Tesla’s automotive business is recovering, and shares are emerging from a correction

Tesla’s Q1 2026 results confirmed that the company continues to deliver growth and maintain financial resilience but is entering a more risk-intensive phase of large-scale investment. On the chart, the shares are holding above the moving average, and the base-case scenario assumes a move from 380 USD towards 490 USD.

Tesla (NASDAQ: TSLA) reported mixed but stronger results than a year earlier for Q1 2026. Revenue increased by 16% to 22.39 billion USD, non-GAAP earnings per share reached 0.41 USD, operating profit rose to 941 million USD, and free cash flow totalled 1.44 billion USD. At the same time, cash and short-term investments increased to 44.74 billion USD, confirming the company’s solid financial position.

The automotive business partially recovered after a weak 2025. Automotive revenue grew 16%, while deliveries increased 6% to 358,023 vehicles. However, Tesla produced 408,386 vehicles but delivered only 358,023, indicating that demand pressure and competitive intensity in the automotive segment persist.

At the same time, Tesla continues to reshape its business. The number of active FSD users increased to 1.28 million, up 51% year-on-year. The company is shifting its focus towards autonomous driving, robotaxis, AI infrastructure, and robotics, where potential margins may be higher than in traditional vehicle sales.

Tesla raised its 2026 capital expenditure plan to 25 billion USD, compared with 20 billion USD previously indicated in January. CFO Vaibhav Taneja also stated that Tesla expects negative free cash flow for the remainder of 2026.

This article reviews Tesla’s business model and revenue sources, outlining the key risks associated with investing in its shares. It presents the main quarterly financial indicators, enabling a comparison of the company’s performance across different periods, and provides a technical analysis of TSLA shares, forming the basis for the Tesla stock forecast for 2026.

About Tesla, Inc.

Tesla was founded in 2003 by Martin Eberhard and Marc Tarpenning. In 2004, Elon Musk joined the co-founders and became the largest investor, assuming the role of Chairman of the Board. In 2008, Musk became the CEO of the company.

Initially, Tesla focused exclusively on electric vehicle production, but new business areas eventually emerged. The first electric car, the Tesla Roadster, was introduced in 2008, marking the beginning of the electric vehicle manufacturing era. In 2014, the company introduced a driver assistance system, which later evolved into a fully autonomous driving system, known as Full Self-Driving.

In 2016, Tesla acquired SolarCity, a company specialising in solar panel installations, which led to the creation of Tesla Energy – a division focused on manufacturing solar panels and energy storage devices. In the coming years, the company plans to launch robotaxi services with autonomous vehicles, enter the freight transport market with its Tesla Semi electric trucks, complete the development of the Optimus humanoid robot, and create the world’s largest AI cluster for the Dojo supercomputer.

Tesla, Inc.’s main revenue streams

Tesla, Inc. generates revenue from various sources, reflecting the diversity of its products and services. The main revenue streams include:

• Vehicle sales: covers both direct sales to consumers and leasing.
• Regulatory credits: regulatory credits sold to other automakers that need them to comply with environmental regulations.
• Energy generation and storage: manufacturing and selling solar energy systems and energy storage devices – Powerwall (for residential use), Powerpack (for commercial applications), and Megapack (for large-scale energy needs).
• Services and other revenues: maintenance and repair centres, the Supercharger network, and insurance services for Tesla vehicle owners.
• Software and autonomous driving: fees for advanced driver assistance systems (Autopilot), the Full Self-Driving (FSD) package, and software updates.
• Battery and powertrain sales: supplying other companies with electric batteries, power units, and drivetrains.
• Renewable energy projects: contracts with utility companies and large energy consumers for deploying Tesla’s energy storage solutions.

Tesla, Inc. Q3 2024 financial results

Tesla released its Q3 2024 earnings report on 23 October, highlighting the following key figures:

• Total revenue: 25.18 billion USD (+8%)
• Net profit: 2.17 billion USD (+17%)
• Earnings per share (EPS): 0.62 USD (+17%)
• Operating margin: 10.8% (+323 basis points)
• Capital expenditures: 3.51 billion USD (+43%)

Revenue breakdown by segment:

• Vehicle sales: 20.02 billion USD (+2%)
• Energy generation and storage: 2.38 billion USD (+52%)
• Services and other revenue: 2.79 billion USD (+29%)

In its commentary on the report, Tesla’s management noted that, despite revenue falling short of Wall Street’s consensus estimate (25.18 billion USD vs. 25.47 billion USD), the company beat profit forecasts, reporting EPS of 0.72 USD compared with the expected 0.60 USD. This was achieved through higher gross margins, supported by reduced per-unit production costs. Tesla delivered a record 462,890 electric vehicles in Q3 2024, its highest quarterly total to date.

