Everything Tesla Announced During Its Q1 2026 Earnings Call: Summary/Recap

On Earth Day, Tesla held its Q1 2026 earnings call, outlining major developments from the quarter and what lies ahead. Elon Musk said the year will be exciting, with substantially higher capital spending spanning research and development, new factories, and new capabilities.

The key points from the call are summarized below.

FSD & Robotaxi

• Paid Robotaxi miles nearly doubled sequentially during Q1.
• Unsupervised Robotaxi launched in Dallas and Houston in April.
• Elon Musk said there has not been a single accident or injury in the unsupervised program to date.
• Cybercab is expected to surpass the Model Y fleet as the highest-volume vehicle on the network in the near future.
• Tesla secured regulatory approval to deploy FSD (Supervised) in the Netherlands.
• FSD (Supervised) is transitioning to subscription-only, with record net new subscriptions in Q1.
• The company said all vehicles are autonomy-ready, and V14 is already safer than human drivers.
• Unsupervised FSD will roll out on a version of V14/V15 where legal.
• FSD V15 is targeted for late 2026 or early 2027 and represents a full architectural overhaul.
• V15 is expected to further elevate safety as part of that overhaul.
• FSD now has 1.3m paid customers globally, with most growth coming from new subscriptions.
• FSD is now pitched as a core feature and service during vehicle sales.
• With Netherlands approval in hand, an EU-wide rollout is planned for Q2, subject to regional regulators.
• New regulatory approvals have also been received in China, with broader rollout approvals expected in Q3 2026.
• Validation is the main limiter for Robotaxi and Unsupervised FSD, as Tesla aims to avoid any accidents or injuries during expansion.
• V14.3 shipped in April with notable architectural advances, with more improvements to follow.

Robotaxi deployment status:

Tesla AI and Chips

• The Cortex 2 supercomputing cluster is online and running training workloads.
• The final chip design for AI5 has been completed.
• Tesla and SpaceX formed a major partnership on TERAFAB to vertically integrate logic, memory, and packaging in one location.
• “Digital Optimus” is in development to automate digital workloads and complement physical, real‑world AI.
• AI5 tape out and design are complete; Elon said it is the best edge compute inference chip in existence and the best value for money.
• Engineering momentum is already underway for the future AI6 chip and the Dojo 3 supercomputer chip.
• Construction of a new Research Technology Fab (Research Fab) at Gigafactory Texas, part of TERAFAB, will begin this year.

Optimus

• Preparations for the first large‑scale Optimus factory will begin in Q2.
• The first‑generation line is designed for 1m robots per year and is replacing the former Model S and Model X lines in Fremont.
• Gigafactory Texas is being prepared for the second‑generation line, targeting a long‑term capacity of 10 million robots annually.
• Optimus mass production will start this year and is expected to be useful outside Tesla’s facilities by summer 2027.
• Optimus V3 is already fully functional, with some aesthetic elements still being finalized.
• The company is cautious about showing Optimus V3 due to copycat competitors but expects to unveil it later this summer once production begins.

Battery, Powertrain, and Manufacturing

• Tesla has started ramping North American lithium, cathode, and LFP production capabilities.
• The ramp includes new LFP cells in Nevada, plus cathode materials and a new Lithium Refinery in Texas.
• Total battery pack capacity remains the bottleneck for vehicle production, not demand.
• Production has officially started for both Cybercab and Semi.
• Demand is rebounding in France, Germany, South Korea, and Japan, with slight growth in the US.
• The company reached its highest Q1 order backlog in two years, driven largely by the value of the Model 3 and Model Y Standard trims.
• Higher gas prices have helped demand, but order improvements began before fuel prices spiked.
• Supply chains for new components follow a stretched S‑curve: initial output for new lines (Optimus, Semi, Cybercab) will be slow, followed by a rapid ramp.

Tesla Energy

• Work continues at the new Megafactory near Houston, with Megapack 3 and Megablock production on track to start later this year.
• Total energy storage deployed in Q1 was 8.8 GWh.
• Megapack demand remains exceptionally strong, but growing competition and recent tariffs are putting outsized pressure on Tesla Energy margins.
• Meaningful customer deployments have begun for Tesla’s new in‑house designed solar panel produced at Gigafactory New York.
• The redesigned panel has 18 individual power zones, triple that of a typical residential panel.

