Tesla Q1 Revenue Hits Highest Growth Rate in Three Years

On Wednesday, after the US stock market closed on the 22nd, Tesla announced that in the first quarter of 2026, its operating income increased by double digits year-on-year, reaching the strongest growth rate in nearly three years, reversing the downward trend of the fourth quarter. The earnings per share (EPS) for the quarter were more than 20% higher than the consensus analyst forecast.

The gross profit margin not only did not decrease but also increased. After returning to the 20% mark in the fourth quarter of last year, it further rose to the highest level in more than three years, and both operating cash flow and free cash flow were better than the market's previous pessimistic pricing.

Tesla emphasized in the financial report that there are one-time gains related to warranties and tariffs in the automotive business. At the same time, the contribution of services and other high-profit or improving businesses increased, coupled with the decline in raw material costs and the positive impact of exchange rates, all jointly pushing up profit performance. Tesla stated that it has found that the demand for the company's vehicles continues to grow in the Asia-Pacific region and South America, and demand has rebounded in Europe, the Middle East, Africa, and North America.

The cash flow was the biggest "surprise" in this financial report. Wall Street originally expected Tesla's free cash flow to turn negative in the first quarter, but the actual cash flow more than doubled year-on-year, and the capital expenditure for the quarter was 40% lower than the analyst's expectation.

Although Tesla is still increasing its investment in Cortex computing power, Dojo chips, autonomous taxi services Robotaxi, humanoid robot Optimus production lines, and vertical integration projects such as battery materials, at least from the first quarter's financial report, the intensity of investment has not dragged down cash flow on the books.

After the financial report was announced, Tesla's stock price, which closed only slightly higher by nearly 0.3% on Wednesday, rose in after-hours trading, with the increase once exceeding 4%. Analysts believe that the core driving force behind the stock price's strength in after-hours trading is the combination of profits and cash flow both being better than expected, coupled with the narrative strengthening brought by the progress of Robotaxi and autonomous driving software FSD.

At the performance conference call, Tesla CEO Elon Musk stated that the company will "significantly increase" investments in the future, with capital expenditures expected to grow substantially. It is expected that the new Optimus factory in Texas will start production in 2027, next year. After Musk mentioned the significant increase in capital expenditure, Tesla's stock price accelerated its post-market gains.

At the conference call, Tesla CFO Vaibhav Taneja stated that the company's capital expenditure this year will exceed $25 billion, which is more than the capital expenditure forecast of over $20 billion disclosed by Tesla when it released its fourth-quarter financial report. Tesla's stock price erased all gains in after-hours trading and turned negative, with the decline currently expanding to more than 2%.

Analysts believe that from the financial report itself, Tesla is using a higher gross profit margin and more service revenue to support the input of multiple fronts such as Robotaxi, AI computing power, chips, robots, and battery materials. However, in the short term, the stock market is more concerned about when these inputs can be transformed into verifiable profits and cash flow.

Karobaar Capital's Chief Investment Officer Haris Khurshid commented on Tesla's post-market decline, saying that higher capital expenditures would delay the payback period, and the market often reacts in the short term. Investors like Tesla's narrative, but when they realize there is still a lot of work to do, they will continuously adjust their strategies.

Revenue Slightly Exceeds Expectations, Gross Margin Rises Instead of Falling, Costs Continue to Increase

Tesla's total revenue for the first quarter of this year was $22.39 billion, a year-on-year increase of 16