Tesla released its Q1 2026 earnings yesterday, April 22, after the close of markets. While the stock jumped shortly after the release, it subsequently pared gains and is trading in the red in today’s price action. Let's look at the key takeaways from the report and examine some of the risks that the company listed.
Key Takeaways From Tesla’s Q1 2026 Earnings
Tesla reported revenues of $22.39 billion in the quarter, which fell short of Street estimates. The topline miss hasn’t really come as a surprise, though, as I had noted in the pre-earnings analysis. Meanwhile, Tesla’s adjusted earnings per share (EPS) came in at 41 cents, which was ahead of the 37 cents that analysts expected. Higher vehicle average selling prices and lower material prices helped the company post better-than-expected adjusted profits in the quarter, even as its GAAP profit fell short of estimates.
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www.barchart.com Here are some of the other key takeaways from the earnings call:
Automotive Business: The earnings call was in line with expectations, and the automotive business is gradually receiving less attention as the focus has shifted to artificial intelligence (AI) initiatives. For the second quarter in a row, Tesla did not provide delivery guidance for the year, even as CEO Elon Musk said the company is laying the groundwork for a “significant increase in vehicle production in the future.” The company, however, sees “tailwinds” in that business, with the Q1 order backlog the highest in two years. While the rise in gas prices has been a positive for its electric vehicle (EV) business, CEO Vaibhav Taneja said that the improvement started even before the spike in gas prices. Musk also confirmed that the company has started the production of its Cybercab, while Tesla Semi production is expected to commence soon. Full Self-Driving (FSD): Tesla has received FSD approval in the Netherlands, and the company expects an EU-wide approval soon. Musk expressed optimism over Tesla receiving FSD approval in China in Q3. The China FSD approval should be taken with a pinch of salt, though, as such reports have been floating around for quite some time now, and given the communist government's paranoia about data, it would want a stringent mechanism to ensure that data of its citizens does not leave its borders. Additionally, Musk said that older Tesla vehicles, which have the Hardware 3 computers, won’t be able to support the unsupervised full self-driving features that it plans to roll out to some vehicles later this year. Musk admitted that doing these upgrades at standard service centers would be too slow. Instead, Tesla plans to set up "micro-factories" in major metropolitan areas, which would essentially be mini-production lines dedicated solely to retrofitting the fleet. The company would also offer discounted trade-ins for Hardware 3 car owners to upgrade to newer vehicles equipped with the latest hardware. Robotaxi: Musk said that Tesla would roll out a robotaxi fleet in around a dozen states this year. He attributed the slow expansion to the “very cautious approach to the rollout” the company is taking as it prioritizes safety. He said that the revenue from robotaxi service won’t be material this year while expecting the business to start contributing significantly from next year. Optimus Humanoid: Musk said that Optimus production should begin at the Fremont factory later this year. He, however, said that the company would unveil the V3 Optimus version as it gets near production, as “competitors do a frame-by-frame analysis whenever we release something and copy everything they possibly can.” In response to a question over the exit rate of Optimus production this year, Musk said that it is “impossible to predict” given the complexity of production. I would add that even the demand for humanoids is also uncertain, even as the current forecasts are quite rosy. Tesla Raised Its Capex Budget: Tesla also raised its capex budget for 2026 to over $25 billion and said that it would be free cash flow negative for the rest of the year. The company is building the Terafab, for which Intel (INTC) and SpaceX are partners. SpaceX is among the many privately held companies that Musk owns, and during the earnings call, Musk said that the deal between the two companies has to be approved by their respective boards to ensure that the “right balance” is maintained and shareholders of both companies are served. That said, Tesla's board hasn’t been a shining example of independence—nor is the overall corporate governance at the company.Key Risks Tesla Faces
Rising capex and resultant negative free cash flow are a challenge for Tesla, but not unexpected given that the company is positioning itself for the next era of growth. To its credit, Tesla has been quite capital efficient in building its EV business, and we have no reason to believe otherwise in the AI business.
I believe Optimus production ramp-up and possible copycat humanoids from competitors, particularly in China, remain a big risk for Tesla. Chinese EV companies are giving Tesla a tough fight in China and global markets despite being late to the party. In humanoids, Tesla does not have the kind of head start that it had in electric cars. Given China’s backing of new-age companies in the EV and robotics industries, we can be quite sure that some Chinese companies will give Tesla a run for its money in physical AI, which remains a big challenge for the company's prospects in global markets.
On the date of publication, Mohit Oberoi had a position in: TSLA , INTC . All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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