Live: Will Tesla Soar After Announcing Q1 Earnings?

Elong Musk just gave more details on how Terafab is going to be funded and the involvement of Intel in the project:

William Finkelstein Stein Truist Securities, Inc., Research Division

Considering the various parties involved in the Terafab project, I’m hoping you can provide some details for investors about which party is going to take responsibility for each aspect of that project, funding it, designing it, building it, operating, taking production and the like. I would love to hear some more details.

Elon Musk Chief Executive Officer

Yes. So we’re still working out the the details of the Terafab deployment. In the near term, Tesla will be building the research fab on our Giga Texas campus. This is something we expect to be probably a $3 billion-ish initiative and capable of maybe a few thousand wafers per month, but it’s really intended to try out ideas. The research fab, it was in terms of maybe — we have some ideas for improving the fundamental technology of how chips are made and some of some new physics we’d like to test out, but we also want to test out the ability to — to see if something is working in production.

So you need kind of like a few thousand wafer starts a month to make sure that a production process is sound. And then SpaceX is going to take care of like the initial phase of the scaled up Terafab. And that’s what we figured out thus far. Any kind of intercompany thing has to be approved by both the SpaceX and Tesla Board of Directors. It has got to go through a conflict resolution. It’s going to have a lot of, unfortunately, a lot of complexity because we’ve got to make sure Tesla shareholders are served and SpaceX shareholders have served and strike the right balance there.

So it takes a while to work through the kind of independent director reviews on this. So that’s basically what we figured out thus far is Tesla doing the research fab, SpaceX doing the initial part of the large-scale Terafab. And then we got to figure out the rest.

William Finkelstein Stein Truist Securities, Inc., Research Division

Yes. And what about Intel’s involvement?

Elon Musk Chief Executive Officer

Yes. So Intel is excited to partner with us on some of the core manufacturing technologies. So we plan to use Intel’s 14A process, which is state-of-the-art and in fact, not yet totally complete. So — but given that by the time Terafab scales up, 14A will be probably fairly mature or ready for prime time. 14A seems like the right move. And we have a great relationship with Intel. A lot of respect for the CEO, the CTO and the new team there. So we think it’s going to be a great partnership.

Ashok Elluswamy Other Key Executive

Yes. And the other thing on the research fab, I think we’ve said it before, we plan to do memory logic, everything in the same place, including [ mask ] because we want to have a quick iteration loop so that we can see and basically scale the technologies, which we are trying to bring up.

Elon Musk Chief Executive Officer

Yes. I think this will be unique in the world, or at least I’m not aware of any a place where you have the lithography mask creation, the — and then logic, memory and packaging in under one roof in one building. That’s about the fastest I could possibly imagine doing [ recourse ] of research and development and being able to try out some pretty radical ideas, some of which have — it’s kind of long-shot stuff, but if some of these long shots pan out, it would be radical improvements in the way [indiscernible] work.

Tesla recently taped out their new AI5 chip, which will be produced by Samsung. There’s been some questions whether the chips would be used in new vehicles or will be used across data centers and Optimus. Musk clarified that the chips will first go to Optimus and data centers because the previous generation chip (AI4) is capable enough for unsupervised driving.

Here’s the full quote from Tesla’s call:

Travis Axelrod Head of Investor Relations

Great. The next question is what enabled you to finish the AI5 tape out early? And were there any changes to the original vision? Last week, Elon said AI5 will go into Optimus and the supercomputer, but 1 month ago said it would go into the robotaxi. Has AI5 been dropped from the vehicle road map?

Elon Musk Chief Executive Officer

Well, the reason AI5 tape-out finished early was because the team worked incredibly hard to make it happen. And just over time, we gathered a lot of momentum. But we did have to work every weekend for 6 months straight, including every holiday. So it was a lot of sacrifice by our team, and I was there, of course, myself, every weekend. And fortunately, we didn’t encounter any major — we didn’t make any major mistakes, at least that we’re aware of that required pushing out the tape-out. So the team just did a great job and worked incredibly hard is the reason.