Tesla plans to introduce more affordable vehicle models in H1 2025, expecting sales growth of 20-30% for the year. Mass production of the Cybercab is scheduled for 2026, with a target output of at least two million units. Additionally, Tesla announced that its 4680-battery cell technology is approaching cost competitiveness, which could significantly shift the economics of battery production.

Management expressed confidence in the company’s strategic initiatives and its leading position in both the automotive and energy sectors.

Tesla, Inc. Q4 2024 financial results

On 29 January, Tesla released its Q4 2024 earnings report, showing a 71% decline in net profit. The key figures from the report are as follows:

• Total revenue: 25.70 billion USD (+2%)
• Net profit: 2.12 billion USD (–71%)
• Earnings per share (EPS): 0.60 USD (–71%)
• Operating margin: 6.2% (–204 basis points)
• Capital expenditures: 2.78 billion USD (+21%)

Revenue breakdown by segment:

• Vehicle sales: 19.80 billion USD (–8%)
• Energy generation and storage: 3.06 billion USD (+113%)
• Services and other revenue: 2.84 billion USD (+31%)

Tesla set a new record for electric vehicle deliveries in Q4 2024, with 495,570 units sold. The Tesla Model Y was the best-selling car worldwide in 2024. Elon Musk highlighted the successful production ramp-up at the Berlin and Texas Gigafactories, which played a key role in achieving these figures.

Tesla’s energy storage business also showed significant growth, driven by increased demand for products such as Megapack and Powerwall. Musk emphasised that this segment is essential to Tesla’s automotive business.

The Full Self-Driving (FSD) technology continues to evolve, with the Beta program now available to more users, helping collect valuable data. Musk expressed confidence that Tesla will achieve full vehicle autonomy soon. Looking ahead, the company aims to increase vehicle deliveries by approximately 50% year-on-year while expanding its model lineup and boosting production capacity at existing factories. Tesla also focuses on cost reduction and improving operational efficiency.

A notable remark from Elon Musk concerned the Optimus robots. He stated that by the end of 2025, several thousand Optimus units will be capable of performing practical tasks, initially tested and deployed at Tesla’s factories. Musk outlined Tesla’s ambition to rapidly scale Optimus production, projecting that even with a 50% annual growth rate, production could reach 100 million units per year within a few years. He underscored the importance of robotics and AI for Tesla’s future, seeing them as part of the company’s strategy to lead not only in electric vehicles but also in AI and robotics – a vision that could make Tesla the most valuable company in the world.

Tesla, Inc. Q1 2025 financial results

On 22 April, Tesla released a weaker-than-expected Q1 2025 report. Its highlights are outlined below:

• Total revenue: 19.34 billion USD (–9%)
• Net income: 0.93 billion USD (–39%)
• Earnings per share: 0.27 USD (–40%)
• Operating margin: 2.1% (–343 basis points)
• Operating expenses: 2.75 billion USD (+9%)
• Capital expenditures: 1.49 billion USD (–46%)

Revenue by segment:

• Vehicle sales: 13.97 billion USD (–20%)
• Energy generation and storage: 2.73 billion USD (+67%)
• Services and other revenue: 2.63 billion USD (+15%)

Tesla’s Q1 2025 report reflected a challenging period for the company. Financial performance was lower than expected, with EPS (non-GAAP) at 0.27 USD, below the forecast of 0.42 USD. The automotive segment, the company’s primary revenue source, contracted by 20%, driven by a 13% decline in deliveries and lower average selling prices. These results highlight the impact of the temporary suspension of Model Y production, an aggressive pricing policy, and a reliance on regulatory credit revenues (595 million USD), without which the automotive division would have posted a loss. Macroeconomic factors, uncertainty surrounding trade policy, and reputational risks associated with Elon Musk’s public activity further complicated the company’s position.

