Electric vehicle (EV) maker Tesla reported total revenue of $22.39 billion for the first quarter (Q1) of 2026, a 16% year-over-year (YoY) increase from $19.34 billion, driven by higher vehicle deliveries, improved average selling prices (ASPs), and strong growth in services and other revenue.

The company’s results exceeded analysts’ expectations, with revenue beating estimates by approximately $190 million.

Automotive revenue rose 16% YoY to $16.23 billion, supported by a 6% increase in total vehicle deliveries to 358,023 units. Model 3 and Model Y deliveries accounted for 341,893 units, while other models contributed 16,130 units.

Growth was also aided by higher ASPs, reflecting product mix improvements and pricing strategies, as well as increased ancillary revenues, particularly from Full Self-Driving (FSD) subscriptions.

Revenue from services and other segments increased 42% YoY to $3.75 billion, providing a significant boost to overall topline performance.

Net income rose 56% YoY to $1.45 billion from $934 million, while non-GAAP diluted EPS came in at $0.41, up from $0.27 a year earlier and beating analyst estimates by $0.06.

Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) reached $3.67 billion, up 30% YoY, with an adjusted EBITDA margin of 16.4%, compared to 14.6% a year earlier.

The margin expansion was driven by improved cost efficiencies, lower material costs, and operating leverage, despite higher operating expenses related to artificial intelligence (AI), research and development, and stock-based compensation.

Chief Financial Officer Vaibhav Taneja said automotive margins excluding regulatory credits improved sequentially from 17.9% to 19.2%, aided by one-time benefits such as warranty true-downs of about $230 million and some tariff relief. However, he noted that tariffs and sustained high interest rates continue to increase automotive costs, with rising interest rates expected to further impact margins through higher subvention expenses.

Energy Generation and Storage

Tesla’s energy generation and storage segment declined during the quarter. Revenue from the segment fell 12% YoY to $2.41 billion, while storage deployments stood at 8.8 GWh, reflecting a 38% sequential decline due to the timing of customer deployments.

Taneja said the energy storage business remains inherently lumpy due to project timelines, though the company expects total deployments in 2026 to exceed those in 2025.

Despite the decline in volumes, the segment recorded strong profitability. Taneja said gross margins exceeded 39.5%, supported by one-time tariff-related benefits of more than $250 million. He added that margins are expected to normalize going forward due to increasing competition and tariff-related cost pressures, particularly given the reliance on battery cells sourced from China.

Chief Executive Officer Elon Musk highlighted strong long-term demand for storage, stating that both the United States and global markets will require significant energy storage capacity to meet rising electricity demand. He added that demand for Megapack remains strong and that production of Megapack 3 is on track to begin later this year at the company’s new facility near Houston.

Tesla currently lists installed annual Megapack manufacturing capacity of 40 GWh in California and 20 GWh in Shanghai, with an additional facility under construction in Texas.

On the solar business, Michael Snyder, Vice President of Energy and Charging, said the U.S. residential solar market is undergoing a correction following the loss of homeowner tax credits, but is expected to see stronger demand in the second half of the year. He noted that Tesla has introduced a leasing product that allows the company to capture tax credits while offering more competitive pricing to customers.

Tesla also reported initial customer deployments of its first in-house-designed solar panel, manufactured at Gigafactory New York. The panel features 18 individual power zones, aimed at improving performance under partial shading conditions.

Tesla posted a revenue of $94.8 billion in 2025, down 3% YoY from $97.6 billion.