Financials

• Tesla produced 408,386 vehicles in Q1 and delivered 358,023.
• Total quarterly revenue reached $22.4 billion, up 16% year over year.
• GAAP operating income was $0.9 billion, with free cash flow of $1.4 billion.
• Total cash and investments rose by $0.7 billion to $44.7 billion at quarter end.
• Financial outflows included $2.0 billion for a SpaceX equity investment.
• Automotive margins, excluding regulatory credits, increased from 17.9% to 19.2%.
• Interest rates and tariffs continue to weigh on auto margins, and Tesla has not yet realized any additional income from the recent Supreme Court tariff ruling.

Forward-Looking Outlook

• Volume production for Cybercab, Tesla Semi, and Megapack 3 remains on schedule to begin in 2026.
• Over time, traditional hardware-related profits are expected to be joined by accelerating AI, software, and fleet-based profits.
• The company remains focused on optimizing existing production capacity before building entirely new factories or lines.
• Capital expenditures for 2026 are expected to total $25 billion.
• Planned spending covers six factories, AI R&D, infrastructure, TERAFAB, and solar manufacturing equipment.

Investor Q&A

Institutional (Submitted)

Q1: What allowed the AI5 tapeout to finish early, and has the plan changed now that AI5 is slated for Optimus and the supercomputer instead of the robotaxi?

A1: The tapeout finished early thanks to intense effort: teams worked 6 months straight, including holidays and weekends. AI5 will focus on Optimus and data centers, while Unsupervised FSD will be achieved on AI4 hardware at greater‑than‑human safety levels. AI5 is not immediately needed in vehicles and is likely several years away; replacement will only be necessary once AI4 becomes outdated. AI4 is getting an upgrade: RAM increases from 16GB to 32GB, with a 10% compute uplift and higher memory bandwidth. AI4.5 enters production next year, with Samsung preparing modifications to begin production.

Q2: With FSD approved in the Netherlands and a Europe‑wide launch expected this summer, what is the robotaxi strategy for the region?

A2: Regional governments will determine how much is approved. FSD (Supervised) is expected to begin EU review in May, with supervised rollout afterward. Robotaxi and Unsupervised FSD will face more red tape, making timelines complex. The iteration deployed in the Netherlands is the same as in the US and other regions, trained with additional local data.

Q3: Given recent NHTSA incident filings, what is the latest on robotaxi safety data, and why not deploy thousands of vehicles to speed removal of the safety driver?

A3: Tesla is using both QA and customer fleets to gather metrics as quickly as possible, scaling in a safe manner. The team is addressing scaling issues such as preventing robotaxis from blocking intersections and avoiding inaccurate drop‑offs.

Q4: Is V14.3 the last piece needed for large‑scale Unsupervised FSD and Robotaxi, or must we wait for V15?

A4: Elon believes it is the last piece, but the key is degrees of safety and convenience. Major architectural improvements on the way will substantially improve safety, so it does not make sense to scale deployment until V15 is ready. Tesla will complete training and validation of V15 before broader Unsupervised FSD and Robotaxi expansion. V15 will be a major upgrade.

Institutional (Call-In)

Q1: For TERAFAB, which entities will handle funding, design, production, and licensing?

A1: Details are still being finalized. The $3B Advanced Chip Fab (research fab) will be built on Giga Texas grounds as a test and trial site, with a capacity of a few thousand wafers per month. TERAFAB will explore new physics and designs and evaluate production with new technologies. SpaceX will lead the initial scaling of TERAFAB. Any intercompany work requires approval by both boards to ensure both Tesla and SpaceX shareholders are well served and to avoid conflicts of interest.

Follow-up: What about Intel’s role?

Intel is partnering on core manufacturing technologies; the state‑of‑the‑art 14A process is expected to be used and should be ready for prime time when TERAFAB ramps. Memory, logic, and packaging will all be done at the new Advanced Chip Fab to try out new techniques, creating a likely unique, single‑facility flow that enables recursive R&D.

Q2: With a current install base of 15% expected to reach about 30–35% in North America, is Tesla gaining more FSD users than new car sales? Are most subscribers on AI4, and are AI4 drivers mostly using FSD? What does success look like?

A2: Ashok agreed with this framing. Quarterly churn is not the right lens, but churn has fallen significantly as FSD improved. Subscriptions have risen, and customers are using FSD more often and for longer, reducing churn.