Nevertheless, Tesla’s energy business posted an impressive 67% increase in revenue, reaching 2.73 billion USD and delivering a record gross profit, confirming the company’s success in the energy storage segment. Free cash flow turned positive, reaching 664 million USD compared with a deficit of 2.53 billion USD a year earlier, indicating effective capital management despite significant AI investments.

The strategic focus on autonomous technology remains the company’s key growth driver. The launch of Full Self-Driving (FSD) as a paid service was planned for June, with millions of autonomous vehicles projected to be deployed by the end of 2025.

The Optimus humanoid robot project, with a target production of one million units per year by 2029, underscored Tesla’s ambition to expand beyond the automotive sector.

The market reacted positively to the report, with the stock gaining over 7% following the release, reflecting confidence in these initiatives, particularly in light of Musk’s statements about prioritising Tesla. However, short-term risks remain considerable. The withdrawal of the growth forecast for deliveries in 2025 signalled demand uncertainty, exacerbated by potential tariffs and competition from Chinese manufacturers such as BYD. A 9% increase in operating expenses and the lack of clarity regarding the launch of more affordable models heightened this uncertainty.

Tesla’s management provided no specific forecasts for Q2 2025, stating instead that they would revise the 2025 outlook after the Q2 2025 results, citing ongoing uncertainty in the automotive and energy markets amid shifting trade policies and macroeconomic conditions. Analysts forecast Q2 2025 revenue of around 24.45 billion USD, although Tesla has not confirmed or revised this figure.

Given these factors, Tesla remains a highly risky investment. The energy segment, AI development, and long-term strategic vision offer substantial growth potential. However, delivering on these ambitions will require Elon Musk to return to active management of the company, as he promised. His involvement in US politics negatively affected Tesla’s reputation, and the company now faces the challenge of restoring trust among both consumers and investors.

Tesla, Inc. Q2 2025 financial results

Tesla released its Q2 2025 earnings report on 23 July. The key figures compared with the same period in 2024 are as follows:

• Total revenue: 22.49 billion USD (–12%)
• Net income: 1.39 billion USD (–23%)
• Earnings per share: 0.40 USD (–23%)
• Operating margin: 4.1% (–220 basis points)
• Operating expenses: 2.95 billion USD (–1%)
• Capital expenditures: 2.39 billion USD (+5%)

Revenue by segment:

• Automotive sales: 16.66 billion USD (–6%)
• Energy generation and storage: 2.78 billion USD (–7%)
• Services and other revenue: 3.04 billion USD (+17%)

Tesla’s Q2 2025 results were disappointing, with revenue down 12% year-on-year to 22.5 billion USD, and net income falling to 1.39 billion USD – the company’s weakest quarterly performance in a decade. The primary factor behind the decline was a 17% decrease in automotive sales revenue, totalling 16.66 billion USD. Operating profit dropped by 42%, while free cash flow totalled just 146 million USD. Overall liquidity also declined, reaching 36.8 billion USD at the end of the quarter. Tesla delivered 384,122 vehicles during the period, representing a 14% year-on-year decrease.

Overall, Q2 revealed serious challenges for Tesla, including a decline in global demand for electric vehicles, intensified competition (particularly from Chinese manufacturers), aggressive pricing, and the withdrawal of subsidies in the US. Taken together, these factors put pressure on margins and profitability. Notably, around 37% of Tesla’s quarterly profit came from the sale of regulatory credits (439 million USD). Additional negative factors included trade barriers and Elon Musk’s political activity, which drew criticism and weakened demand in Europe.

Despite this, Tesla still has several growth drivers. One of them is the planned launch of a fully autonomous robotaxi, which could create a new subscription-based model and scalable robotaxi fleet. Another is the affordable electric vehicle priced at approximately 25,000 USD, which could significantly expand the customer base. The development of energy storage and robotics platforms also promises growth over the next two years.

For Q3 2025, Tesla did not provide formal guidance for key indicators. Elon Musk warned that the upcoming quarters could be challenging, citing macroeconomic headwinds, the expiry of US incentives, new tariffs on Chinese-made components, and regulatory uncertainty in autonomous driving. The CFO added that production of the latest affordable model was expected to begin gradually.

