Tesla Motors is scheduled to release its first-quarter financial results after the U.S. market closes on Wednesday, corresponding to early Thursday morning Beijing Time. However, investor attention extends far beyond the quarterly profit and loss figures. With delays in the expansion of its Robotaxi service, an unclear mass-production timeline for the Optimus robot, and the emergence of a massive chip manufacturing initiative dubbed "astronomical" in scale, this earnings report is poised to be a critical juncture for the market to recalibrate Tesla's valuation narrative.
According to FactSet data, Wall Street anticipates Tesla will report adjusted earnings per share of 37 cents for the first quarter, an increase from the 27 cents reported a year ago. Revenue is projected to reach $222 billion, marking approximately 15% year-over-year growth. Earnings before interest, taxes, depreciation, and amortization (EBITDA) are expected to be $32 billion, reflecting a roughly 17% increase compared to the same period last year. Tesla has already pre-disclosed that its electric vehicle deliveries and energy storage product deployments fell below market expectations, indicating that fundamental weaknesses are already factored into market sentiment. Barclays analyst Dan Levy noted in a research report that Tesla's stock has declined about 19% year-to-date, underperforming the S&P 500 index by over 20 percentage points, which reflects investor disappointment regarding the pace of Robotaxi expansion and the prospects for Optimus mass production. For the market, the earnings figures themselves may not be the most significant variable. Jefferies analyst Philippe Houchois warned clients in a report that these results "will further highlight the gap between vision and execution" and could raise concerns about financing. He added that the outcomes might "reinforce" the logic behind a potential eventual merger with SpaceX. Barclays maintains an "Equal Weight" rating on Tesla with a $360 price target. The guidance provided by management during the earnings call regarding capital expenditures, Robotaxi expansion, and Optimus progress will be the core variables determining the market's reaction.
Capital Expenditures: The Scale Debate Remains Unresolved
A central question heading into this earnings season is whether Tesla will raise its capital expenditure guidance and if the financing path for mega-projects like Terafab will become clearer. In the previous quarter's report, Tesla provided capital expenditure guidance exceeding $200 billion for 2026. This is intended to support the construction of six factories and production lines, including a lithium refinery, a lithium iron phosphate battery factory, Cybercab, the Semi truck, the Houston Gigafactory, and the Optimus production line, as well as the expansion of AI computing infrastructure. Tesla plans to increase its equivalent Nvidia H100 GPU count from approximately 120,000 by the end of 2025 to around 280,000 by the end of June. Barclays estimates that the GPU procurement cost alone exceeds $35 billion, with supporting infrastructure requiring an additional $25 to $30 billion. However, this $200 billion guidance explicitly excludes two major projects: the Terafab chip factory and a solar factory. In March, Tesla announced the Terafab plan, aiming to build a chip manufacturing base with an annual output of 1 terawatt of computing power—a scale roughly 50 times the current global total output of AI computing power. SpaceX, Intel, and Super Micro Computer are all reportedly involved. If fully realized, the total capital expenditure for Terafab could reach an staggering $5 to $13 trillion. Even focusing on near-to-medium-term ground-based chip production, the initial target of 100 to 200 gigawatts per year of capacity might require an investment of $500 billion to $1 trillion. Barclays views Terafab as an "unproven story" currently lacking specific construction timelines and financing plans. Regarding solar, Tesla plans to build 100 gigawatts of manufacturing capacity in the United States by 2028. Previous reports indicated Tesla was in negotiations with Chinese suppliers for $29 billion worth of solar production equipment, scheduled for delivery by August this year; Barclays estimates this project would require at least $30 billion in capital expenditure. Morgan Stanley analyst Andrew Percoco expects Tesla's full-year capital expenditures could increase to $250-$350 billion and estimates that under a scenario with $210 billion in capex, free cash flow for 2026 would be negative $84 billion; FactSet data shows the market consensus expects negative free cash flow exceeding $47 billion. Commenting on this, GraniteShares CEO Will Rhind stated in an interview with MarketWatch: "Even with ongoing downward revisions to 2026 free cash flow expectations, Tesla still possesses the strongest net cash position and balance sheet flexibility in the industry, sufficient to bet on all these directions simultaneously—this is precisely what supports its valuation premium." Barclays, however, expects that large-scale capital expenditures will lead to sustained negative free cash flow for Tesla, a situation that could persist until 2029.
