Tesla’s first-quarter results topped Wall Street forecasts, with profit rising about 16% from a year earlier. The beat gave the stock a brief lift after hours, but CEO Elon Musk opened the earnings call by warning investors the company will sharply ramp up spending, dampening some of the initial enthusiasm.
Musk said Tesla plans roughly $25 billion in spending this year on AI software and chips, plus manufacturing and design — an acceleration that could reduce near-term profitability. He framed the move as a long-term bet similar to major technology firms that are increasing capital investment now.
The quarter’s strength arrived even as parts of the business cooled. Energy storage sales — stationary batteries rather than vehicle battery business — slowed, and revenue from regulatory credits declined. Those credits, purchased by automakers that don’t meet fuel-efficiency and zero-emission mandates, have become less valuable amid policy shifts under the Trump administration.
By Tesla’s recent standards the quarter was muted: it recorded its second-worst net profit and vehicle delivery totals among the past 12 quarters, with only the weak first quarter of 2025 performing worse. Still, the results were better than many analysts had feared.
Tesla said demand is picking up in some markets, including North America, and higher vehicle prices aided margins this period. U.S. sales have been pressured by a broader slump in EV purchases and, analysts say, the polarizing effect of Musk’s public political activity. Despite that, the Model 3 and Model Y remain in strong demand and continue to attract buyers positioned in a popular price and performance segment, according to industry observers.
Revenue increased in other areas, including the Supercharger network and subscription services tied to the company’s supervised Full Self-Driving software.
Throughout the call, Musk shifted focus away from short-term car sales and toward next-generation technologies he sees as Tesla’s future: artificial intelligence, humanoid robots and fully autonomous vehicles. The company already operates a small fleet of fully autonomous robotaxis in Texas and has promised a large rollout. Tesla has paused production of the luxury Model S and Model X to free up capacity for its humanoid robot, Optimus. Musk said Optimus is slated to enter production this summer and become useful outside Tesla next year, and he suggested the robot could become one of the company’s most important products.
Investors appear willing to place their bets on that long-term vision. Tesla’s market value sits near $1.45 trillion — more than five times Toyota’s — even though Toyota still sells far more cars.
At the Tesla Diner in Los Angeles, where Optimus made an appearance at the grand opening, the robot was not present on the day of the earnings call; staff said robots show up for special events only. Visitors and supporters remained upbeat despite the absence. One investor cited Optimus, full self-driving and potential new mobility products as reasons to stay fully invested, while a friend acknowledged Musk’s timelines often slip but expressed belief that the company’s promises will eventually materialize.
That faith in Tesla’s long-term potential — rather than any single quarterly report — has helped keep the stock elevated through cycles of stronger and weaker financial performance.