Tesla Q1 revenue rises, driven by EV sales and FSD subscriptions

Tesla has reported a notable increase in its revenue and profits year-over-year, primarily driven by a surge in automotive sales and an uptick in subscriptions to its Full Self-Driving (FSD) system, which has now reached 1.28 million users. Following the release of its first-quarter earnings, Tesla's shares experienced a 4% rise in after-hours trading, reflecting strong free cash flow and year-over-year growth in both revenue and profits. The company's revenue for the first quarter reached $22.38 billion, marking a 16% increase from the $19.3 billion reported in the same period last year. Automotive revenue also saw a significant rise, climbing to $16.2 billion compared to $13.96 billion in the prior year. Additionally, Tesla reported a positive free cash flow of $1.44 billion, indicating financial resilience amid challenges. However, despite these positive figures, Tesla delivered 358,023 electric vehicles globally in the first three months of the year, falling short of analysts' expectations of approximately 368,000 deliveries. The company produced 408,386 vehicles during this period, showcasing a production surplus over deliveries. This discrepancy highlights ongoing challenges in the EV market, exacerbated by the expiration of the $7,500 federal tax credit for electric vehicles, which has affected sales across the industry. While the first-quarter results reflect a year-over-year improvement, they also reveal a vulnerability when compared to Tesla's performance in the previous quarters. For instance, the company reported fourth-quarter revenue of $24.9 billion and third-quarter revenue of $28 billion, boosted by last-minute purchases prior to the tax credit's expiration. Tesla's net income for the first quarter stood at $477 million, up from $409 million in the same quarter last year, yet significantly lower than its previous quarter profits—$840 million in Q4 and $1.37 billion in Q3. CEO Elon Musk has indicated that Tesla is navigating a challenging transition from its core electric vehicle business towards becoming a more diversified company focused on AI and robotics. The rollout of Tesla's Optimus humanoid robot is still in its early stages, with production set to commence at its Fremont, California facility. Additionally, while the company has initiated a limited robotaxi service in Austin, Dallas, and Houston, the availability of these vehicles remains restricted, indicating that Tesla's future growth will depend on successfully scaling these new ventures.