Tesla posted a year-over-year rise in revenue and profit, boosted by growth in revenue from automotive and other services, including active subscriptions to its advanced Full Self-Driving (Supervised) driver assistance system, which reached 1.28 million.
Tesla shares rose 4% in trading after the release first quarter earnings reportdriven largely by the rise in its free cash flow, as well as year-over-year increases in revenue and earnings. That share price rally was short-lived and ended up in negative territory during the company’s earnings call.
The company reported revenue of $22.38 billion on Wednesday, a 16% increase from the $19.3 billion it generated in the first quarter of 2025. Its auto revenue also rose to $16.2 billion, compared to $13.96 billion in the same period last year. Specifically, the company reported positive free cash flow of $1.44 billion, more than double what it had in the first quarter of 2025. The figure surprised analysts who expected the company to burn through more cash in the first quarter.
That revenue rise, which met the expectations of analysts surveyed by Yahoo Finance, offered some good news for the company, which has faced lagging EV sales. Tesla delivered 358,023 EVs worldwide in the first three months of the year, below analysts’ expectations of about 368,000. The company also produced 408,386 vehicles during the same period, far more than it delivered.
The company’s first-quarter revenue was boosted by higher average vehicle prices, services and active FSD subscriptions, which rose 51% year-over-year to 1.28 million.
Tesla’s business took major headwinds in 2025, causing profits to drop 46% year over year to $3.8 billion. The drop was largely due to lower EV sales — a problem other automakers have faced since the Trump administration ended a $7,500 federal tax credit for electric vehicles.
Tesla’s first-quarter results, while positive on a year-over-year basis, still show some weakness when considering the previous three quarters. The company’s fourth-quarter revenue was $24.9 billion and third-quarter revenue was $28 billion, a figure that was buoyed by consumers who bought an EV before the tax credit expired.
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The first-quarter results also show a company that still relies on its traditional EV business, along with services and subscriptions, and is yet to capitalize on its future bets on artificial intelligence and robotics.
Tesla’s net income was $477 million, compared to $409 million in the first quarter of 2025. This first quarter 2025 earnings number was significantly lower, down 71% from the same period in 2024. Like the revenue story, Tesla’s first quarter earnings are still significantly lower than the previous three quarters. The company’s fourth-quarter earnings were $840 million and third-quarter earnings were $1.37 billion.
Tesla said a higher average vehicle selling price combined with an increase in vehicle deliveries, an increase in service and, surprisingly, an increase in one-time car warranty-related benefits and tariffs boosted the results.
Tesla CEO Elon Musk has repeatedly warned that the company is in the midst of an awkward and potentially painful financial transition from its core EV business to an artificial intelligence and robotics company. It has yet to scale up production of the Optimus humanoid robot, which will be produced at its Fremont, California, plant, or significantly boost its robotaxi service. The company said preparations for the “first large-scale Optimus factory” will soon begin in the second quarter.
The company currently operates a limited robotaxi service without a human safety operator in Austin. It recently began operating this service in Dallas and Houston, but access to these vehicles remains severely limited.
But he plans to spend a huge amount to make this shift. Tesla said its capital spending will be $25 billion in 2026, about three times what it has spent historically. Tesla CFO Vaibhav Taneja said as a result, the company will have negative cash flow for the rest of the year.
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