Tesla Beats on EPS, Margins Climb Sharply
Tesla reported first-quarter 2026 results on 22 April, delivering adjusted earnings per share of 41 cents and topping the 37-cent Wall Street consensus. Revenue reached $22.39 billion — a narrow miss against the $22.64 billion analyst estimate — but the company's profitability rebound stole the headline.
Gross margin climbed to 21.1%, an increase of 478 basis points year-over-year from the 16.3% reported in Q1 2025. The figure also edged ahead of Q4 2025's 20.1%, suggesting the margin pressure that defined Tesla's 2024 and early 2025 quarters is easing. Management attributed the improvement to lower vehicle production costs and a better mix of higher-margin software sales.
Key Financial Metrics
| Metric | Q1 2026 | Consensus | YoY change |
|---|---|---|---|
| Adjusted EPS | $0.41 | $0.37 | Beat |
| Revenue | $22.39 B | $22.64 B | Slight miss |
| Gross margin | 21.1% | — | +478 bps |
| Energy revenue | $2.41 B | — | -12% |
| Capex | $2.49 B | — | +67% |
The energy storage and solar segment was the quarter's weak spot, posting $2.41 billion — a 12% drop from $2.73 billion a year earlier. Tesla has not yet explained the decline in detail, but analysts point to Megapack shipment timing and a slower ramp at the Lathrop facility.
Capex Surge and the 2026 Spending Signal
Tesla's capital expenditure jumped 67% year-over-year to $2.49 billion. On the earnings call, management said full-year capex would land roughly $5 billion above prior guidance — a disclosure that pushed the stock from an initial 4% after-hours gain back to flat.
The increased spending is tied to Cybercab production at Giga Texas, the expansion of Optimus manufacturing at Fremont, and hardware upgrades required for Unsupervised FSD. European investors should note that part of the outlay covers further expansion work at Giga Berlin, including paint-shop capacity and tooling for the refreshed Model Y.
What It Means for European Owners
The margin rebound matters for anyone considering a Tesla purchase in Europe. Healthier margins give Tesla more room to hold prices steady or add features without eroding profitability — and indeed, recent Model Y pricing moves in France, Germany, the Netherlands, and Norway came alongside this quarter's improved cost structure.
The bigger question for European buyers is whether the capex surge accelerates Giga Berlin output or remains focused on North American projects. Tesla did not break out Berlin-specific spending, but CFO Vaibhav Taneja confirmed that European production is "tracking to plan" for 2026, with demand described as "firmer than anticipated" following the Q1 registration recovery.
FSD subscriptions hit record levels in Q1, which helped lift software margins — a trend that will intensify as European FSD approvals roll out country by country through summer 2026.
Update: 2026-04-24
Further disclosures from the same 22 April 2026 earnings call that have emerged since publication: Tesla stated that 14% of the global customer fleet now has Full Self-Driving either as an active subscription or a paid outright, with subscriptions driving most of the Q1 growth. Elon Musk floated a May 2026 debut for the second-generation Roadster. Tesla also announced AI4+, a successor FSD computer with additional memory and compute, and confirmed on the call that existing HW3 vehicles will not reach Unsupervised FSD — HW3 cars will instead be kept on a parallel branch called FSD v14 Lite, targeted for release by June 2026. These product reveals complement the margin and EPS story that led this article and are the main reason Tesla's share price held above the after-hours capex-related fade.