Tesla's cumulative revenue over the past 12 months surpassed $100 billion for the first time, yet second-quarter profits dwindled to just $400 million. On July 22, after U.S. market hours, Tesla released its Q2 FY2026 results, with revenue reaching $28.24 billion, up 26% year-over-year. Adjusted EPS came in at $0.33, significantly below the market expectation of $0.51—a 35% shortfall. Operating profit was $398 million, with operating margin declining from 4.1% to 1.4%. Revenue grew by 26%, while profit dropped by 57%. On July 23, Tesla plunged 12% intraday, with its market capitalization falling to USD 1.23 trillion. Gross margin stood at 21.1% in Q1 but plunged sharply to 16.8% in Q2—a 4.3 percentage-point drop. Excluding one-time factors, Q1’s underlying gross margin was approximately 17.5%, compared to 16.8% in Q2. Automotive gross margin, excluding regulatory credits, was 16.3%, down from 17.2% a year ago. The operating margin decline stemmed from a 47% surge in operating expenses, driven by aggressive investments in AI R&D. Regulatory credit revenue also declined from $380 million in Q1 to $146 million in Q2. In North America,