Key Highlights
- Tesla exceeded Q1 projections with $22.39B revenue and $0.41 earnings per share against $0.35 consensus
- The company achieved a 21.7% gross margin, significantly surpassing the 17.7% analyst forecast
- Capital expenditure for 2026 projected at “over $25 billion,” representing a sharp increase from the previous $20B forecast and signaling negative free cash flow ahead
- The autonomous ride-hailing service launched in Dallas and Houston with unsupervised vehicle operations
- Shares fell more than 3% in premarket hours Thursday; Mizuho reduced price target from $540 to $480
Tesla surpassed analyst expectations across most financial metrics in its first quarter report — yet the stock retreated on aggressive investment plans.
The electric vehicle manufacturer posted $22.39 billion in quarterly revenue, exceeding the $22.08 billion Wall Street consensus. Earnings per share on an adjusted basis reached $0.41, beating analyst estimates of $0.35. The gross margin figure of 21.7% handily outperformed the 17.7% projection.
Yet despite these positive results, TSLA shares dropped over 3% during Thursday’s premarket session. The primary driver? A capital expenditure announcement that surprised market participants.
During the quarterly earnings discussion, CFO Vaibhav Taneja disclosed that Tesla’s capital spending for 2026 would exceed “$25 billion” — a notable increase from the company’s earlier $20 billion projection and a substantial leap from approximately $9 billion spent in fiscal 2025. Management indicated this elevated investment level would drive negative free cash flow through year-end.
Autonomous Service Grows Geographic Footprint
Tesla announced its Robotaxi platform extended operations into Dallas and Houston markets during the weekend, featuring “unsupervised” autonomous functionality — meaning no backup safety operator behind the wheel. The expansion timeline proved faster than some market observers anticipated, though the company continues to withhold specific data on fleet composition or the number of fully autonomous vehicles deployed in any given city.
The platform’s autonomous miles traveled nearly doubled from the previous quarter. Tesla indicated that Cybercabs will ultimately replace the Model Y vehicles presently serving riders. Before this latest expansion, Tesla’s Robotaxi operated exclusively in Austin, with ride-hailing services available in the San Francisco Bay Area.
Regarding manufacturing timelines, the company stated that Cybercab, Tesla Semi, and Megapack production remain on target.
During the earnings call, CEO Elon Musk stated that Optimus V3 would likely be unveiled around production commencement, estimated for July or August. He suggested that Optimus robots would “probably” become available for external customers by next year.
Tesla also revealed that its AI5 semiconductor has completed tape-out — the final design verification phase. The chip will power upcoming electric vehicles, artificial intelligence training systems, and Optimus humanoid robots, with manufacturing planned at Tesla’s forthcoming Terafab production facility in Austin. Industry analysts have characterized the internal chip manufacturing initiative as exceptionally ambitious, with Bloomberg sources indicating that actual silicon fabrication won’t commence until 2029.
Wall Street Responds with Caution
Mizuho preserved its Outperform rating while lowering its price objective to $480 from $540, highlighting near-term demand challenges. The investment firm projects approximately 4% year-over-year electric vehicle volume growth in 2026, a significant deceleration from 30% growth in 2025.
Goldman Sachs retained its Neutral stance with a $375 price target. Truist maintained its Hold rating at $400. TD Cowen continued its Buy recommendation, emphasizing autonomous vehicle and robotics growth opportunities.
Tesla’s automotive gross margin, excluding regulatory credits, achieved 19.2% in Q1 — climbing 120 basis points sequentially, supported by tariff adjustments and warranty provision adjustments.
First quarter vehicle deliveries totaled 358,023 units, marginally below the 364,645 consensus forecast, though year-over-year comparisons benefited from the prior year’s Model Y production transition disruption.
