Elon Musk waves to the crowd during the 56th annual World Economic Forum meeting in Davos, Switzerland, Jan. 22, 2026.
Denis Balibouse | Reuters
Tesla reported first-quarter earnings on Wednesday that beat analysts’ estimates even as revenue came in weaker than expected.
Shares of the electric vehicle maker initially rose about 4% in extended trading but gave up their gains after the company said on the earnings call that spending this year will be $5 billion above prior guidance.
Here’s how the company did, compared with estimates from analysts polled by LSEG:
- Earnings per share: 41 cents adjusted vs. 37 cents expected
- Revenue: $22.39 billion vs. $22.64 billion expected
Tesla’s stock has underperformed all of its megacap peers so far this year, dropping 14% as of Wednesday’s close. The company’s core automotive business continues to struggle against competitors across the globe like China’s BYD and Xiaomi.
Revenue increased 16% in the quarter from $19.3 billion a year earlier, according to Tesla’s earnings statement. In its auto segment, revenue also rose 16% to $16.2 billion from $14 billion a year ago. Tesla confirmed in the earnings deck that it plans to make “more affordable trims” of its Model Y SUV and Model 3 sedans.
The past year has been a challenge as rivals offer higher-tech but lower-cost models against Tesla’s aging lineup of electric vehicles. Tesla also faces an ongoing consumer backlash in response to CEO Elon Musk’s work with the Trump administration, his incendiary political rhetoric and endorsements of far-right political figures.
Earlier this month, Tesla reported 358,023 vehicle deliveries for the first quarter, which was lower than the prior quarter and up about 6% from a year earlier. Tesla has recorded annual declines in the past two years, with a drop in the year-ago quarter partially attributable to “the loss of several weeks of production,” as the company was upgrading Model Y factory lines.
Net income increased to $477 million, or 13 cents a share, from $409 million, or 12 cents a share, a year earlier.
Tesla’s automotive gross margins, excluding the sales of environmental regulatory credits, came in at 19.2%, higher than in any quarter last year. The company said margins were helped by higher average selling price and “lower average cost per vehicle due to lower material costs.”
Profits were also boosted by what the company described, in its shareholder deck, as “one-time benefits” related to tariffs, and its automotive warranties. In February, the Supreme Court struck down a huge chunk of President Donald Trump’s far-reaching tariff agenda, and companies are now claiming refunds from the federal government. CFO Vaibhav Taneja said on the earnings call that the company hasn’t received a benefit from the Supreme Court decision.
Capital expenditures jumped 67% in the quarter to $2.49 billion from $1.49 billion in the same quarter last year. Taneja said on the call that capex will top $25 billion this year, up from a 2026 prediction last quarter of $20 billion. That’s an increase from $8.6 billion in 2025.
In its energy segment, which sells solar installations and a range of battery energy storage systems, Tesla reported $2.41 billion in revenue for the quarter, down 12% from $2.73 billion in the year-ago period.
Musk has been trying to change the narrative surrounding his company by focusing on efforts in self-driving technology and humanoid robots. While the company is testing a small number of driverless cars in its ride-hailing service in Texas, Tesla still relies on EV sales for the bulk of its revenue and doesn’t yet sell a robotaxi-ready vehicle.
Tesla said in January that it would end production of Model S and X vehicles, and use the factory in Fremont, California, to build Optimus humanoid robots. The company said on Wednesday that “preparations for our first large-scale Optimus factory will begin shortly in Q2,” with a plan for the “first-generation line” to build 1 million robots a year.
Musk has a history of setting and missing ambitious targets for developing futuristic products.
On the earnings call, Musk said older model Tesla vehicles featuring Hardware 3 computers would not be able to use the company’s forthcoming “unsupervised” FSD systems, which are intended to make their cars capable of driverless operations, or safe for use without active human supervision.
The company said it plans to set up a “discounted trade-in” for cars that have the older hardware, and will allow customers to upgrade their car computers and cameras to enable future self-driving system use.
Tesla is the first of tech’s trillion-dollar companies to report results for the quarter. Alphabet, Amazon, Meta and Microsoft are scheduled to report next Wednesday, followed a day later by Apple.
This is breaking news. Please check back for updates.
WATCH: Tesla can only trade on hopes about the future for so long, says Cramer