Tesla’s first-quarter results beat Wall Street expectations, with profits 16% higher than a year earlier. The report briefly lifted the stock in after-hours trading, but CEO Elon Musk began the earnings call by warning investors the company will sharply increase spending, wiping out some of the enthusiasm.
“We’re going to be substantially increasing our investments in the future,” Musk said, noting roughly $25 billion Tesla plans to spend this year on AI software and chips as well as on manufacturing and design. That caution tempered the market’s response.
The stronger-than-expected quarter came even as Tesla’s energy storage business — stationary batteries rather than vehicle batteries — slowed and revenue from regulatory credits declined. Those credits, bought by automakers that fall short of fuel-efficiency and zero-emission requirements, have been less in demand amid policy shifts under the Trump administration.
By Tesla’s own standards the quarter wasn’t stellar. The company logged its second-worst net profit and vehicle deliveries in the last 12 quarters, with only the weak first quarter of 2025 worse. Still, results exceeded what many analysts had feared.
Tesla said demand is rebounding in some markets, including North America, and higher vehicle prices helped margins this quarter. U.S. sales have been hit in recent years by a broader slump in EV buying and, some analysts say, by the polarizing effect of Musk’s political activities. But the Model 3 and Model Y continue to draw strong interest. “The Model 3 and the Model Y are really kind of benchmark vehicles that are positioned right in that sweet spot,” Damon Bell, senior research editor at Cars.com, told NPR.
Revenue also rose in categories that include the Supercharger network and subscriptions tied to the “Full Self-Driving (supervised)” software, which assists driving when monitored by a human.
Musk used the call to steer attention away from near-term car sales, arguing Tesla’s future hinges on artificial intelligence, humanoid robots and fully autonomous vehicles. He has repeatedly said the company will invest heavily in these next-generation technologies, which could make upcoming quarters look less profitable as spending accelerates. “Tesla’s not alone in this,” he said. “I think you’ve seen most, if not all, [of] certainly the major technology companies substantially increasing their capital investments. And we’re going to be doing the same. I think it’s going to pay off in a very big way.”
Tesla is already operating a small fleet of fully autonomous robotaxis in Texas and has pledged a large rollout. The company has stopped producing the luxury Model S and Model X to free up production capacity for its humanoid robot, Optimus. Musk said Optimus will enter production this summer and begin being useful “outside Tesla” next year. “As you’ve heard me say a few times, I think Optimus will be our biggest product,” he added.
Investors appear willing to bet on that vision: Tesla’s market capitalization stands near $1.45 trillion, more than five times Toyota’s, even though Toyota sells far more cars.
At the Tesla Diner in Los Angeles, where Optimus once made an appearance for the grand opening, the robot was absent on the day of the earnings call. Staff said robots show up only for special occasions. Visitors and Tesla supporters expressed disappointment but remained optimistic. Jimmy Cho, an investor from Taiwan, cited Optimus, full self-driving and a possible “Cybercab” as reasons he’s all-in on Tesla. His friend Allen Chiang acknowledged Musk’s timelines can slip but said he believes Musk’s promises will eventually come to pass. “I think Tesla will change the world of human beings,” Chiang said.
That belief in Tesla’s long-term potential — more than any single quarter’s results — has helped keep the stock lofty through cycles of stronger and weaker financial performance.
