Tesla, Inc. (TSLA.US) Q1 profits exceed expectations, free cash flow unexpectedly turns positive, Musk announces plans to "significantly increase investment", with a target of producing one million Optimus vehicles per year.

Tesla, Inc. (TSLA.US) released its first quarter earnings report for 2026 after the market closed on April 22nd, Eastern Time, stating that global demand for electric vehicles is rebounding. The report showed that the company's revenue for Q1 was $22.387 billion, an increase of 16% compared to the previous year, slightly below the market's expectations of $22.792 billion; adjusted earnings per share were $0.41, higher than the $0.27 of the same period last year and the market's expectation of $0.34. This is the second consecutive quarter that Tesla, Inc. has exceeded profit expectations. After the earnings report was released, Tesla, Inc.'s stock price rose by 4% in after-hours trading, but the increase narrowed later. As of the time of writing, the stock was slightly down in after-hours trading. Key financial data: Profits surpass expectations, unexpected positive cash flow The report showed that in terms of profitability, the company's GAAP net profit was $477 million, an increase of 17% compared to the previous year; GAAP earnings per share increased from $0.12 to $0.13 compared to the same period last year. Positive cash flow was unexpected this quarter. In the first three months of 2026, Tesla, Inc. spent less than $25 billion in capital expenditures, roughly only half of what is needed for each quarter to reach the annual expenditure target. This allowed Tesla, Inc. to achieve a positive free cash flow of $1.4 billion for the quarter, much better than the analysts' expected net cash outflow of about $1.9 billion. Operating cash flow was $3.94 billion, an 83% increase year-on-year. As of the end of the first quarter, the company had a total of $44.74 billion in cash, cash equivalents, and short-term investments. In terms of profit margins, the company's total gross profit margin increased significantly from 16.3% to 21.1% compared to the same period last year, and operating profit margin improved from 2.1% to 4.2%, with operating profit reaching $941 million, compared to $3.99 million in the same period last year. Excluding environmental regulatory credit, the gross profit margin for electric vehicles was 19.2%, the highest level since 2025. Automotive business: Delivery volume increased by 6% year-on-year, trending towards stabilization Data shows that revenue from Tesla, Inc.'s automotive business in the first quarter increased by 16% year-on-year to $16.23 billion. In terms of deliveries, Tesla, Inc. produced a total of 408,386 electric vehicles globally in the first quarter, an increase of 13% year-on-year. They delivered 358,023 vehicles, a 6% year-on-year increase, but lower than analysts' expected 366,000 vehicles, making it the second-worst quarter in terms of sales volume since 2022. This delivery performance was only better than the same period the previous year when Tesla, Inc. suspended Model Y production and faced widespread resistance due to Musk's political activities. By model, 394,611 Model 3/Y vehicles were produced, and 341,893 were delivered; while 13,775 of other models (including Cybertruck, etc.) were produced, with 16,130 delivered. In the earnings report, Tesla, Inc. stated, "We see continued growth in vehicle demand in the Asia-Pacific region and some markets in South America, while demand in Europe, the Middle East and Africa, as well as the North American market, is also rebounding." At the same time, the company will launch "more affordable versions" of Model Y and Model 3 in response to competition pressure. Zacks Investment Research analyst Andrew Rocco noted in a report that this earnings report "confirmed that while traditional electric vehicle business growth is no longer rapid, it is stable enough to support Tesla, Inc.'s large-scale investments in Siasun Robot&Automation and autonomous driving technology." Energy business revenue declined by 12%, energy storage deployment lower than expected The energy business, which had performed well for several consecutive quarters, cooled down in the first quarter. Revenue from the energy storage and generation business was $2.41 billion, a 12% decrease compared to the $2.73 billion in the same period last year. Energy storage deployment decreased by 38% quarter-on-quarter to 8.8 gigawatt-hours, far below analysts' expected range of 12 to 14 gigawatt-hours. The company stated that the energy storage business itself is volatile, but it still expects the full-year energy storage deployment to exceed 2025 levels. Tesla, Inc. stated that the production of key products such as Cybercab, Semi, and upgraded Megapack battery energy storage systems is progressing as planned. Musk announced that the production of Cybercab and Semi trucks will start this year, although the initial pace may be slow, but exponential growth is expected by the end of this year and in 2027. Capital expenditures significantly increased, 2026 investment plan revised up to over $25 billion Tesla, Inc. had capital expenditures of $2.49 billion in the first quarter, a 67% increase year-on-year, mainly used to expand AI computing power and advance new production line construction, including the Cybercab self-driving taxi production line and the Optimus humanoid Siasun Robot&Automation production line. During the subsequent earnings call, Tesla, Inc.'s Chief Financial Officer Vaibhav Taneja announced an upward revision of the full-year capital expenditure expectation for 2026 from the previous $20 billion to over $25 billion. Taneja also mentioned that rising oil prices have brought positive order increment to Tesla, Inc. Additionally, the company plans to continue expanding the Robotaxi fleet. Musk stated during the analyst call that the company will "significantly increase" vehicle production and investment in the future, and that capital expenditures are expected to increase significantly. Strategic transformation: Focus on autonomous driving and Siasun Robot&Automation Tesla, Inc. is accelerating its business transformation, reducing dependence on car sales, and focusing on developing autonomous driving and Siasun Robot&Automation business. Musk stated during the call that unmanned FSD or Robotaxi is expected to be introduced in more than a dozen states by the end of this year. The electric car manufacturer reiterated its plan for the new mobility service "Robotaxi," stating that the business will expand as planned to Phoenix, Miami, Orlando, Tampa, and Las Vegas in the first half of this year. The Robotaxi service was initially envisioned as an autonomous service, launched last year in Austin, and has since slowly expanded. It has also been launched in Houston and Dallas this month. Musk emphasized, "There are still a lot of significant improvements planned in the FSD (fully automated driving) area, and unmanned FSD may be possible in any region where it is legally allowed in the world." The company has not yet provided details on the revenue or size of the fleet for this business, or disclosed how many vehicles are operating without safety supervisors. Tesla, Inc. also offers ride-hailing services through the same app in the San Francisco Bay Area, catering more towards the models of Uber Technologies, Inc. and Lyft. As for the Optimus humanoid Siasun Robot&Automation business, Tesla, Inc. will start preparing for the construction of the first large-scale factory in the second quarter, with the goal of producing 1 million units of Siasun Robot&Automation per year. The new facility near the Texas Gigafactory is designed to have a production capacity of 10 million units of the second-generation Optimus Siasun Robot&Automation per year, while the Fremont factory in California will build a smaller first-generation production line to replace the one previously used for producing Model S and Model X. After the earnings report was released, Tesla, Inc.'s stock price rose by nearly 4% in after-hours trading, but the increase later narrowed. By the close of regular trading, the stock had dropped by approximately 14% since the beginning of the year, underperforming other large tech stocks. Investing.com senior analysts commented, "The real focus is on cash flow, which undoubtedly provides Musk and his team with more firepower - more importantly, it buys time."