Tesla misses, yet Musk reassures investors with AI push
Tesla’s first quarter results, announced at market close yesterday, may have disappointed on traditional metrics.
Yet, the company has used its earnings to pivot the story, away from missed car delivery targets and falling profits, and toward its future bets on AI, autonomy and energy.
Revenue fell nine per cent year on year to $19.3bn, while net income slumped 71 per cent to $409m.
Vehicle deliveries dropped 13 per cent, largely due to planned factory shutdowns as the company retooled production lines for a refreshed Model Y.
But the market reaction was muted. What’s more, Tesla shares rose more than four per cent in after hours trading, suggesting investors were more interested in what’s next than the numbers that were just delivered.
Musk bets big on AI
Tesla used the earnings call to underline its AI ambitions, positioning itself less as a carmaker and more as a robotics and autonomy platform.
Chief executive and billionaire Elon Musk said the company remains on track to launch its first robotaxi service in Austin, Texas by June and reaffirmed a bold forecast: millions of autonomous Tesla vehicles offering paid rides by the second half of 2026.
Tesla’s “full self-driving software” was recently launched in China, a notable step into a tightly regulated market.
Meanwhile, the company’s humanoid robot, Optimus, is expected to begin pilot production at its Fremont facility this year.
Behind the AI push is a practical advantage. Musk revealed that some Tesla vehicles in US factories already drive themselves from the end of the production line to delivery lots – a glimpse into what he described as a “fully autonomous future fleet”.
“Tesla is increasingly an AI and robotics company”, Musk said on the call. “We build physical robots with wheels and humanoid form factors, powered by real-world AI – and this is where we believe the future lies”.
Energy storage surges
Another bright spot in the mixed earnings was Tesla’s energy division, which delivered 67 per cent year over year growth, reaching $2.73bn in revenue.
Battery storage deployments hit record highs, led by its Powerwall and Megafactory facilities.
The Megafactory, based in Shanghai, produced more than 100 units, though most had not yet shipped by the end of the quarter.
With AI data centres driving up electricity demand globally, Tesla sees long-term upside in energy storage.
Chief financial officer Vaihav Taneja described grid-scale battery deployment as a “strategic growth pillar”, especially as the world adapts to renewable energy volatility.
Tariffs, tensions, and political fallout
But the earnings call was polluted with warning signs, too.
Tesla flagged higher costs due to global trade headwinds, particularly US tariffs on Chinese parts and equipment.
Teneja estimated that tariffs could increase the cost of a vehicle by up to$2,000, even though most content is sourced from North America.
China’s export controls on rare earth magnets have also hit Tesla’s supply chain, including the Optimus robot project.
Political tensions may also be dampening brand sentiment in the Us – a point acknowledged by Tesla execs, who hope that new production launches and autonomy features can help repair image issues.
Musk refocuses on Tesla
In a development welcomed by the market, Musk said he plans to reduce time spent advising the White House on government efficiency.
AJ Bell’s Russ Mould dubbed it a “step toward regaining investor trust”, after the controversial tech behemoth’s political involvement drew criticism from several investors, helping push its share price to a six-month low.
Despite the earnings hit, Tesla ended the quarter with $37bn in cash and turned positive free cash flow and $664m.
New, more affordable vehicle models are expected to begin production in 2025, with Musk noting that existing factory capacity could support 3m vehicles per year.
For now, Tesla remains in transition. The drop in car sales may have dominated the headlines, but the firm’s earnings narrative is shifting – and firmly rooting itself in the AI future Musk has long promised.