Follow-up: How will xAI and Grok integrate with Optimus and vehicles?

Optimus must work without cell or Wi‑Fi connectivity, so compute must be on board and function offline, similar to FSD. Optimus needs a “manager” or greater intelligence to assign tasks, and the orchestration AI and voice would be Grok. Optimus could operate for several hours without management oversight.

Q3: Is TERAFAB about better chip economics, and when might those gains begin?

A3: TERAFAB is not intended to gain leverage over chip suppliers. It is a path to secure sufficient supply for Tesla and SpaceX projects. Industry capacity cannot keep up with demand, so the companies are pursuing their own R&D and production.

Q4: Beyond FSD driving sales, what is the view on new vehicle models (e.g., family or compact)?

A4: Cybercab is Tesla’s two‑person vehicle, and over the long term, most production will be Cybercab. The future lineup will consist of autonomous vehicles of varying sizes. Long‑term, the only manually driven car will be the Roadster (new debut date — 1 month or so out — validation still ongoing).

Follow-up: What about battery constraints and solutions, in‑house vs. suppliers?

The limiter is not cells but pack production capacity. Tesla is addressing this actively, adding capacity now with more to come. Berlin has launched the 4680Y, supporting the European demand surge. The company is retooling and upgrading older battery pack facilities to modernize and increase output, and Giga Shanghai is scaling as well.

Q5: With the safety driver removed in Austin and expansion to Dallas and Houston coming, what safety metrics govern further robotaxi growth?

A5: Tesla tracks a broad set of safety metrics and leverages a large QA fleet across the US, considering both real and simulated interventions to address edge cases. Expansion has proceeded as planned. Current challenges are convenience‑related: robotaxis are tuned for maximum safety and can stop when not confident enough to proceed, for example at a traffic light that never turns or a problematic rail crossing. Elon cited a case where a Waymo crashed into a bus while Tesla robotaxis blocked a left‑turn lane because they could not proceed safely; the task is to resolve scenarios where the car lacks sufficient confidence. Another example involved construction around a single entry point leading to an infinite loop in which the robotaxi circled the block and refused to enter for safety.

Follow-up: Sun glare, Direct Photon Counting, and the NHTSA filing?

Updated cameras mitigating sun glare have been in production for some time. NHTSA has requested extensive information on older vehicles, and the investigation is expected to conclude soon, positively. Recent software builds improve FSD safety in sun glare or windshield build‑up and prevent FSD from activating if visibility is completely blocked.

Retail

Q1: When will Optimus V3 be revealed and production start, given Model X and S production ended earlier than mid‑year? Expected production rate by year‑end, and initial targeted skills?

A1: Elon again noted copycats; the unveil will be closer to production in the late July–August timeframe. The last S/X production will be in early May; the line is being dismantled piece by piece, with final assembly last. The production rate is uncertain; the team is “building the plane as they fly it,” and ramping novel parts and processes takes time.

Q2: What milestones are targeted for unsupervised FSD and Robotaxi expansion beyond Austin this year, and how will that drive recurring revenue?

A2: The rollout is very cautious. There have been no injuries or fatalities to date, and Tesla intends to keep it that way.

Q3: When is FSD Unsupervised expected to reach customer cars?

A3: Elon offered a tentative guess of Q4 2026 and did not sound very confident. The team must still address edge cases such as unsafe intersections, poor road markings, and high‑incident zones.

Q4: How will Hardware 3 vehicles reach unsupervised FSD?

A4: HW3 does not have the capability for Unsupervised FSD. For customers who purchased FSD, Tesla will offer either a discounted trade‑in for AI4 hardware or a free car computer plus camera replacement. Conversion facilities will be set up in major cities to perform the work, which requires partial vehicle disassembly. Elon added it makes sense to convert HW3 to AI4 so older cars can join the Robotaxi fleet. Ashok noted that V14‑lite will be released to HW3 vehicles soon, bringing all V14 features available on AI4, with timing in late June.

Q5: How will Tesla scale its solar generation business given stalled residential roof deployments? Will the company focus on regional solar and battery farms or utility deployments?

A5: Strong demand is forming for the second half of the year, despite a reduction in the residential home solar credit. The company’s lease‑to‑own program has made good progress, as have the new solar panel and mounting system. Both utility‑scale and residential solar will continue to scale.

Listen to Earnings Call

You can listen to Tesla’s earnings call below: