Tesla’s Q1 revenue boosted by EV sales and FSD subscriptions

Tesla posted higher sales and profits year-over-year, with numbers supported by higher auto revenue and other services, including 1.28 million active subscriptions for fully self-driving (supervised) advanced driver assistance systems.

Tesla shares rose 4% in after-hours trading after the company announced its first-quarter results, mainly due to a surge in free cash flow and year-over-year increases in sales and profits. The rise in stock prices was short-lived and eventually fell into negative territory during the company’s earnings release.

The company reported sales of $22.38 billion on Wednesday, an increase of 16% from sales of $19.3 billion in the first quarter of 2025. Automotive sales also increased to $16.2 billion from $13.96 billion in the same period last year. Notably, the company reported positive free cash flow of $1.44 billion, more than double the amount from Q1 2025. The numbers surprised analysts who had expected the company to burn through even more cash in the first quarter.

The strong earnings met the expectations of analysts surveyed by Yahoo Finance and were a bit of good news for the company, which is grappling with slow EV sales. Tesla delivered 358,023 EVs worldwide in the first three months of this year, lower than analysts expected to deliver around 368,000. The company produced 408,386 vehicles during the same period, far more than it delivered.

The company’s first quarter revenue increased 51% year-over-year to 1.28 million vehicles, driven by higher average vehicle prices, services and active FSD subscriptions.

Tesla’s business faced significant headwinds in 2025, with profits down 46% from a year earlier to $3.8 billion. The drop was largely due to a decline in EV sales, a problem other automakers also faced after the Trump administration ended the $7,500 federal tax credit for electric vehicles.

Tesla’s first quarter results, while positive year-over-year, still show some weakness considering the past three quarters. The company had revenue of $24.9 billion in the fourth quarter and $28 billion in the third quarter, which were driven by consumers who bought EVs before the tax credit expired.

The first quarter results also show that the company is still reliant on its traditional EV business, along with services and subscriptions, and has yet to benefit from its future bets on AI and robotics.

Tesla’s net income was $477 million, compared to $409 million in the first quarter of 2025. The profit numbers for Q1 2025 were noticeably off, down 71% compared to the same period in 2024. Similar to the earnings story, Tesla’s first quarter profits are still significantly lower than the past three quarters. The company’s fourth-quarter profit was $840 million, and its third-quarter profit was $1.37 billion.

Tesla said profits were boosted by higher average selling prices for its cars, as well as higher vehicle deliveries, service growth and, oddly enough, higher car benefits related to warranties and fees.

Tesla CEO Elon Musk has repeatedly warned that the company’s transition from its core EV business to an AI and robotics company could be difficult and financially painful. The company has no plans yet to scale up production of its humanoid robot Optimus, which is produced at its Fremont, Calif., factory, or to meaningfully enhance its robotaxi service. The company said preparations for its “first large-scale Optimus factory” will begin soon during the second quarter.

The company currently operates a limited robotaxi service in Austin without a safety operator. The company recently began operating the service in Dallas and Houston, but access to those vehicles remains severely restricted.

But we’re going to spend a lot of money to make that change. Tesla said its capital spending in 2026 will be $25 billion, about three times its previous spending. As a result, Tesla’s CFO Vaibhav Taneja said the company will have negative cash flow for the rest of the year.