Tesla's 78/100 score is supported by a strong balance sheet and free cash flow above accounting profit. However, revenue and net income declined in 2025; thin margins, weak capital efficiency and a high approximate valuation are important counterweights.
What does Tesla do?
Tesla manufactures and sells electric vehicles and also provides energy-storage systems, solar products, charging and services. A significant part of its growth plan rests on autonomous driving, Robotaxi, AI infrastructure and the Optimus robot. These areas may create opportunity, but investment can also weigh on current profitability.
What do the FY2025 financials show?
Total revenue was $94.83 billion, down $2.86 billion from the prior year. Net income attributable to common shareholders fell by $3.30 billion to $3.79 billion. Gross margin used by the model was 18.0% and operating margin 4.6%. Sales are large, but operating profit left after costs is limited.
Operations generated $14.75 billion of cash and capital expenditure was $8.53 billion. The roughly $6.22 billion difference equalled 163.9% of net income. Year-end cash and investments were $44.06 billion, versus $8.18 billion of aggregate principal debt.
Why do the five categories produce this result?
Growth 71/100: Five-year revenue growth looks strong, but lower 2025 sales and a negative five-year net-income trend show that historical growth was not uninterrupted.
Profitability 5/100: An 18.0% gross margin, 4.6% operating margin and approximate 5.2% return on capital keep this group weak. The core question is whether new investment ultimately produces higher profit.
Cash flow 99/100: Although the free-cash-flow margin was only 6.6%, free cash exceeding net income shows strong conversion of accounting profit into cash.
Balance sheet 100/100: The current ratio was 2.16 and the net-cash position was strong. Operating income covered interest expense about 27.9 times. The composite result is capped at 100 for readability.
Shareholder policy 49/100: Stock compensation was about 3% of revenue and no cash was distributed through dividends or repurchases in 2025. The model's approximate 235-times earnings multiple based on SEC public-float data points to high expectations risk. Corporate-action effects within the share-count measure also require careful interpretation.
Critical combinations
- Net cash + high interest coverage
- Positive free cash + strong earnings conversion
- Automotive scale + growing energy business
- Falling annual profit + thin operating margin
- High expectations + heavy AI investment
- New businesses + uncertain commercial timing
Q2 2026 current context
Tesla reported $50.62 billion of revenue and $1.59 billion of net income attributable to common shareholders for the first six months of 2026. Operating cash flow was $8.63 billion and capital expenditure $8.28 billion. The company linked higher investment to AI and operational infrastructure and factory expansion.
The interim period shows revenue recovery and investment needs rising together. It is not included in the FY2025 score, and no assumption is made that investment will necessarily become future revenue or cash flow.
Tesla's balance sheet provides a strong investment buffer, but the long-term outcome depends on automotive and energy scale as well as whether AI, Robotaxi and robotics investment converts into sustainable profit and free cash flow. This is not investment advice.
Frequently asked questions
Why does Tesla score 78?
A strong balance sheet and cash conversion support the total, while thin margins, weak capital returns and a high approximate valuation limit it.
Are Q2 2026 results included in the score?
No. The 78 score uses only FY2025 10-K data; Q2 2026 is separately labelled current context.
Where the figures come from
- Tesla FY 2025 Form 10-K, SEC — year ended 31 December 2025; sole financial-period source for the score.
- Tesla Q2 2026 Form 10-Q, SEC — interim period ended 30 June 2026; current context only.
- Tesla Investor Relations, Q2 2026 — results announcement and company context.
- Free cash flow is operating cash flow less capital expenditure. Approximate valuation uses public-float data in the 10-K, not a live price.