Tesla Just Solved Its Second-Biggest Problem
Key Points
Tesla's total first-quarter deliveries were lackluster, leading to disappointing revenue.
Of the automobiles it's selling, however, it's clearing a growing amount of net profit.
In that electric vehicles remain its breadwinning business, this resiliency dials back some of the reasons for worrying about this year's sizable planned capital expenditures.
- These 10 stocks could mint the next wave of millionaires ›
Tesla's (NASDAQ: TSLA) first-quarter results weren't quite as bad as the stock's post-earning setback suggests. Sure, revenue fell short of most expectations, but the bottom line came in better than the consensus. The market's mostly -- and understandably -- just concerned about the company's big spending plans for the remainder of the year, even if almost everyone agrees that its impending capital investments in capacity and artificial intelligence-driven opportunities make sense.
The thing is, while investors are focused on Tesla's past and projected top and bottom lines, they've largely lost sight of the most important numbers in the middle. That, and the fact that electric vehicles (EVs) still account for the lion's share of the company's results. And when zooming in on this particular business, things look pretty bullish.
Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue »
Image source: Tesla.
Tesla might just be turning the corner
Tesla enjoyed the pricing power that comes with being the only major name in the electric vehicle business for a long, long time. That began changing in earnest in late 2022 and early 2023, however. And the price cuts implemented around that time took a clear toll on per-car profitability. Indeed, net profits that at one time exceeded $10,000 per automobile were pared back to less than half that figure by 2024.
After a fair amount of tweaking and fine-tuning, though, the company's EV business seems to be back on track. Its gross profit per vehicle delivered last year was $9,558, up from $8,000 in the prior quarter. Earnings before interest, taxes, depreciation, and amortization (EBITDA) per delivery also improved for a second quarter in a row, to $10,245.
Data source: Tesla Inc. Chart by author.
These still aren't the kind of per-unit figures we were seeing prior to and through 2022, when Tesla still faced little to no competition, and when interest in electric vehicles was still reasonably healthy. However, the turmoil that seems to have chipped away at profitability for most of the last couple of years finally appears to be abating.
Not as bad as the rhetoric suggests
The company's biggest problem is still in place, to be clear. That's just selling its electric vehicles in a sea of new and existing EV competition like China's BYD. Tesla manufactured 408,386 battery-electric vehicles last quarter, but delivered only 358,203. That's the biggest production/delivery disparity seen since at least 2019 (although it got close to this gap in the first quarter of 2024). Some of this can be chalked up to logistical challenges. Some of it can't. Either way, this is at least part of the reason Tesla's Q1 top line of $22.4 billion slightly missed consensus estimates.
We do now know at least one encouraging thing about Tesla, though. That is, it can manufacture and market electric vehicles at a cost and price that's both respectable and sustainable. With this business humming along reasonably well, the company's 2026 plan for more than $25 billion worth of capital expenditures on things like its robotaxis, its Optimus robot, and other artificial intelligence initiatives doesn't seem quite so scary.
More to the point for anyone mulling a new stake in Tesla, the bearish argument may not be quite as solid as it's being made out to be following the release of the company's first-quarter numbers.
Don’t miss this second chance at a potentially lucrative opportunity
Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.
On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:
- Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $540,224!*
- Apple: if you invested $1,000 when we doubled down in 2008, you’d have $51,615!*
- Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $498,522!*
Right now, we’re issuing “Double Down” alerts for three incredible companies, available when you join Stock Advisor, and there may not be another chance like this anytime soon.
See the 3 stocks »
*Stock Advisor returns as of April 27, 2026.
James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool recommends BYD Company. The Motley Fool has a disclosure policy.
Recommended Articles