Tesla, Inc. Q3 2025 financial results

On 22 October, Tesla released its Q3 2025 report. The key figures compared with the same period in 2024 are as follows:

• Total revenue: 28.10 billion USD (+12%)
• Net profit: 1.77 billion USD (–29%)
• Earnings per share: 0.50 USD (–31%)
• Operating margin: 5.8% (–501 basis points)
• Operating expenses: 3.43 billion USD (+50%)
• Capital expenditure: 2.25 billion USD (–36%)

Revenue by segment:

• Automotive sales: 21.21 billion USD (+6%)
• Energy generation and storage: 3.42 billion USD (+44%)
• Services and other income: 3.48 billion USD (+25%)

In Q3 2025, Tesla delivered a record 497,099 electric vehicles (+7% y/y), supported by a surge in US demand ahead of the expiry of the 7,500 USD tax credit. The energy business also reached a record high, with 12.5 GWh of installed energy storage systems.

Revenue rose to a record level, but profit declined due to higher costs and changes in the revenue mix. The margin contracted as vehicle production costs increased, income from regulatory credit sales decreased, and, unlike last year, there was no one-off gain from FSD. Meanwhile, research and administrative expenses increased, resulting in a 40% year-on-year decline in operating profit. A key positive in the quarter was the record free cash flow of 3.99 billion USD and an increase in cash reserves to 41.6 billion USD.

The automotive segment increased revenue but saw lower profitability – rising component prices and tariffs offset the benefit of higher volumes. The energy business became the main growth driver, with Megapack and Powerwall contributing more revenue and profit. The services segment (including maintenance, charging stations, etc.) continued to grow at a double-digit rate.

The company did not provide specific figures for the next quarter, noting risks related to tariffs, trade policy, and changes in government support. Tesla is betting that over time, a greater share of profit will come from software, artificial intelligence, and services. The company has sufficient financial reserves to support its plans, including the launch of robotaxis in California and the expansion of its energy business.

Tesla, Inc. Q4 2025 financial results

Tesla released its Q4 2025 report on 28 January. Below are the key figures compared to the same period in 2024:

• Total revenue: 24.90 billion USD (–3%)
• Net income: 1.76 billion USD (–16%)
• Earnings per share: 0.50 USD (–17%)
• Operating margin: 5.7% (–50 basis points)
• Operating expenses: 3.60 billion USD (+39%)
• Capital expenditures: 2.39 billion USD (–14%)

Revenue by segment:

• Vehicle sales: 17.69 billion USD (–11%)
• Energy generation and storage: 3.84 billion USD (+25%)
• Services and other revenue: 3.37 billion USD (+18%)

Tesla reported earnings per share of 0.50 USD and revenue of 24.9 billion USD for Q4 2025, surpassing expectations despite a decline in sales compared to the previous year. Gross margin reached a two-year high of 20.1%, driven by improved cost efficiency and higher-priced products. For the full year 2025, total revenue was 94.8 billion USD, slightly down from 2024, with profit decreasing due to macroeconomic challenges and strategic investments.

Tesla also disclosed subscriber numbers for the first time in its report, announcing 1.1 million active Full Self-Driving (FSD) subscribers, representing significant growth compared to the previous year. Tesla’s energy business, including energy generation and storage, also showed resilience and strategic importance. While revenue from the automotive segment declined, the energy sector grew by 25% compared to the same period in 2024.

Tesla did not adjust its digital asset holdings in Q4 2025, ending the period with 11,509 BTC on its balance sheet. As Bitcoin prices declined, the company recorded an unrealised impairment loss of approximately 239 million USD under GAAP standards, but there were no purchases or sales. Management and the company’s filings emphasised that this was an accounting revaluation effect rather than a strategic shift. Tesla’s position signals a long-term holding approach to Bitcoin rather than active trading, treating it as a reserve asset.

Tesla did not provide specific revenue or delivery figures for Q1 2026. Nevertheless, the company outlined an aggressive plan for full-year 2026, focused on capital expenditure and a shift in manufacturing priorities. Tesla’s capital spending is expected to exceed 20 billion USD in 2026 (compared with 9 billion USD in 2025), with funds allocated to expanding AI infrastructure, launching new production lines, and advancing the Optimus project. The company officially announced the discontinuation of the Model S and Model X, and the Fremont plant will be retooled for large-scale production of Optimus robots, with a target capacity of up to 1 million units per year. In addition, Tesla plans to launch its Robotaxi service in seven US cities in the first half of 2026, while serial production of the Cybercab and large-scale manufacturing of Optimus robots are scheduled to begin at the end of 2026.

