TSLA Stock Rallies As Q1 Earnings Drive Past Wall Street Estimates On Higher Deliveries, Lower Costs

• The company delivered 358,023 electric vehicles in Q1, lower than expected, but still 6% higher than the corresponding quarter of 2025.
• However, automotive gross margin touched 21.1%, a sharp improvement year-over-year, while revenue from the company’s service and other segment rose 42%. 
• Musk has described 2026 as a challenging period of transition as the company diversifies away from its core electric vehicle business and into alternative sources of revenue such as artificial intelligence and robotics.

Tesla Inc (TSLA) on Wednesday reported first-quarter earnings above Wall Street expectations, spurred by higher vehicle delivery numbers and strong gross margins.

Shares of the company edged up 4% after hours at the time of writing.

The company reported Q1 adjusted earnings per share of $0.41, compared to an analyst estimate of $0.35. Revenue for the three months ending March came in at $22.39 billion, above an expected $22.20 billion, according to data from Fiscal AI.

Q1 EV Delivery

The company delivered 358,023 electric vehicles in Q1, lower than expected, but still 6% higher than the corresponding quarter of 2025. Production ran at 408,386 vehicles, leaving the company with about 50,000 more cars built than sold — the largest inventory built in recent memory.

However, automotive gross margin touched 21.1%, a sharp improvement year-over-year, thanks to manufacturing cost reductions, while revenue from the company’s service and other segment rose 42%.

Year Ahead

Musk has described 2026 as a challenging period of transition as the company diversifies away from its core electric vehicle business and into alternative sources of revenue such as artificial intelligence and robotics. The company is looking to start volume production of its dedicated robotaxi offering called Cybercab and its freight electric truck, Tesla Semi, this year, in addition to its humanoid robot Optimus and a new iteration of its energy storage product called Megapack.

While the Semi truck will be manufactured at the company’s gigafactory in Nevada, Cybercab will be manufactured at the Texas gigafactory itself, the company said.  

Tesla also said on Wednesday that preparations for its first large-scale Optimus factory will begin in the current quarter. The first-generation production line for the first generation of robots will replace the company’s lines for the now-retired Model S and X vehicles at its factory in Fremont. A second-generation production line, with an annual production capacity of 10 million robots, is being prepped at the company’s gigafactory in Texas, the company said.

SpaceX-Tesla Partnership

In March, Tesla announced that the company would build a semiconductor fabrication facility — a collaboration between Tesla and Musk’s privately-held company SpaceX — called Terafab, which will integrate chip design, fabrication, mask production, packaging, and testing into a single complex in Austin capable of eventually producing more than one terawatt of computing capacity annually. The facility, Tesla said, is aimed at meeting the anticipated greater chip demand than what the existing industry can accommodate.

How Did Retail Traders React?

On Stocktwits, retail sentiment around TSLA stock stayed within the ‘extremely bullish’ territory over the past 24 hours,  while retail chatter in the stock stayed at ‘high’ levels.

A Stocktwits user voiced optimism for the company’s upcoming product pipeline and reiterated faith in CEO Musk.

A Stocktwits user expressed disappointment that the company’s earnings for the quarter are still trailing Q4 levels.

TSLA stock has gained 63% over the past 12 months. 

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Editor's note: This story has been corrected to include the missing word "billion" in Tesla's Q1 revenue figures.