Tesla's total revenue rose 26 percent from a year earlier to $28.24 billion, beating estimates.
Of this, $20.52 billion came from the automotive segment, a 23 percent jump.
The energy business brought in $3.14 billion, up 13 percent, while services and other revenue rose 50 percent to $4.58 billion.
Despite stronger revenue, gross margin dropped from 17.2 percent to 16.8 percent, while GAAP net income fell 5 percent to $1.11 billion.
Analysts had expected a 19.4 percent gross margin, per StreetAccount.
Several factors contributed to the profit decline.
Operating expenses climbed faster than revenue due to significant investments in artificial intelligence and other R&D projects.
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Additionally, Tesla earned less from regulatory credits, and average sales prices of its EVs were also down.