Tesla, Inc. Q1 2026 financial results

Tesla reported its Q1 2026 financial results on 23 April. The key figures compared with the same period in 2025 are as follows:

• Total revenue: 22.39 billion USD (+16%)
• Net income: 0.48 billion USD (+17%)
• Earnings per share: 0.13 USD (+8%)
• Operating margin: 4.2% (+214 basis points)
• Operating expenses: 3.78 billion USD (+37%)
• Capital expenditure: 2.49 billion USD (+67%)

Revenue by segment:

• Automotive sales: 16.23 billion USD (+16%)
• Energy generation and storage: 2.41 billion USD (–12%)
• Services and other revenue: 3.75 billion USD (+42%)

After a weak Q4 2025 in terms of revenue, Tesla’s Q1 2026 report showed an improvement in year-on-year performance. Revenue rose to 22.39 billion USD, operating profit reached 941 million USD, and free cash flow totalled 1.44 billion USD. The company maintained positive cash flow despite a sharp increase in capital expenditure and significant investment in new initiatives. At the end of the quarter, Tesla held 44.74 billion USD in cash, cash equivalents, and short-term investments. As a result, the financial base for transitioning to a more capital-intensive business model remains strong.

The automotive segment in Q1 2026 looked stronger on a year-on-year basis than in Q4 2025. Automotive revenue increased by 16% to 16.23 billion USD, while deliveries rose by 6% to 358,023 vehicles.

In Q1 2026, Tesla began to show the first signs of its evolving business model. The number of active FSD subscribers increased to 1.28 million, compared with 1.10 million in Q4 2025 and 0.85 million a year earlier. This trend strengthens the role of software and subscription revenue in the company’s future profit structure. The company also reported growth in FSD sales and subscriptions. For investors, this is an important signal, indicating that Tesla is seeking to offset pressure on its traditional automotive business by expanding higher-margin services.

At the same time, the energy business temporarily weakened in Q1 2026. Revenue from energy generation and storage declined by 12%, and deployed energy storage fell to 8.8 GWh, down from 14.2 GWh in Q4 2025. While this does not diminish the segment’s long-term importance, it shows that growth in the energy business remains uneven on a quarterly basis. Following the decline in automotive revenue in Q4 2025, the energy segment appeared to be the main source of resilience. In contrast, in Q1 2026, that role was partially taken over by services, FSD, and the recovery in automotive sales.

Overall, the Q1 2026 report continues the trajectory established in Q4 2025. Tesla is expanding its AI infrastructure, launching new battery and materials capacity, preparing production lines for Megapack 3, Cybercab, and Tesla Semi, and beginning preparations for large-scale Optimus production. The company confirmed that production of Cybercab, Tesla Semi, and Megapack 3 is scheduled to begin in 2026. As a result, Tesla is entering a period of elevated spending, where current profitability will depend on how quickly new projects begin to generate revenue.

Tesla revised its cash flow outlook for the remainder of 2026 due to the expansion of its investment programme. The company now expects capital expenditure for the year to reach around 25 billion USD, up from the previously stated 20 billion USD. Chief Financial Officer Vaibhav Taneja also warned that free cash flow in the remaining quarters of 2026 will likely be negative. This means Tesla will spend more on new production capacity, AI infrastructure, and future projects than it generates from its current operations.

Tesla, Inc. key valuation multiples analysis

Below are the key valuation multiples for Tesla based on the Q1 2026 financial results, calculated at a share price of 376 USD.

Conclusion on Tesla’s valuation multiples

Tesla remains an expensive stock based on its current financial metrics. A P/E ratio of around 345, P/FCF of approximately 202, EV/EBITDA near 89, and EV/EBIT close to 281 indicate that the current share price already reflects very high expectations for the business’s future scale. This means that any noticeable slowdown in growth or delays in launching new projects could lead to significant pressure on the stock.