Yes, I do expect that AI5 will go into Optimus and into the data center because it’s looking like we’ll be able to achieve unsupervised self-driving with AI4 that is far greater than human safety levels. So — which means it’s not — certainly not immediately needed in the car. At some point, I think it will make sense for us to switch to AI5 in the car, but that’s — but there’s not a pricing issue to do so. So — but at some point, the AI4 hardware is going to get like so old that it’s like, okay, the only reason they’re keeping the factory open is for AI4.

We are planning an AI4 upgrade to use newer generation RAM. So it will go from 16 gigabytes to, I think, 32 gigabytes per SoC. It’s a total of 64 gigabytes, and probably a 10% increase in compute in sort of into [ trillions ] of operations per second and in memory bandwidth. So that’s AI4.1 or AI4+ probably goes into production middle of next year, I think, depends. It depends on — Samsung is doing the modifications for us. So it sort of depends on when they’re able to finish that — finish those modifications and bring it to production.

Here’s another updated timeline from Elon Musk on tonight’s earnings call. He says customers can ‘probably’ expect unsupervised FSD by the fourth quarter of the year.

Travis Axelrod Head of Investor Relations

Great. Thank you very much. The next question is, when do you expect FSD unsupervised to reach customer cars?

Elon Musk Chief Executive Officer

I’m just guessing here, but probably in the fourth quarter. It’s difficult to release this like to everyone everywhere all at once because we do want to make sure that they’re not unique situations in a city that particularly complex intersection or actually, they tend to be places where people get into accidents a lot because they’re just — perhaps there’s — and like I said, an unsafe intersection or bad road markings or a lot of weather challenges. So I think we would release unsupervised gradually to the customer fleet as we feel like a particular geography is confirmed to be safe.

The first question on Tesla’s conference call asked when the company would reveal Optimus 3. Elon Musk had said he won’t reveal it until shortly before it goes into production to protect trade secrets. Here’s his full answer:

Travis Axelrod Head of Investor Relations

Thank you very much, Vaibhav. Now we’re going to go to investor questions, starting with questions from say.com. The first question is, when will we have the Optimus 3 reveal, which we already touched on. But the rest of the question is, when will Optimus production start since we ended the Model X and S production earlier this — the midyear? And then what’s the expected Optimus production rate exiting this year? And what are the initial targeted skills?

Elon Musk Chief Executive Officer

Well, as I was saying, what we found is that when we’ve unveiled various Optimus versions, we found out our competitors literally do a frame-by-frame analysis and copy everything we’re doing. So I think we want to push the Optimus 3 unveil maybe closer to production. Start of production is — we’re assuming is somewhere around the late July, August time frame. And I mean just to inject some reality into these questions since these questions are not — if I were to describe those questions, it does not fully understand what happens with the production line. The last S and X production will be in early May. But you have to look at the entire upstream portion of the production line.

So you start with sales, battery packs, motor production, all the parts production. And so we’ve been dismantling the S, X production line from the more base-level parts — more basic level parts to — as you get to more larger subassemblies, you start dismantling the line from the small parts first, not from the final assembly first. So the final assembly line will — that will be dismantled next month and after the last of the S X vehicle is done. You can’t dismantle some gigantic production line like overnight. It takes at least a few months to do so. And then you’ve got to install a new production line, and you’ve got to provide all of the wiring and communication, test out the machines of the new production line for Optimus.

So that also takes several months. So frankly, if we’re able to go from [ suffering ] production on one line, dismantling that entire line, reinstalling a whole new line and turning that on in a matter of 4 months, that is an insanely fast speed. I don’t think any other company on earth has ever done that before, just to put things into perspective and inject some reality into the situation here. I don’t know what the production rate of Optimus will be this year. It is impossible to predict these things. The — when you have a brand-new product in an entirely new production line and you have 10,000 unique items, all of which have to go right into ramp production, it will move as fast as the least luckiest, lowest, dumbest part in the entire 10,000.

