Tesla's next frontier is convincing everyone that this is fine

Tesla has long been in the business of selling tomorrow. Its cars are built for movement, but the company’s real product has always been momentum — a story that only looks complete if you squint a few quarters ahead. Those quarters promise to bloom into something extraordinary, into years that will make sense of the present if you’re patient enough to wait.

The company’s latest quarterly earnings showed that instinct to stretch the calendar still governs everything: record revenue paired with shrinking margins, all wrapped in promises about robotaxis and humanoids that aren’t yet generating real dollars. What the company offered this quarter wasn’t proof that the future is here — it was assurance that the future is still on schedule. 

The future, CEO Elon Musk implied, is intact. And for now, that should be fine.

The numbers were impressive when viewed from one angle. Revenue climbed 12% to $28.1 billion, and vehicle deliveries reached 497,099 units — both company records. But profit fell 37% to $1.4 billion, and operating margin settled at 5.8%. Earnings per share came in at $0.50, missing consensus, and regulatory-credit revenue plunged 44% to $417 million. Chief financial officer Vaibhav Taneja told investors that tariffs cost “in excess of $400 million.” If the headline growth told one story, the margin compression told another.

But Musk assured investors that the margin squeeze was temporary, brushing off the compression as a temporary cost of ambition. The story now depends on those capital expenditures — the gigafactories, the new chips, the humanoid robot prototypes — all of it meant to usher in the next phase of Tesla’s empire. Musk said the company is building for the next wave. That wave is now the business itself.

The work is now persuasion

This next stretch demands steadiness. Tesla still needs investors to accept that a thinner present can still be a credible bridge — and that the pieces already working can carry more of the load until the bigger bets show up in big dollar figures. This most recent quarter already set the terms. Now, Tesla must make the repeatable parts do more of the talking — energy that throws off real gross profit, a charging network that behaves like infrastructure, cash generation that doesn’t lean on one-time quirks.

“[Tesla] did a good job of explaining what they’re doing, which is retooling for the next wave of profitability,” said Brian Mulberry, senior client portfolio manager at Zacks Investment Management. “There are certainly some very strong growth maps when you’re looking at the other segments, outside of just the pure autos. ... The capex looks like it’s going to be productive.”

But, he added, “We want to see that return on capex sooner than later. ... What we want to see going forward is continued growth in those other business segments that arrive more of the revenue on a total basis.”

Mulberry thinks energy and charging can do real work in the near term — roughly $2 billion over the next three quarters — enough to offset about a 10% percent pull-forward from this quarter’s EV tax-credit rush within a year. That’s “tolerable.” But it’s not a green light to add. “Does it mean that I want to buy more Tesla right now? No, probably not,” he said. “Because they need to start hitting some of these metrics now, without the subsidies.”

A handful of tidy quarters would move more minds than any keynote. If the rhythm becomes obvious, the cost of belief falls on its own. Those are planks investors can step on. They don’t fix margin compression, but they make “we’re investing through it” sound less like a plea and more like a plan.

The future keeps moving forward

Tesla’s horizon pieces haven’t changed — robotaxis and a general-purpose humanoid robot — but the dates have. In 2019, Musk said there would be “over a million robotaxis” the next year. In 2025, the map is narrower: a geofenced Austin pilot with talk of removing safety monitors later in the year if conditions allow, and a staged rollout after that.

The company’s humanoid robot, Optimus, follows the same choreography. In 2022, Musk told shareholders that mass production would begin by 2025. The new target is 2026, with limited factory use next year and the promise of volume manufacturing “when ready.” Musk said on the call that Tesla is “seeing real progress,” noting that Optimus is now doing factory work. That’s technically true — the robot has been filmed moving boxes in a controlled lab setting — but it’s a far cry from a million-robot workforce.

What’s remarkable is how routine this pattern has become. A timeline slips, a new prototype appears onstage, and the market shrugs — and sometimes rallies. Tesla’s stock is up almost 17% year to date, as faith moves faster than margins. So far this year, the company has “refreshed” an old model, launched a long-promised “cheaper” model that wasn’t actually that cheap, and repackaged its Megapack batteries into something called the Megablock. That all has somehow been enough to keep the chart pointing up, which might be the most futuristic thing Tesla has shipped all year.

Many investors’ patience rests less on numbers than on personality. “Show me another CEO that has the engineering prowess that Elon has,” Mulberry said. “His innovative mind and aggressive business tactics have gotten Tesla to where it is.” That’s how some investors justify waiting through messy prints: conviction in the operator while operating leverage rebuilds.

For Tesla, each new deadline functions as proof of concept rather than proof of progress. Tesla doesn’t need to meet its own schedule to validate belief; it only needs to show that Musk is still the one drawing the map. Even so, patience isn’t charity. Mulberry said, “If the P/E [trailing P/E of 259.5 and forward P/E/ of 172.4] were to come down from orbit, just a little bit, we might be interested in owning a little bit more.” The market still believes in Tesla’s story, just maybe not at a sky-high valuation.

How long can ‘fine’ carry?

Wall Street continues to orbit that story, too. Wedbush’s Dan Ives called the quarter “a good one” in a post-earnings analyst note and kept his $600 price target, arguing that Tesla “is laying the autonomous path” that will define its next decade. In his view, the company’s AI strategy — the custom AI5 chip, the so-called Full-Self-Driving miles logged, the growing energy business — justifies any short-term turbulence.

Others are less rhapsodic. But Tesla has turned earnings into an optical illusion; what you see depends on where you’re standing. The bulls see cash flow, scale, and Musk’s restless genius. The bears see an automaker with fading novelty and profit margins that now look positively terrestrial. The rest of the market sees something in between: a company that has mastered the art of making time feel like traction.

Every quarter seems to follow the same schedule. Tesla overdelivers on scale, underdelivers on profit, reframes the miss as investment, and pushes the payoff another year out. Musk’s frontier isn’t physical or technological — it’s temporal. He’s building time and selling it forward.

The company can keep pointing to data, chips, pilots, and internal deployments; it can keep reminding everyone that other lines are scaling while the splashier ones mature. But if the horizon keeps moving, the present has to feel sturdier in ways that show up in a model, not just a narrative. That means fewer sentences hedged with “later this year” or “at the start of next year” and more that translate directly into the income statement. It means using the cash cushion to finance the build, not the storyline. It means that, when the quarter asks for confidence, the confidence comes from factory throughput, software attach, service revenue, and signed energy contracts, not from the promise (once again) that the next version will change, well, everything.

The center of the market is ready to reward that version of Tesla because it lowers the cost of belief in a simple way. Hold the shares while the second act keeps doing its job. And if conviction gets cheaper and execution gets tidier. In Tesla’s universe, “fine” is always a prelude. Margins can compress, timelines can stretch, credits can expire — as long as the next big thing is still coming. Eventually. The company no longer needs to prove that future is imminent; it just has to prove that it’s intact.

There’s a certain genius in that. Tesla has managed to industrialize optimism, to turn a trillion-dollar valuation into a self-reinforcing ecosystem of faith. Each setback simply becomes a sequel, and each quarter an exercise in collective suspension of disbelief. For now, investors are still willing to play along. They accept that fine means temporary, that patience is a growth strategy, and that the most valuable thing Tesla produces isn’t a car or a robot — it’s the confidence that both will exist soon enough.

And that, somehow, is just fine.