Tesla reported net income of $477 million on revenue of $22.4 billion for the first quarter of 2026, showing continued profitability as the electric vehicle maker expands into artificial intelligence and robotics. The results reflected recovery in electric vehicle demand and growth in Full Self-Driving subscription revenue.

During the earnings call, CEO Elon Musk acknowledged that approximately 4 million Tesla vehicles equipped with the company's Hardware 3 computer will not be able to receive unsupervised Full Self-Driving capabilities. This admission affects a significant portion of Tesla's customer base, including those who paid for the feature when purchasing their vehicles.

The disclosure could expose Tesla to legal challenges, as the company had previously indicated that customers were just software updates away from having fully autonomous vehicles. Tesla has been investing heavily in AI, robotics, and semiconductor manufacturing as part of Musk's broader transformation strategy.

Car sales drove much of the revenue growth during the quarter, while battery sales and emissions credit revenue declined compared to previous periods. Tesla's revenue showed improvement from the first quarter of 2025 as the company continues to allocate substantial resources toward its technology initiatives.

The hardware limitation revelation comes as Tesla faces increased scrutiny over its self-driving promises and timelines. The company has been working to transition from a traditional automaker to a technology company focused on autonomous driving and artificial intelligence applications.