Robotaxi: Expansion Accelerates, but Scale Remains a Question
The progress toward scaling Robotaxi services is a core narrative currently driving Tesla's valuation and one of the most closely watched topics in this earnings report. Over the weekend, Tesla announced the expansion of its Robotaxi service to parts of Dallas and Houston, following its initial limited rollout in Austin, Texas, and the San Francisco Bay Area in California. This marks the first substantive geographical expansion since the limited unsupervised service launched in Austin this January. Tesla also plans to expand the service to at least nine cities by the end of June, including Las Vegas and three cities in Florida. However, the gap between the reality of limited expansion scale and investor expectations has sparked noticeable dissatisfaction. Crowdsourced tracking data indicates that only a combined total of 4 vehicles were recorded as operational in Dallas and Houston. Last July, Tesla CEO Elon Musk claimed that Robotaxi service would be available to about "half" of the U.S. population by the end of 2025; a target that has clearly not been met. On a Tesla investor platform, one shareholder holding 275,000 shares directly asked: "Why is the rollout of the Robotaxi network so slow?" Another shareholder questioned: "Why has progress fallen behind less than 90 days from the last guidance?" UBS analyst Joseph Spak stated in a report earlier this month that he does not expect to see "meaningful scaling" in Tesla's target cities and maintained a Neutral rating with a $352 price target. He wrote: "We believe the technology is continuously improving and infrastructure will gradually be built out, but given the importance of safety culture, Tesla's pace will be relatively slow." Morgan Stanley noted that the accelerated deployment of Robotaxi services is "critical" for supporting Tesla's high valuation.
Optimus: Awaiting Fulfillment, Yet to Be Proven
Besides Robotaxi, the Optimus robot represents Tesla's other core growth narrative, though both currently remain in a stage characterized more by demonstrations than deployment. Management's commentary during the earnings call will be crucial. According to data from Say Technologies, the timeline for Optimus is the top concern among shareholders on the investor platform. One investor holding 22 million shares asked: "When will Optimus V3 be released? Given the Model X and S production lines are ceasing ahead of mid-year, when will Optimus mass production begin?" Musk had previously indicated Optimus V3 would debut in March, but ultimately only a short promotional video was released, with the formal launch postponed to address related issues. In January of this year, he stated that Optimus would be available for public sale by the end of 2027, with mass production beginning later this year on some production lines originally intended for electric vehicles. Morningstar analyst Seth Goldstein told MarketWatch: "By 2028, as Tesla starts generating revenue from Robotaxi and robotics businesses, we should truly begin to see this transition reflected in the financials." Barclays remains cautious regarding Optimus, currently incorporating only limited sales projections within a ten-year horizon into its models. However, Barclays also acknowledges that any specific progress disclosures concerning the aforementioned projects would act as a positive catalyst for the stock price.
Fundamentals: Weakness Priced In, Downside Risks Persist
Beyond the three major themes, Tesla's core automotive business continues to face pressure, although the market has largely priced in these expectations. Barclays expects Tesla's first-quarter automotive gross margin (excluding regulatory credits and including stock-based compensation) to be approximately 14.4%, down about 350 basis points sequentially. The main contributing factors include a sequential delivery decline of approximately 60,000 vehicles (a drop of about 14%) and rising costs for raw materials such as steel, aluminum, copper, and precious metals. Partial offsets include benefits from tariff refunds—Tesla's 100% U.S. manufacturing footprint makes it eligible for IEEPA tariff refunds—along with stable pricing and an improved regional sales mix. Regarding regulatory credits, Barclays expects first-quarter revenue of approximately $300 million, lower than the $542 million in the previous quarter and the $595 million reported a year ago. For the energy storage business, first-quarter deployments were 88 gigawatt-hours, significantly below the market expectation of 144 gigawatt-hours. Barclays anticipates the segment's gross margin will decline to around 25% from approximately 29% in the prior quarter. From a full-year perspective, Barclays forecasts Tesla's 2026 deliveries at about 161 million vehicles, lower than the 164 million expected for 2025 and below the market consensus of approximately 167 million. The full-year EPS forecast is $157, compared to the consensus estimate of $194. It is noteworthy that the consensus estimate has been significantly reduced from $382 a year ago, but Dan Levy believes there is still room for further downward revisions. Tesla's stock has fluctuated widely between $22985 and $49883 over the past 12 months, closing around $386 on Tuesday, down 16%.
Comments