• 1Q26 results were above our expectations. 1Q26 revenue/adj. PATMI was at 23%/34% of our FY26e forecasts, driven by higher-than-expected auto gross margins. Adj. PATMI (excl. stock-based compensation, “SBC”) surged 56% due to an increase in vehicle deliveries and higher auto gross margins from lower average cost per vehicle.
• 358k deliveries (+6% YoY) missed the consensus of ~366k. Production exceeded deliveries by 50k units, marking the largest single-quarter inventory build in TSLA’s history. Energy storage deployments of 8.8 GWh (-15% YoY) fell short of the consensus of 14.4 GWh, removing a key pillar of the non-auto growth narrative. Active supervised FSD subscribers grew 16% QoQ to 1.28mn.
• We maintain our SELL recommendation and a higher DCF target price of US$220 (prev. US$215) as we raise FY26e earnings by 19% from higher auto revenue and gross margin estimates. Our WACC/growth rate assumptions of 9%/5% remain unchanged. We continue to expect auto deliveries to decline in FY26e due to the removal of the US$7,500 EV tax credit, accelerating share loss in China, and softening EV demand in the US and EU. We remain cautious on TSLA: the Capex raise to >US$25bn (prev. US$20bn) will push FCF into negative territory for the remainder of FY26e. Significant revenue contribution from multi-year initiatives (FSD, Robotaxi, Optimus) remains >5 years out, and steep valuations of ~270x PE FY26e suggest optionality is already priced in.

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Company Profile Geely is one of the leading enterprises in China's self-brand passenger vehicles manufacturers. The Company's products include six major brands: Geely, Lynk, Zeekr, covering the A0 to C-class passenger vehicles market. Investment Summary 26Q1 Sales Remained Largely Flat, with Premiumisation Strategy Showing Bright Spots In the first quarter of 2026, Geely Auto delivered a cumulative 709.4 thousand vehicles, up 0.8% yoy, setting a new record high for the same period in history and regaining the top position among...
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