside scenario is about $500 and the downside scenario about $150.

• Scenario analysisDCF scenario analysis by segment

  Segment-level DCF scenario analysis

  The report states that it can provide clients with an illustrative DCF scenario analysis by business segment to assess different business contributions and valuation sensitivity.

• Factor analysisGS Factor Profile

  Growth, Financial Returns, Multiple, and Integrated percentile

  The Goldman Sachs Factor Profile compares individual stocks with the market and industry peers across growth, financial returns, valuation multiples, and composite metrics.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Tesla Inc. (TSLA)

  Covered company and core equity asset

  Strengths

  Has long-term growth opportunities in EV, FSD, robotaxi, Optimus, energy storage, battery, and AI compute; FSD subscriptions and North America attach rate show commercial traction; vehicle backlog has reached a multi-year high.

  Weaknesses

  2Q margins and EPS were significantly below expectations; Automotive and Energy gross margins are under pressure; FCF is negative; opex and capex may continue to increase over the next several years.

  Comparison

  Goldman believes Tesla faces multiple competitors in AV, EV, Energy, and robotics; its robotaxi fleet scale remains smaller than some competitors.

  Risks

  Valuation is already fairly full, intensifying competition, long technology development cycles, rising capital expenditures, delays in product rollout, and policy/tariff risks.

• FSD / Robotaxi

  Long-term AI and autonomous driving growth option

  Strengths

  Active FSD subscribers reached 1.5mn, with North America new-car take-rate at 55%; cumulative paid robotaxi miles approached 2.5mn, with fully unsupervised miles exceeding 380k miles.

  Weaknesses

  Robotaxi operations are still at a low-base stage, and Cybercab deployment may be constrained by the need for the new platform to accumulate FSD miles.

  Comparison

  The report notes that Tesla's robotaxi fleet remains smaller than some competitors'.

  Risks

  Safety validation, regulation, pace of city expansion, commercialization timing, and competitive pressure.

• Optimus

  Long-term robotics growth option

  Strengths

  The first-generation production line is being installed, with production expected in 2026.

  Weaknesses

  Management says the technical challenges are complex, and initial output may remain low for a long time.

  Comparison

  The report believes the robotics field is also competitive, and that commercial deployment of Optimus may take a long time.

  Risks

  Technical execution, production ramp-up, real-world application scenarios, external shipment pace, and continued R&D investment.

• Energy

  Energy storage and battery business

  Strengths

  Megapack 3 and Megablock remain on track to begin production in 2026; progress has been made in Berlin cell-pack capacity, Texas cathode and lithium refining, and Nevada LFP cells.

  Weaknesses

  2Q Energy gross margin was dragged down by about $240mn in warranty costs, and long-term gross margin is expected to normalize back to the low- to mid-20% range.

  Comparison

  Management links long-term normalization of Energy gross margin to the competitive environment.

  Risks

  Supplier cell quality, warranty costs, margin pressure from competition, and execution risk in capacity ramp-up.

Key data

• 2Q26 revenue$28.236bnUp 26% YoY and 26% QoQ; below Goldman's $28.478bn, above FactSet's $26.423bn and company-compiled consensus of $27.584bn.
• 2Q26 total gross margin16.8%Below Goldman's 19.8%, company-compiled consensus of 19.5%, and FactSet's 19.3%.
• Automotive gross margin16.3%Including SBC and excluding regulatory credits; below Goldman and market expectations of 18.5%, affected by promotional APR, commodity costs, and lower vehicle ASP.
• Energy gross margin20.4%Affected by about $240mn in supplier cell-related warranty costs; excluding this, around 28%.
• Services gross margin14.1%A record high for 2Q.
• EBITabout $398mn1.4% of sales; below Goldman's about $1.805bn and company-compiled consensus of $1.503bn.
• Non-GAAP diluted EPS$0.33Below Goldman's $0.58, FactSet's $0.53, and company-compiled consensus of $0.55.
• Cash, cash equivalents, and investments$43.5bnDown $1.2bn QoQ; 2Q FCF was -$1.092bn.
• Active FSD subscribers1.5mnUp 16% QoQ and 56% YoY; North America new-car FSD take-rate was 55%.
• Robotaxi milesCumulative paid miles approached 2.5mnOf which more than 380k miles were fully unsupervised, with operating areas including Texas and Florida.
• New 2026-2028 EPS forecasts including SBC$1.00 / $2.00 / $2.55Previous values were $1.65 / $2.35 / $2.75; lowered due to reduced EBIT margins.
• 2026-2028 EPS forecasts excluding SBC$1.90 / $2.80 / $3.35Used to supplement assessment of profitability and the upside scenario.
• 2026 capex expectation>$25bnManagement expects opex and capex to continue rising to expand AI and energy-related projects.
• Potential debt financing capacityup to $30bnManagement said it may opportunistically obtain debt financing arrangements to support capital deployment.

Impact & implications

The report's investment implications are neutral to cautious: short-term earnings pressure comes from declining margins, rising opex, and negative FCF; the long-term narrative still centers on FSD, robotaxi, Optimus, and the energy business, but these opportunities require greater investment and their commercialization pace remains uncertain. The target price cut reflects Goldman's downward revision to near- to medium-term EPS and EBIT margins, while maintaining Neutral indicates that current valuation already fairly reflects long-term opportunities.

Risks

• Vehicle price declines could be greater than expected.
• EV competition intensifies.
• Tariff impacts or changes in government policy could have negative effects.
• EV demand slows.
• Development of products or capabilities such as FSD and 4680 is delayed.
• Key person risk.
• Internal control environment risk.
• Margin pressure.
• Operational risks arising from high vertical integration.
• Commercialization pace of AI-related products is below expectations.

What to watch

• FSD subscriber count, North America attach rate, and progress of v14/v15 rollout.
• Robotaxi unsupervised miles, pace of city expansion, and Cybercab deployment timing.
• Optimus production line installation, 2026 production ramp, and actual deployment scenarios.
• Whether Automotive gross margin continues to be dragged down by ASP, promotional APR, and commodity costs.
• Whether Energy warranty costs subside, and whether long-term gross margin returns to the low- to mid-20% range.
• Whether 2026 capex exceeds $25bn, and the magnitude of capex and opex growth over the next two to three years.
• Whether 2026-2028 EPS and EBIT margins continue to be revised down.
• Competitors' progress in AV, EV, Energy, and robotics.