Tesla experienced an increase in revenue and profit compared to the previous year, driven by a rise in automotive revenue and other services such as active subscriptions to its Full Self-Driving system, which reached 1.28 million. Tesla shares surged 4% in after-hours trading after releasing its first-quarter earnings report, largely due to a boost in free cash flow, alongside revenue and profit growth year-over-year.
The company reported revenue of $22.38 billion, a 16% rise from $19.3 billion in the first quarter of 2025. Automotive revenue increased to $16.2 billion, compared to $13.96 billion in the same period last year. Remarkably, Tesla reported positive free cash flow of $1.44 billion, more than double its cash position from the first quarter of 2025, surprising analysts who had anticipated higher cash burn.
The revenue increase, which matched expectations from analysts surveyed by Yahoo Finance, provided positive news for the company amid lagging EV sales. Tesla delivered 358,023 EVs globally in the first three months, below analysts’ projections of around 368,000. The company produced 408,386 vehicles in the same period, exceeding deliveries.
First quarter revenue benefitted from higher average vehicle prices, services, and a 51% rise in active FSD subscriptions to 1.28 million. Tesla faced headwinds in 2025, leading to a 46% year-over-year profit decline to $3.8 billion, primarily due to decreased EV sales—a problem faced by other automakers following the end of the $7,500 federal tax credit for electric vehicles.
Tesla’s first-quarter results, though positive year-over-year, still revealed some weaknesses compared to previous quarters. Fourth-quarter revenue was $24.9 billion, and third-quarter revenue was $28 billion, buoyed by EV purchases before the tax credit expiration.
The first quarter results highlight Tesla’s reliance on its traditional EV business, services, and subscriptions while not yet reaping significant benefits from future investments in AI and robotics. Tesla’s net income reached $477 million compared to $409 million in the first quarter of 2025. The Q1 2025 profit figure had dropped 71% from 2024. First quarter profits remain lower than the past three quarters, with fourth-quarter and third-quarter profits at $840 million and $1.37 billion, respectively.
Tesla attributed its improved bottom line to a higher average vehicle selling price, increased vehicle deliveries, growth in services, and automotive one-time benefits related to warranty and tariffs.
CEO Elon Musk warned of a potentially challenging transition from Tesla’s core EV business to an AI and robotics company. The company has yet to scale production of its Optimus humanoid robot or expand its robotaxi service significantly. Preparations for Tesla’s first large-scale Optimus factory will begin in the second quarter.
Tesla currently operates a limited robotaxi service without a human safety operator in Austin, and has recently expanded this service to Dallas and Houston, though access remains limited.