Key Takeaways
- Tesla exceeded Q1 projections with $22.39B revenue and $0.41 EPS versus analyst expectations of $0.35 per share
- The automaker delivered gross margin of 21.7%, significantly outpacing the forecasted 17.7%
- Capital expenditure guidance for 2026 was raised to “over $25 billion” from a previous $20B forecast, triggering negative free cash flow expectations through year-end
- The company’s Robotaxi offering launched in Dallas and Houston with fully autonomous operation
- TSLA shares fell more than 3% premarket Thursday following the earnings release; Mizuho reduced its target price from $540 to $480
Tesla delivered a quarter that surpassed analyst projections across most financial metrics — yet shares tumbled on ambitious capital spending plans.
The electric vehicle manufacturer posted quarterly revenue of $22.39 billion, exceeding the Street consensus of $22.08 billion. Earnings per share on an adjusted basis reached $0.41, beating estimates of $0.35. The company’s gross margin registered at 21.7%, substantially higher than the 17.7% projection.
Yet despite the positive financial performance, TSLA shares dropped over 3% during Thursday’s premarket session. The reason? An unexpected capital expenditure outlook that raised investor eyebrows.
During the quarterly earnings conference call, CFO Vaibhav Taneja disclosed that Tesla’s 2026 capital spending would exceed “$25 billion” — a notable increase from the previously communicated $20 billion estimate and a substantial leap from approximately $9 billion spent in fiscal 2025. Management indicated this elevated spending level would push the company into negative free cash flow territory for the balance of the year.
Autonomous Taxi Service Reaches New Markets With Limited Transparency
The electric vehicle maker announced that its Robotaxi platform launched in select areas of Dallas and Houston this past weekend, featuring fully “unsupervised” autonomous operation without safety drivers present. The expansion timeline exceeded some market expectations, though the company continues to withhold specific data regarding fleet composition or the quantity of unsupervised vehicles deployed in each metropolitan area.
Robotaxi mileage nearly doubled from the previous quarter during Q1. Management indicated that Cybercabs will ultimately replace the Model Y vehicles currently utilized for the service. Before this geographic expansion, Tesla’s Robotaxi operations were limited to Austin, while ride-hailing services operated in the San Francisco Bay Area.
Regarding manufacturing timelines, the company stated that Cybercab, Tesla Semi, and Megapack production remain on track.
During the earnings call, CEO Elon Musk indicated that Optimus V3 would be unveiled around the commencement of production, anticipated in July or August. He suggested that Optimus would “probably” become available for external use beyond Tesla operations sometime in the following year.
Tesla also disclosed that its AI5 semiconductor has completed tape-out — the final design validation phase. The proprietary chip will power upcoming electric vehicles, AI training infrastructure, and Optimus humanoid robots, with manufacturing planned at Tesla’s forthcoming Terafab manufacturing facility in Austin. Industry analysts have characterized the internal chip fabrication strategy as exceptionally aggressive, with Bloomberg sources indicating that actual silicon production won’t commence until 2029.
Wall Street Responds With Caution
Mizuho Securities maintained its Outperform rating while lowering its price target from $540 to $480, highlighting near-term demand challenges. The investment firm projects electric vehicle volume expansion of approximately 4% year-over-year for 2026, a significant deceleration from the 30% growth recorded in 2025.
Goldman Sachs retained its Neutral stance with a $375 price target. Truist Securities held steady with a Hold rating at $400. TD Cowen affirmed its Buy recommendation, emphasizing autonomous driving and robotics opportunities as key growth drivers.
Tesla’s automotive gross margin, when excluding regulatory credits, achieved 19.2% during Q1 — an improvement of 120 basis points from the prior quarter, aided by favorable tariff developments and warranty reserve adjustments.
First quarter vehicle deliveries totaled 358,023 units, marginally below analyst expectations of 364,645, though year-over-year comparisons benefited from the prior year’s Model Y production transition disruption.
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