And this is a Optimus — it’s a completely new product with completely new production line. So it’s just literally impossible to predict, except that I think it will be quite slow for us as we iron out the 10,000-plus unique items that have to be sold for Optimus to reach volume production. Initial skills will be — obviously, we’re going to start with simple skills in the factory and then build up from there.

In Tesla’s earnings deck, they revealed that paid Robotaxi miles doubled to 1.1 million in the March quarter.

In December, the company reported 525,000 miles and in September 125,000 paid miles.

Some other highlights from the quarter that caught our attention:

• Auto revenue grew 15.7% year-over-year while the Energy segment fell 11.7%. ERnerg sales missed Wall Street’s expectations by more than 34%.
• GAAP gross margins were up 480 basis points year over year while free cash flow margins were up 300 points.
• Operating cash flow of $3.937 billion came in more than 50% above Wall Street’s consensus expectations.
• Despite Energy sales missing expectations, gross margins in the segment ballooned to 39.5%.

We will be updating this live blog during Tesla’s earnings call which begins at 5:30 p.m. ET. Simply leave this page open and new updates will post automatically. We expect three to four new updates during Tesla’s earnings call. 

Here’s an update on how stocks reporting earnings are performing:

• ServiceNow: Down 15% after EPS met expectations for Q1 and guidance points to deteriorating profitability.
• IBM: Down 6% despite a beat on EPS and revenue
• Tesla: Up 4% after beating EPS and reporting strong gross margins
• Lam Research: Up 2% after delivering strong revenue and EPS
• Texas Instruments: Up 9% as profitability rose strongly and the company reported strong guidance

In short, its a tough night for software stocks while companies exposed to the AI supply chain continue soaring.

Well, Wall Street has had a bit more than 5 minutes to digest Tesla’s most recent earnings, and they like what they see.

Shares are now up 4.5%. The bottom line is that Tesla beat expectations on about every line item. 

Wall Street is likely most focused on the company’s gross margin numbers, which came in significantly above Wall Street’s expectations of 18.3%.

Here are some highlights from Tesla’s Q2 outlook:

• Expecting maximum capacity utilization at factories
• “Cybercab, Tesla Semi and Megapack 3 are on schedule for volume production starting in 2026. First-generation production lines for Optimus are being installed in anticipation of volume production. “

Telsa’s earnings just hit newswires, here’s what the key numbers they announced:

• Revenue: $22.39 billion
• EPS:$.41

And as a reminder, here’s what Wall Street expected:

• Revenue: $22.2 billion
• EPS: $.35

Gross margins came in significantly ahead of expectations at 21.1%. Shares have initially jumped 3.5%.

Cantor Fitzgerald released a research note before Tesla’s earnings. They maintain a price target of $510 per share, which is 32% above the company’s current share price.

While Tesla delivered 358,023 vehicles in Q1 (below consensus), Fitzgerald notes that they expect management to provide “further granularity” around Optimus on today’s call. The firm regards FY26 as a “transformational year” for Tesla.

Once again, we expect Tesla’s earnings a little after 4:05 p.m. ET, and will continue updating this live blog with news and analysis the moment their earnings hit the newswire. 

Tesla shares are up about .45% as of 3:45 p.m. ET. That’s trailing the broader market as investors await earnings, the Nasdaq is up nearly 1.5% on the day. Other Magnificent 7 stocks have broadly seen strong gains.

Amazon is up 1.9%, Alphabet is up 2.1%, and Apple is up 2.4%.

As we noted earlier, we expect Tesla to report a little after 4:05 p.m. ET. The moment the company reports, we’ll begin posting updates with news and analysis.

Prediction market Polymarket currently has Tesla at just a 25% chance of beating earnings tonight. It’s worth noting that this prediction market has Tesla’s earnings at non-GAAP EPS of $.39, which is higher than Wall Street’s current expectations of $.35.

Still, this shows that expectations aren’t high for Tesla’s earnings last quarter. That doesn’t necessarily mean the stock will fall, as we noted earlier in this live blog, reactions to Tesla’s earnings will focus on forward-looking commentary in areas like Self-Driving subscriptions, Robotaxi expansion, and Humanoid robotics progress.