However, Tesla has an important distinguishing feature. The company maintains a very strong balance sheet, with 44.7 billion USD in cash and short-term investments at the end of Q1 2026, compared with debt and lease liabilities of around 9.2 billion USD. This implies a substantial net cash position and reduces risks associated with leverage. In addition, in Q1 2026, Tesla reported 16% year-on-year revenue growth, a 136% increase in operating profit, a 51% rise in paid subscriptions for its autonomous driving system, and announced the launch of autonomous ride services in Dallas and Houston, alongside preparations for serial production of Cybercab and Semi this year, and continued development of the Optimus project. For this reason, investors continue to value Tesla not as a traditional automaker but as a technology company with multiple revenue streams.

Overall, on a valuation basis, Tesla currently appears significantly overvalued if assessed as a mature company and compared with its present earnings. However, if viewed as a high-growth business in autonomous driving, robotaxi services, energy solutions, and robotics, these multiples no longer appear extreme. Ultimately, investing in Tesla shares at this level represents a bet on the future scale of the business.

Expert forecasts for Tesla, Inc. shares for 2026

• Barchart: 15 out of 42 analysts rated Tesla shares as Strong Buy, 2 as Buy, 18 as Hold, and 7 as Strong Sell. The upper price target is 600 USD, and the lower bound is 123 USD.
• MarketBeat: 19 out of 41 analysts assigned a Buy rating, 16 recommended Hold, and 6 recommended Sell. The upper price target is 600 USD, and the lower bound is 25 USD.
• TipRanks: 13 out of 30 analysts recommended Buy, 12 recommended Hold, and 5 recommended Sell. The upper price target is 600 USD, and the lower bound is 25 USD.
• Stock Analysis: 7 out of 32 analysts rated Tesla shares as Strong Buy, 9 as Buy, 11 as Hold, 2 as Sell, and 3 as Strong Sell. The upper price target is 600 USD, and the lower bound is 25 USD.

Tesla, Inc. stock price forecast for 2026

On the weekly chart, Tesla shares are trading above the 200-period moving average, indicating that the prevailing trend remains upward. The Stochastic indicator is in oversold territory, which may signal that the corrective decline is nearing completion and that the upward move could resume within the broader uptrend. Based on the current price dynamics of Tesla shares, the potential scenarios for 2026 are as follows:

The primary forecast for Tesla shares assumes a rebound from support at 380 USD, followed by a move towards resistance at 490 USD. If this resistance level is breached, the next upside target would be the upper boundary of the channel near 530 USD.

The alternative forecast for Tesla stock assumes a break below support at 380 USD. In this case, the share price could decline towards 300 USD, after which a renewed upward move in TSLA may follow.

Risks of investing in Tesla, Inc. shares

Considering the factors that could negatively impact the company’s future earnings is crucial when investing in Tesla, Inc. shares. Below are the main risks:

• Increased competition: Tesla faces growing competition from both traditional automakers, such as Volkswagen, General Motors, and Ford, as well as newer players, including BYD, Rivian, and Lucid. The competition is particularly fierce in China, where BYD has already surpassed Tesla in total electric vehicle production, including hybrid vehicles. Increased competition could lead to a loss of market share and price wars, reducing Tesla’s profitability.
• Economic conditions: elevated interest rates and economic downturns can impact consumer spending on expensive goods, such as electric vehicles. If interest rates remain high or increase further, the cost of financing a new Tesla could deter potential buyers.
• Policy changes: changing government policy, such as the cancellation or reduction of tax incentives for electric vehicles, could affect demand for Tesla cars. State-level policies, such as a potential new credit system in California, where Tesla may not meet the criteria, could also further impact sales.
• Manufacturing and supply chain issues: delays or inefficiencies in ramping up production of new models could prevent Tesla from meeting market demand. Supply chain disruptions, chip shortages, or factory shutdowns could also affect production capabilities.
• Technological challenges: if Tesla’s advancements in autonomous driving or battery technology fail to meet expectations, or if competitors outpace Tesla in these areas, it could result in a loss of competitive advantage and investor confidence.
• Global Market Dynamics: fluctuations in exchange rates, trade tensions (especially with China, where Tesla has significant sales and production), or new tariffs could impact Tesla’s international revenues.

These factors in combination could influence Tesla’s revenue trajectory in 2026, creating a challenging environment where the company will need to navigate both internal and external challenges to maintain or improve its market position.

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