Tesla delivered a mixed first quarter update on Wednesday evening, beating profit expectations but missing on revenue as its core car business continued to come under pressure.
The electric vehicle maker reported earnings of 41 cents per share, ahead of the 37 cents expected.
Meanwhile, revenue came in at $22.39bn (£16.6bn), dipping slightly below forecasts of around $22.6bn.
Shares initially rose in after-hours trading but reversed course after chief executive Elon Musk signalled a sharp increase in spending on AI, robotics and chip infrastructure.
The Wall Street behemoth said capital expenditure would rise significantly this year, with total spending expected to exceed $25bn as it accelerates investment in self-driving technology and humanoid robots.
Investors question timing of AI payoff
Investors seem to be concerned about a growing disconnect between the EV giant’s near-term performance and long-term ambition.
Analysts at Jefferies described the update as lacking “groundbreaking” developments, even as spending plans ramp up.
Tesla’s own messaging underscored the scale of its ambition, with the company saying it is working on “large ambitious projects” spanning AI, robotics and autonomy.
While overall revenue rose 16 per cent year-on-year, Tesla’s automotive division remains under strain from intensifying global competition and softer demand.
Vehicle deliveries increased modestly to just over 358,000 units in the quarter, but still fell short of market expectations. The company also produced more cars than it delivered, adding to inventory levels.
Margins showed some improvement, with automotive gross margins reaching 19.2 per cent, helped by lower material costs and pricing adjustments.
However, the broader picture reflects a more competitive market, particularly from Chinese rivals such as BYD.
Tesla’s energy division reported a decline in revenue, while services posted stronger gains.
Musk has increasingly framed Tesla as an AI and robotics business, with robotaxis and the Optimus humanoid robot central to its long-term strategy.
The company is now entering a capital-intensive phase, with investors sceptical about whether Tesla’s pivot beyond electric vehicles can deliver sustained earnings.
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