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Tesla beat Wall Street expectations in its first earnings report of the year after recent weakness in its core auto business as it shifts focus to self-driving taxis, humanoid robots and AI infrastructure.
(Photo by Nora Tam/South China Morning Post via Getty Images)
South China Morning Post (via Getty Images)
important facts
Tesla reported first-quarter revenue of $22.39 billion and earnings of $0.41 per share, beating FactSet estimates of $22.19 billion and earnings of $0.35 per share.
Although the company reported its second-worst quarter for auto sales since 2022, the company said Wednesday that demand for its vehicles had rebounded in North America and Europe, led by countries such as France and Germany, while growth continued in the Asia-Pacific region, particularly South Korea and Japan.
Tesla delivered just over 358,000 vehicles in the first quarter, up 6% from a year earlier, but missed the company’s consensus of 365,645 and FactSet’s forecast of 381,000.
Capital spending increased 67% from the first quarter of 2025 to $2.49 billion. The move is part of the company’s plan to spend $20 billion this year to pivot its business, more than double last year’s $8.5 billion.
On Wednesday’s earnings call, founder and CEO Elon Musk said the company’s aggressive capital spending is “well justified,” especially since the company intends to invest heavily in training AI models and designing and manufacturing AI chips in-house as it competes with the biggest tech companies.
The stock rose 4% in after-hours trading but is down 11% this year, underperforming the rest of the Magnificent 7 tech stocks, including Apple, Microsoft, Alphabet, Amazon, Meta and Nvidia.
Main background
The quarter caps off a difficult period for Tesla’s core auto business. Full-year sales for 2025 decreased 3% to $94.83 billion, the first annual sales decline in the company’s history, while earnings per share decreased 47% to $1.08 as annual vehicle deliveries declined for the second time. Musk pivoted the company this year from its core electric vehicle business to robotaxis, humanoid robots and AI infrastructure amid declining sales. The brand has struggled with increased competition, especially from Chinese EV makers, as it aggressively eroded market share and customer backlash from Musk’s involvement in the Trump administration. Earlier this year, the company announced plans to end production of its Model S and Model X vehicles and instead use the California manufacturing facility that made those vehicles to produce its humanoid robot, called Optimus. He also announced a $2 billion investment in Musk’s AI venture xAI as tech companies race to develop the most powerful AI models. Last month, Musk announced Terafab, a joint effort between Musk’s three companies SpaceX, xAI, and Tesla to make AI chips in partnership with Intel. Tesla on April 18 announced plans to expand its robotaxis business, which currently trails Alphabet’s Waymo, beyond California to Houston and Dallas (Tesla’s current robotaxis service in California is run by either human drivers or human safety supervisors). Musk also merged SpaceX and xAI in the first quarter in a deal worth $1.25 trillion, setting the combined companies up for a potential record-breaking IPO.
Forbes rating
Forbes estimates that Musk is the richest person on the planet, with a fortune of $786 billion, more than $500 billion more than the second-richest man, Larry Page. SpaceX’s expected public debut in June will value the company at $1.75 trillion, meaning Musk could soon become the first person with a net worth of over $1 trillion. Musk owns an estimated 43% of SpaceX stock and 12% of Tesla stock, and is part of a $1 trillion compensation package approved by Tesla shareholders in November, but the automaker needs to meet several goals over the next 10 years. Mr. Musk has also raised a total of $2 billion in private funding for two other startups: tunnel drilling company The Boring Company and brain implant company Neuralink.
tangent
“I think Optimus is not only Tesla’s biggest product in history, it’s probably Tesla’s biggest product ever,” Musk said in his opening remarks on Tesla’s first quarter results. Tesla’s first humanoid robot project was announced in 2021, and two versions have been announced so far. In late 2024, it was revealed that the Optimus robot performed simple tasks at Tesla’s October “We, Robot” event, some of which were controlled remotely. Tesla installed hundreds of units in its factories last year for task execution and AI training data, but Musk acknowledged in last quarter’s earnings call that they were for learning purposes and did not perform any critical tasks. During Wednesday’s earnings call, Musk said the company will announce the latest version of Optimus around the end of July or August, as the third version of Optimus is expected to go into production this summer.
