# Tesla's Sales Increased but Costs Rose as Well The company's profit margin significantly declined. - **Source:** [Ars Technica - All content](https://brifing.si/source/b728770c-8dda-457a-8986-84879c9fc42c) - **Published:** 2026-07-22 - **Topic:** [Business](https://brifing.si/c/business) - **Original article:** - **On Brifing:** https://brifing.si/s/a93eb95d-88bc-4afd-9266-37bc03e47760 ## Tesla's Financial Results Tesla increased its sales by 25% year-over-year in the second quarter of 2023. However, rising costs and expenses significantly reduced the profit margin. The company's once-enviable double-digit profit margin has now fallen to just 1.4%. ## Electric Vehicle Revenues Tesla's revenue from the electric vehicle business reached $20.5 billion, a 23% year-over-year increase. However, revenue from automotive regulatory credits was only $146 million. These credits had previously been a key contributor to the company's profitability. ## Energy and Storage Business Tesla's energy and storage business revenue rose by 13% year-over-year to $3.1 billion. This growth indicates the company's focus on business areas beyond electric vehicles. ## Growth in Services Tesla's services revenue doubled to $4.6 billion. The shift to a monthly subscription model for the Full Self-Driving (FSD) feature played a significant role in this growth. ## Rising Costs The company's increasing costs significantly reduced its profit margin. Major factors include CEO Elon Musk's massive compensation package and expenses related to the transition to the FSD subscription model. ## Future Expectations To improve its profit margin in future quarters, Tesla needs to focus on cost control and subscription-based revenue models. Growth in the energy and services businesses could support long-term profitability. ## Sources covering this story - https://arstechnica.com/cars/2026/07/teslas-revenues-are-up-but-profits-squeezed-as-musk-spends-on-ai/ — --- _Summary written by Brifing from the original reporting. Copyright in the original article belongs to its publisher; read the full piece at the link above._