Quick Summary
- Tesla exceeded Q1 revenue and earnings projections, delivering $22.39B in sales and $0.41 earnings per share compared to $0.35 analyst expectations
- The automaker achieved a 21.7% gross margin, significantly surpassing the 17.7% consensus forecast
- Capital expenditure guidance for 2026 was raised to “over $25 billion” from an earlier $20B projection, indicating negative free cash flow for the year’s remaining quarters
- The company’s Robotaxi operations extended into Dallas and Houston with fully autonomous deployments already active
- TSLA shares declined more than 3% in Thursday’s premarket session following the results; Mizuho lowered its target price from $540 to $480
Tesla exceeded Wall Street projections across most financial metrics in Q1 — yet the market reacted negatively to the company’s capital spending forecast.
The electric vehicle manufacturer posted quarterly revenue of $22.39 billion, surpassing analyst consensus of $22.08 billion. Adjusted earnings per share reached $0.41, beating the $0.35 estimate. The company’s gross margin landed at 21.7%, well beyond the anticipated 17.7%.
Nonetheless, TSLA declined over 3% during Thursday’s premarket hours. The reason? An updated capex guidance that surprised market participants.
Chief Financial Officer Vaibhav Taneja revealed during the earnings conference that Tesla anticipates 2026 capital expenditures exceeding $25 billion — an increase from the previous $20 billion projection and a substantial rise from approximately $9 billion in fiscal year 2025. Management indicated this elevated spending level would produce negative free cash flow through year-end.
Robotaxi Operations Grow, But Transparency Remains Limited
Tesla announced that its Robotaxi platform extended into select Dallas and Houston areas during the past weekend, featuring “unsupervised” operations — meaning no safety driver present — now active in those locations. The expansion timeline moved faster than some market observers anticipated, although Tesla continues withholding specific details about fleet quantities or the total number of driverless vehicles operating in each market.
The company reported that Robotaxi mileage nearly doubled from the previous quarter during Q1. Tesla indicated that Cybercabs will ultimately replace the Model Y vehicles currently deployed for the service. Before this latest expansion, the company only operated Robotaxi in Austin and conventional ride-hailing services throughout the San Francisco Bay Area.
Regarding manufacturing timelines, Tesla stated that Cybercab, Semi trucks, and Megapack energy storage units remain on track.
During the earnings call, CEO Elon Musk mentioned that Optimus V3 would be unveiled around production commencement, expected in July or August. He suggested that Optimus would “probably” become commercially available beyond Tesla’s internal operations sometime in the following year.
Tesla further announced that its AI5 semiconductor has completed tape-out — the final design phase. This chip is intended for upcoming electric vehicles, AI training infrastructure, and Optimus humanoid robots, with manufacturing planned at Tesla’s forthcoming Terafab manufacturing center in Austin. Industry analysts have characterized the internal chip production initiative as exceptionally ambitious, with Bloomberg sources indicating actual silicon manufacturing won’t commence until 2029.
Wall Street Response Varies
Mizuho preserved its Outperform rating while reducing its price objective to $480 from $540, pointing to near-term demand challenges. The investment firm projects approximately 4% year-over-year electric vehicle volume expansion in 2026, a sharp deceleration from 30% growth in 2025.
Goldman Sachs retained a Neutral stance with a $375 price target. Truist maintained its Hold recommendation at $400. TD Cowen sustained a Buy rating, emphasizing autonomous vehicle technology and robotics as potential growth drivers.
Tesla’s automotive gross margin, excluding regulatory credits, achieved 19.2% during Q1 — representing a 120 basis point sequential improvement, aided by tariff adjustments and warranty accrual reductions.
First quarter deliveries totaled 358,023 vehicles, falling marginally short of the 364,645 consensus, though year-over-year comparisons benefited from the previous year’s Model Y production transition disruptions.
