It's Tesla earnings night again; the market cares most about these three things.

Tesla is set to release its first-quarter earnings after the US market closes on Wednesday (early Thursday Beijing time), but investors’ focus has already moved well beyond the quarterly profit and loss figures. Against the backdrop of slow Robotaxi expansion, unclear timelines for Optimus robot mass production, and an “astronomical” chip manufacturing plan emerging, this earnings report will be a key moment for the market to recalibrate Tesla’s valuation narrative.

According to FactSet data, Wall Street expects Tesla’s adjusted earnings per share for the first quarter to be $0.37, higher than last year’s $0.27; revenue is expected to be $22.2 billion, about 15% higher year-on-year; EBITDA is expected to be $3.2 billion, up about 17% compared to last year.

Tesla has already disclosed that both EV deliveries and energy storage product deployments are below market expectations, so the weak fundamentals are largely priced in. Barclays analyst Dan Levy noted in a research report that Tesla shares have fallen about 19% year-to-date, underperforming the S&P 500 by more than 20 points, reflecting disappointment among investors regarding Robotaxi expansion and the prospects for Optimus mass production.

For the market, the earnings figures themselves may not be the biggest variable. Jefferies analyst Philippe Houchois warned in a client report that this earnings release “will further highlight the gap between vision and execution” and may trigger concerns about funding issues; he also added that the outcome may “reinforce” the ultimate logic of Tesla merging with SpaceX. Barclays maintains a “hold/neutral” rating on Tesla, with a price target of $360. At this earnings call, management guidance on capital expenditure, Robotaxi expansion, and Optimus progress will be the key factors influencing market reaction.

Capital Expenditure: Scale Debate, Unresolved Suspense

Entering this earnings season, the core question for the market is: will Tesla raise its capital expenditure guidance, and will the financing path for ultra-large projects like Terafab become clearer?

In its last quarterly report, Tesla guided capital expenditure for 2026 to over $20 billion, covering six factory and production lines, including the lithium refinery, LFP battery factory, Cybercab, Semi truck, Houston gigafactory, and Optimus production line, as well as AI computing infrastructure expansion. Tesla plans to increase the number of Nvidia H100 equivalent GPUs from about 120,000 at the end of 2025 to about 280,000 by the end of June. Barclays estimates that GPU procurement alone would cost over $3.5 billion, with another $2.5–3 billion needed for supporting infrastructure.

However, the above $20 billion guidance explicitly excludes the Terafab chip factory and the solar factory projects. In March, Tesla unveiled the Terafab plan to build a chip manufacturing base with 1 terawatt compute capacity per year—about 50 times the current global AI compute output—with SpaceX, Intel, and Super Micro Computer involved.

If Terafab is fully implemented, total capital expenditure could reach $5–13 trillion; even focusing just on short- to medium-term ground chip production with an initial capacity target of 100–200 GW/year could require $500–1 trillion in investment. Barclays notes that Terafab currently lacks a specific construction timeline and funding plan, and is a “story yet to be proven.”

On the solar side, Tesla plans to establish 100 GW manufacturing capacity in the US by 2028. Previously, it was reported Tesla was negotiating with Chinese suppliers for $2.9 billion in solar manufacturing equipment, aiming for delivery before August this year; Barclays estimates capital expenditure on this project to require at least $30 billion.

Morgan Stanley analyst Andrew Percoco expects Tesla’s annual capital expenditure could rise to $25–35 billion, and estimates that with $21 billion in spending, Tesla’s free cash flow in 2026 would be negative $8.4 billion; FactSet data shows consensus expectation is for negative free cash flow over $4.7 billion.

GraniteShares CEO Will Rhind told MarketWatch: “Even if 2026 free cash flow expectations keep going lower, Tesla still has the strongest net cash position and balance sheet flexibility in the industry, enough to bet on all these directions at once—that’s exactly what supports its premium valuation.” Barclays, however, expects that large-scale capital expenditures will keep Tesla’s free cash flow negative, potentially lasting until 2029.

