Tesla Q1 earnings preview: Robotaxis, AI bets, and rising spending

Tesla (TSLA) is scheduled to report first-quarter earnings after the closing bell on Wednesday, with Wall Street closely watching the company’s gradual Robotaxi rollout and rising capital expenditures, which are expected to increase sharply due to its expanding AI initiatives, News.Az reports, citing foreign media.

Analysts, according to Bloomberg consensus, expect Tesla to report revenue of $22.08 billion, representing a 9% year-over-year decline. Adjusted earnings per share are projected at $0.35, while adjusted EBITDA is forecast at $3.217 billion, down 14.4% compared to the same period last year.

A central focus for investors is the expansion of Tesla’s Robotaxi service, which the company considers key to its future growth. Over the weekend, Tesla said it had extended Robotaxi operations into parts of Dallas and Houston.

Before this expansion, the service was available only in Austin, while ride-hailing operations had also been offered in the San Francisco Bay Area.

Tesla also stated that its Robotaxi service in Dallas and Houston operates in an “unsupervised” mode, meaning no safety driver is present. A similar limited unsupervised rollout had previously taken place in Austin.

However, key uncertainties remain, as Tesla does not disclose the number of vehicles operating in its Robotaxi fleets in each region, nor how many are fully unsupervised. Despite this lack of transparency, the expansion has been viewed positively by Tesla investors.

On Tuesday, BofA Securities analyst Alexander Perry reaffirmed a “buy” rating on Tesla shares, along with a price target of $460, citing the company’s Robotaxi ambitions.

“We think investor focus for TSLA 1Q earnings will be on its robotaxi deployments, as it looks to disrupt the rideshare market and capture a portion of the $1tn+ market opportunity, and as competition accelerates with Uber & Waymo,” Perry wrote in a client note. He also highlighted Tesla’s recent expansion into Dallas and Houston as a positive development.

Perry added that the bank sees “significant embedded opportunity” in Robotaxis and believes Tesla is still in the early stages of monetizing its autonomy technology.

Morgan Stanley estimates Tesla will soon exceed 10 billion miles driven using Full Self-Driving (FSD), a milestone it believes could unlock further advancements through accumulated driving data.

Future expansion of the Robotaxi service into additional cities is also expected, as Tesla’s progress in this area has so far been slower than anticipated, even with recent growth in Texas.

Another major focus of the earnings report will be Tesla’s capital expenditures and forward spending outlook. The company is projecting capex of more than $20 billion in 2025, a significant increase from $8.5 billion last year. As a result, Tesla’s free cash flow is expected to move into negative territory.

Spending is expected to cover a range of initiatives, including battery production, Cybercab manufacturing, Optimus robots, AI computing infrastructure, and chip development—an area being prioritized by CEO Elon Musk.

Tesla’s stock rose last week following optimism around its chip strategy, after Musk said the company had reached the “taping out” stage of its upcoming AI5 chip design. The chip is intended for use in future electric vehicles, large-scale AI training clusters, and Optimus robots.

These chips are expected to be manufactured at Tesla’s planned Terafab facility. However, analysts have described the move to build a dedicated semiconductor fabrication plant as highly ambitious and potentially extremely challenging both technically and financially.

Musk has reportedly urged teams to accelerate development, though sources cited by Bloomberg suggest the facility may not begin silicon production until 2029, followed by gradual scaling.

Bernstein analysts have estimated that the full project could require between $5 trillion and $13 trillion in capital expenditure, underscoring the scale of the undertaking.

Alongside AI and autonomy, Tesla’s core automotive business remains in focus. The company is reportedly considering introducing a lower-cost model to refresh its aging product lineup.

Earlier this month, Tesla reported first-quarter global deliveries of 358,023 vehicles, below expectations of 364,645 units, though still up 6.3% year over year. The comparison was affected by last year’s lower baseline due to the transition to the new Model Y.

News.Az 

By Nijat Babayev