Tesla reported first-quarter earnings that beat Wall Street estimates despite weaker-than-expected revenue, with adjusted earnings per share at 41 cents versus the 37 cents forecast.
Revenue came in at $22.39 billion, below the $22.64 billion analysts had projected, though it marked a 16% increase from $19.3 billion a year earlier. Automotive revenue likewise rose 16% to $16.2 billion from $14 billion in the prior year period.
Net income increased to $477 million, or 13 cents per share, up from $409 million, or 12 cents per share, a year ago. Automotive gross margins, excluding regulatory credit sales, reached 19.2% — the highest in any quarter over the past year — helped by higher average selling prices and lower material costs.
The company cited one-time benefits tied to tariffs and automotive warranties as contributors to profitability, though CFO Vaibhav Taneja said Tesla had not yet received any benefit from the Supreme Court’s February decision striking down parts of the Trump administration’s tariff agenda.
Capital expenditures jumped 67% year-over-year to $2.49 billion from $1.49 billion, reflecting increased investment in production and infrastructure.
Vehicle deliveries totaled 358,023 for the quarter — up about 6% from a year earlier but lower than the prior quarter — as Tesla continues to face production constraints from ongoing factory upgrades for the Model Y.
Tesla confirmed plans to introduce more affordable trims of the Model Y SUV and Model 3 sedan to counter competition from lower-cost rivals like BYD and Xiaomi, which are gaining ground with higher-tech offerings.
Despite the beat, Tesla’s stock initially rose about 4% in extended trading before giving up gains after Elon Musk warned on the earnings call that annual spending would be $5 billion above prior guidance.
For more on this story, see Tesla beats Q1 earnings estimates and pivots Fremont plant to Optimus.
Musk later clarified that the company plans to spend $25 billion this year alone on AI software and chips, as well as traditional manufacturing and design costs, a figure that far exceeds the $5 billion increase mentioned earlier and intensified investor concerns about near-term profitability.
The surge in AI-related spending comes as Tesla’s energy storage business slows and revenue from regulatory credits declines, as Trump administration policy shifts reduce demand for zero-emission vehicle credits that automakers once purchased from Tesla to offset their own emissions shortfalls.
Tesla’s U.S. Vehicle sales have stagnated or declined in recent years, influenced in part by consumer backlash to Musk’s political activities and broader weakness in the domestic EV market, though the company reports a rebound in demand in some North American markets.
Revenue growth was supported by the Supercharger network and subscriptions for Full Self-Driving (supervised) software, which assists with driving tasks under human supervision.
While profits exceeded expectations, NPR noted this quarter marked Tesla’s second-worst net income and vehicle delivery performance over the last 12 quarters, surpassed only by the first quarter of 2025.
Analysts remain divided on whether the aggressive AI investment will yield returns fast enough to justify the spending, especially as core auto margins face pressure from aging vehicle platforms and intensifying global competition.
Why did Tesla’s stock rise initially then fall after earnings?
The stock initially gained on better-than-expected profits but lost those gains after Elon Musk disclosed that annual spending would be $5 billion above prior guidance, later clarifying a $25 billion annual AI investment plan that raised concerns about near-term cash flow and profitability.
How is Tesla offsetting weakness in its core auto business?
Tesla is boosting profitability through higher average selling prices, lower material costs, one-time benefits from tariffs and warranties and growing revenue from its Supercharger network and Full Self-Driving (supervised) software subscriptions, even as U.S. Vehicle sales face pressure from political backlash and broader EV market sluggishness.
