Tesla’s first-quarter profit rose 17 percent year-on-year to $477 million (€407.7 million), but the electric vehicle maker’s revenue missed analysts’ expectations, underscoring persistent concerns about its core automotive business. The company, led by billionaire Elon Musk, earned 13 cents per share, or 41 cents on an adjusted basis—beating Wall Street’s 36-cent forecast—but revenue of $22.39 billion (€19.14 billion) fell short of consensus estimates.
Automotive revenue climbed 16 percent, driven by a rebound from a sharp slump in 2025. Yet both profit and revenue remain well below their peaks from earlier in the decade, when Tesla’s cars were rapidly gaining market share. That trend has reversed as European automakers—from Volkswagen in Wolfsburg to Stellantis in Paris—and Chinese rivals like BYD have intensified competition. Last year, Tesla lost its title as the world’s largest electric vehicle maker to BYD, based in Shenzhen.
Musk’s Bet on Robotaxis and Robots
Musk has repeatedly downplayed Tesla’s struggles in car sales, arguing that the company’s future lies less in selling vehicles and more in providing self-driving taxi services. During a conference call with investors on Wednesday, he highlighted that robotaxi miles doubled in the first quarter compared with the fourth quarter of last year. These services currently operate in San Francisco and three cities in Texas, including Austin, where Tesla is headquartered.
Musk also emphasised Tesla’s development of humanoid robots for homes and businesses. He spoke about a planned factory in Texas to produce the robots, known as Optimus, with a potential capacity of 10 million units per year. “I think Optimus will be our biggest product,” Musk said, adding, “not just Tesla’s biggest product ever, but probably the biggest product ever.”
The company has begun producing its so-called Cybercabs, which have neither pedals nor steering wheels. Musk also teased the possible unveiling of a new manually driven Roadster sports car within the next month.
Massive Spending Plans
Tesla is investing heavily in this transition. Capital expenditure reached $2.5 billion (€2.14 billion) in the first quarter, up 67 percent from a year earlier. Musk warned of “a very significant increase” in spending ahead. The company expects capital spending of more than $25 billion (€21 billion) this year, covering a substantial increase in investment for self-driving taxis, trucks, robots, and a massive new chip factory to power its AI ambitions.
This pivot comes as European policymakers grapple with the implications of such technologies. The European Union’s data economy and privacy regulations could shape how Tesla’s autonomous services are deployed across the continent. Meanwhile, European cities like Berlin and Paris are already testing autonomous shuttles, but regulatory frameworks remain fragmented.
For European consumers, Tesla’s shift raises questions about the availability of affordable electric vehicles. While Musk focuses on robotaxis and robots, European rivals are pushing ahead with new EV models, from the Renault 5 to the Volkswagen ID.2, aiming to capture the mass market. The competition is also heating up in the commercial sector, with companies like Volvo Trucks and Daimler Truck investing in electric and hydrogen-powered heavy vehicles.
Musk’s vision of a future dominated by autonomous taxis and humanoid robots may excite investors, but for now, Tesla’s core car business faces headwinds from both established European manufacturers and aggressive Chinese newcomers. The company’s ability to execute its ambitious spending plans while maintaining profitability will be closely watched in boardrooms from Munich to Milan.
