Tesla’s revenue rises in the first quarter, driven by electric vehicle sales and FSD subscriptions

Tesla saw a slight rise in revenue and profit year-over-year, supported by an increase in revenue from vehicles and other services, including active subscriptions to its advanced driver assistance system for full self-driving (Supervision), which reached 1.28 million.

Tesla shares rose 4% in after-hours trading following the release of its first-quarter earnings report, driven largely by a jump in free cash flow, as well as year-over-year increases in revenue and profits.

The company on Wednesday reported revenues of $22.38 billion, up 16% from the $19.3 billion it achieved in the first quarter of 2025. Its automotive revenue also rose to $16.2 billion, compared to $13.96 billion in the same period last year. Notably, the company reported positive free cash flow of $1.44 billion, more than double what it had in the first quarter of 2025. This number surprised analysts who expected the company to spend more money in the first quarter.

This revenue increase, which met the expectations of analysts surveyed by Yahoo Finance, provided some good news for the company, which has suffered from lagging electric vehicle sales. Tesla delivered 358,023 electric vehicles globally in the first three months of the year, lower than analysts’ expectations of about 368,000. The company also produced 408,386 vehicles during the same period, much more than were delivered.

The company’s first-quarter revenue got a big boost from higher average prices for vehicles, services and active FSD subscriptions, which grew 51% year-over-year to 1.28 million.

Tesla’s business faced significant headwinds in 2025 causing profits to decline 46% year over year to $3.8 billion. The decline is primarily due to declining electric vehicle sales, a problem other automakers have also faced after the Trump administration ended the $7,500 federal tax credit for electric vehicles.

Although Tesla’s first-quarter results are positive year-over-year, they still show some weakness when taking the previous three quarters into account. The company’s fourth-quarter revenue was $24.9 billion, and third-quarter revenue was $28 billion, a number supported by consumers who purchased an electric vehicle before the tax credit expired.

The first-quarter results also show that the company is still relying on its traditional electric vehicle business, along with services and subscriptions, and has yet to capitalize on its future bets on artificial intelligence and robotics.

Tesla’s net income was $477 million, compared to $409 million in Q1 2025. The Q1 2025 earnings number was noticeably off the mark, down 71% from the same period in 2024. Like the revenue story, Tesla’s Q1 earnings are still noticeably lower than the past three quarters. The company’s profits in the fourth quarter amounted to $840 million, and its third-quarter income amounted to $1.37 billion.

Tesla said the rise in the average selling price of a vehicle coupled with an increase in vehicle deliveries, growth in services and, oddly enough, an increase in one-time vehicle benefits related to warranty and tariffs boosted its bottom line.

Tesla CEO Elon Musk has repeatedly warned that the company is going through a difficult and potentially financially painful transition from its core electric vehicle business to an artificial intelligence and robotics company. It has not yet scaled up production of its humanoid Optimus robot, which will be produced at its factory in Fremont, California, or meaningfully increased its robotaxi service. The company said preparations for the “first large-scale Optimus factory” will begin soon in the second quarter.

The company currently operates a limited robo-taxi service with no human safety operator in Austin. It recently started operating this service in Dallas and Houston, but access to those vehicles is still very limited.