{"id":603409,"date":"2026-04-24T10:11:12","date_gmt":"2026-04-24T10:11:12","guid":{"rendered":"https:\/\/www.newsbeep.com\/us\/603409\/"},"modified":"2026-04-24T10:11:12","modified_gmt":"2026-04-24T10:11:12","slug":"tesla-earned-next-to-nothing-on-cars-in-q1-and-plans-to-spend-25-billion-in-capex-anyway","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us\/603409\/","title":{"rendered":"Tesla earned next to nothing on cars in Q1, and plans to spend $25 billion in CapEx anyway"},"content":{"rendered":"

Tesla\u2019s earning calls in the last few quarters have always been a study in extremes: The EV-maker\u2019s profits from making and selling cars and batteries keeps shrinking, while CEO Elon Musk\u2019s promises of wonders to come for the likes of robotaxis and humanoid robots keep ballooning. The Q1 edition, held after the market close on April 22, set a new standard. Digging into financial statements reveals that Tesla<\/a> earned almost zip in repeatable, bedrock profits on the EV side. Yet Musk greatly ramped his already super-ambitious investment agenda for pending blockbusters, \u201crevolutionary\u201d offerings that he\u2019s long promised as a year or two away, but that suffer serial delays, and keep gestating as prototypes either in the labs, or making trial runs on the roads.<\/p>\n

So the question arises that didn\u2019t get answered on the call: How is Tesla going to pay for all that extra CapEx when the only arm generating cash is fading? And can it possibly earn a big enough return on all the capital newly piled on its balance sheet to reward shareholders?<\/p>\n

Tesla\u2019s basic EV franchise showed minuscule profits in Q1, and the enterprise now trades at its most outrageous adjusted PE ever<\/p>\n

In the last couple of years, this reporter\u2019s been calculating an adjusted GAAP net earnings number for each Tesla quarter. The aim: gauging what the EV giant actually books, on a sustained basis, from its car and battery business. To get that number, I subtract income from the sale of regulatory credits, an item Musk himself avows will disappear over time (though it\u2019s stayed higher than expected so far), and gains on sales of digital assets (I add the losses back to the profit line).<\/p>\n

In Q1, Tesla posted GAAP profits of $491 million. That\u2019s already a depressing number. At its peak in 2023, Musk\u2019s company was averaging four times that number at around $2 billion a quarter. But almost all of Q1 earnings\u2014$470 million after-tax to be exact\u2014flowed from the carbon credits line ($297 million) and gains on trimming its Bitcoin trove ($173 million). Hence, Tesla made only $21 million in what I\u2019ll call its \u201ccore\u201d franchises. Over the past two quarters, using this metric, it\u2019s actually lost almost $70 million.<\/p>\n

With each earnings release, I\u2019ve also been counting \u201ccore\u201d profits over the last 12 months. I marshal that annual stat to assess how much of Tesla\u2019s giant market cap is attributable to how it\u2019s performing now, and how much should be assigned to Musk\u2019s vision of what\u2019s on the horizon. I call the latter \u201cThe Musk Magic Premium.\u201d So here we go. Over the past four quarters, Tesla\u2019s booked $2.13 billion in core profits. As of mid-morning on April 23, its market cap stood at $1.4 trillion. Hence, its PE based on GAAP profits from the places it makes money today towers at 657. In autos, Tesla is now a no-growth engine. Still, we\u2019ll assign those baseline profits a generous multiple of 15, which is higher than average for big carmakers. On that formula, Tesla\u2019s profit-spinning side\u2019s worth $32 billion (the PE of $15 times core profits of $2.13 billion). As a share of the total valuation, The Musk Magic Premium has reached its all-time summit at almost 98%.<\/p>\n

Despite the weak basics, Musk unveils an unexpectedly daring plan for CapEx <\/p>\n

On the call, Musk got straight to the big issue. His second sentence: \u201cWe\u2019re going to be substantially increasing our investments in the future. So you should expect to see a very significant investment in capital expenditures.\u201d He then highlighted the new research chip fab at the Giga Texas Campus, and noted that Tesla\u2019s \u201cworking on a lot of large, ambitious projects.\u201d How big got clarified in CFO Vaibhav Taneja\u2019s portion of the call. He stated that \u201cwe\u2019re paying for six factories, some have already started, some will go into operation in the later part of this year,\u201d adding that \u201cWe\u2019re further increasing our investment in AI-related initiatives.\u201d<\/p>\n

Taneja then declared that \u201cour current expectation for 2026 is over $25 billion in CapEx.\u201d That\u2019s a far bigger number than analysts were expecting. In Q1, Tesla spent $2.5 billion on CapEx. So for the rest of the year, it\u2019s pledging outlays of at least $22.5 billion, or $7.5 billion a quarter. That\u2019s 3x the first quarter amount. <\/p>\n

Taneja added that Tesla will post negative free cash flow for the rest of the year. How big could that deficit be? In the past four quarters, Tesla\u2019s recorded average cash from operations\u2014the fount the feeds CapEx\u2014of $4 billion a quarter. But Musk is pledging to spend almost double that in CapEx going forward, for quarterly shortfalls of at least $3.5 billion, and knowing Musk, probably more.<\/p>\n

The plan raises two issues. First, where is all that money going to come from? Will Tesla shoulder new debt or issue shares that would dilute the current stockholders? The second: Musk will be adding loads of assets on a balance sheet where the left side\u2019s total already jumped from $91 billion in mid-2023 to what looks like around $170 billion by the close of 2026. Tesla\u2019s generating puny and declining returns on the plants, inventories and other assets now on its books. To reward investors, it will both need to compensate for that weakness plus achieve absolutely gigantic returns on the fresh capital it\u2019s amassing at top speed.<\/p>\n

The market didn\u2019t like the CapEx surprise. By midday on April 23, Tesla\u2019s shares had dropped 3.7% to $373, bringing the decline since the start of 2026 to 17%. Investors are right to question whether Tesla can earn remotely enough five or ten years forward to merit a valuation of $1.4 trillion, when it makes peanuts now. It\u2019s easy to get mesmerized by Musk\u2019s pitch. But doing the math to identify the actual numbers Musk must conjure for a glorious finale may get you to grab your remote, and click off the show.<\/p>\n","protected":false},"excerpt":{"rendered":"Tesla\u2019s earning calls in the last few quarters have always been a study in extremes: The EV-maker\u2019s profits…\n","protected":false},"author":2,"featured_media":603410,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[27],"tags":[28,8084,939,60447,1019],"class_list":{"0":"post-603409","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"tag-business","9":"tag-earnings","10":"tag-finance","11":"tag-investing-strategy","12":"tag-tesla"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/603409","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=603409"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/603409\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/603410"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=603409"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=603409"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=603409"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}