Robotaxi: Expansion Accelerates, but Scaling Remains Uncertain

The scaling up of Robotaxi is currently the core narrative driving Tesla’s valuation, and one of the most watched topics in this earnings report.

Over the weekend, Tesla announced expansion of Robotaxi services to parts of Dallas and Houston; previously the service was only available in Austin, Texas and the San Francisco Bay Area, California. This marks the first substantial geographic expansion since limited unsupervised service rollout in Austin in January. Tesla plans to roll out services to at least nine cities by the end of June, including Las Vegas and three cities in Florida.

However, the gap between limited real-world rollout and investor expectations has caused clear dissatisfaction. Crowdsourced tracking data shows only four vehicles operating in Dallas and Houston combined. Last July, Tesla CEO Elon Musk claimed Robotaxi would reach “about half” of the US population by the end of 2025—but this goal is clearly unmet. On Tesla’s investor platform, a shareholder with 275,000 shares directly asked: “Why is the rollout of the Robotaxi network so slow?” Another asked: “Why is the progress behind just 90 days after the last guidance?”

UBS analyst Joseph Spak said in a report earlier this month that he does not expect to see “meaningful scale-up” in Tesla’s target cities, and maintains a neutral rating with a price target of $352. He wrote: “We believe the technology is continually improving, infrastructure will be gradually completed, but given the importance of safety culture, Tesla’s rollout will be slow.” Morgan Stanley notes that accelerating Robotaxi deployment is “crucial” to support Tesla’s high valuation.

Optimus: Expectations Await Fulfillment, Yet to be Proven

Aside from Robotaxi, the Optimus robot is Tesla’s other core growth narrative, but currently both are at the “more showcase than rollout” stage. Management commentary in this earnings call will be crucial.

According to Say Technologies data, the most-cited shareholder question on the investor platform concerns the Optimus timeline. A shareholder holding 2.2 million shares asked: “When will Optimus V3 be released? Since Model X and S production lines are shutting down before midyear, when will mass production for Optimus begin?” Musk previously stated Optimus V3 would debut in March, but only a brief promo video was released, with the formal launch delayed to fix related issues.

In January, he said Optimus would be available to the public by the end of 2027, with mass production starting later this year on production lines originally for EVs. Morningstar analyst Seth Goldstein told MarketWatch: “By 2028, as Tesla begins generating revenue from Robotaxi and robots, we should truly start seeing this shift reflected in financials.”

Barclays is cautious—right now, in its models it only includes limited Optimus unit sales over the next ten years. However, Barclays admits any concrete progress on these projects could positively catalyze the stock price.

Fundamentals: Weakness Already Priced In, Downside Risk Remains

Apart from the three main themes, Tesla’s core automotive business fundamentals remain under pressure, although the market is already largely prepared for this.

Barclays expects Tesla’s automotive gross margin in Q1 (excluding regulatory credits, including equity incentives) to be about 14.4%, down about 350 basis points sequentially, mainly due to delivery volume decreasing by about 60,000 (down 14%) and rising material costs for steel, aluminum, copper, and precious metals. Partial offsets include tariff refunds—Tesla’s fully made-in-USA status qualifies for IEEPA tariff refunds—as well as stable pricing and improved regional sales mix.

On regulatory credits, Barclays expects Q1 revenue of about $300 million, below last quarter’s $542 million and last year’s $595 million. Energy storage deployments were 8.8 GWh, well below market expectation of 14.4 GWh, with Barclays expecting gross margin on this segment dropping from last quarter’s ~29% to about 25%.

For the full year, Barclays expects Tesla’s 2026 deliveries to be about 1.61 million, below 2025’s 1.64 million, and also below the consensus of about 1.67 million; full-year EPS estimate is $1.57, below consensus $1.94. Notably, consensus EPS has already been cut dramatically from $3.82 a year ago, but Dan Levy believes the downgrade is not fully realized. Tesla’s share price has fluctuated widely between $229.85 and $498.83 over the past 12 months, closing at about $386 Tuesday, down 1.6%.

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