Quick Summary

• Tesla’s Q1 2026 electric vehicle deliveries reached 358,023 units, falling below analyst projections of 370,000.
• Shares have declined 23% in 2026 and are approaching their eighth consecutive weekly decline.
• The automaker manufactured 408,300 vehicles while delivering only 358,023, resulting in an unprecedented inventory surplus.
• Derivative trading patterns that historically bolstered share prices have weakened throughout 2026.
• Wall Street forecasts Tesla will experience negative free cash flow exceeding $6 billion during the current year.

Tesla’s first quarter 2026 delivery figures came in below expectations, accompanied by a concerning accumulation of unsold vehicles.

Tesla, Inc., TSLA

The electric vehicle manufacturer reported deliveries of 358,023 units during the opening quarter, undershooting analyst consensus of 370,000. While this represents a nominal 6% increase compared to the first quarter of 2025, that baseline itself reflected a 13% year-over-year decline, making the comparison less meaningful.

Tesla manufactured 408,300 vehicles during the three-month period while delivering 358,023 units. This differential of approximately 50,000 vehicles marks the company’s largest ever accumulation of unsold inventory.

JPMorgan analyst Ryan Brinkman highlighted the inventory accumulation as a significant drain on free cash flow, noting that undelivered vehicles consume capital until they reach customers.

Cash Flow Challenges Mount

The situation is complicated by timing factors. Tesla increased its capital expenditure forecast to $20 billion for 2026, a substantial jump from $8.5 billion spent in 2025. The majority of this investment targets artificial intelligence infrastructure and humanoid robotics manufacturing.

Wall Street analysts compiled by Visible Alpha project Tesla will generate negative free cash flow surpassing $6 billion in the current year, followed by additional negative cash flow exceeding $1.2 billion in 2027.

William Blair analyst Jed Dorsheimer noted “global EV demand ex-China remains under pressure,” suggesting that Tesla is “actively sacrificing its EV business in favor of a fully autonomous future.”

Market headwinds extend beyond Tesla. Intensifying competition, tariff policies from the Trump administration, and the elimination of the $7,500 federal electric vehicle tax credit have dampened demand throughout the sector.

The Model 3 and Model Y accounted for 97% of total Q1 deliveries, underscoring the company’s continued dependence on these two product lines.

Derivative Market Activity Weakens

Beyond fundamental factors, technical market dynamics have shifted. GLJ Research analyst Gordon Johnson has monitored options market activity surrounding Tesla and observed that retail investors have reduced aggressive call option purchasing in 2026.

Historically, substantial call buying compelled market makers to hedge positions by acquiring shares. This purchasing activity generated what market participants term a “gamma squeeze,” creating a self-reinforcing cycle that elevated share prices independent of underlying business performance.

Johnson contends this technical support mechanism has diminished, exposing the stock more directly to fundamental performance. He maintains a Sell rating with a $25.28 price target—significantly below consensus estimates and representing a contrarian position.

Nevertheless, his analysis of options market dynamics provides relevant insight into technical influences.

Entering Friday’s session, Tesla traded at $344.82 during premarket hours, declining approximately 0.2%. The stock currently trades at roughly 170 times projected 2026 earnings.

Full-year 2025 deliveries totaled 1.64 million units, down from 1.79 million in 2024.

Bittensor subnet developer Covenant AI said Friday that it is leaving the decentralized artificial intelligence network, accusing Bittensor of operating under a concentrated governance structure that undermines its decentralization claims.

In a Friday post on X, Covenant AI founder Sam Dare said the team could no longer build on or raise for Bittensor because its governance was not meaningfully distributed.

“It is decentralization theatre,” Dare said. “Jacob Steeves maintains effective control over the triumvirate, resists any meaningful transfer of authority, and deploys changes unilaterally whenever he chooses, without process and without consensus.”

The dispute cuts to the core of Bittensor’s decentralization pitch. Covenant AI alleged that founder Jacob Steeves, known as Const, exerts outsized influence over governance and network operations, an accusation Steeves denied.

Bittensor’s governance documents describe a transitional system in which a “Triumvirate” of Opentensor Foundation employees holds root permissions alongside a senate, rather than a fully open governance model.

Covenant AI claims subnet emissions were suspended, Bittensor founder denies allegations

Covenant AI said Steeves had taken several actions against the project in recent weeks, including suspending emissions to its subnet, restricting moderation powers in community channels and applying “direct economic pressure” through visible token sales during the dispute.

Steeves rejected the allegations, claiming that he cannot suspend subnet emissions and that he does not hold “any privilege beyond what normal TAO holders have.”

In a Friday X response, Steeves said he sold some of his “alpha holdings on his three subnets because they were not running and were on near 100% burn code,” which changed the emissions the same way “all buys and sells on Bittensor do.”

Steeves also denied stripping Covenant AI of its moderation rights, saying he only temporarily removed the team’s ability to delete posts before restoring it. He added that large token sales would have been visible onchain.

“Less than 1% of what i had invested in his teams. Visibility is impossible to avoid in my position. I reserve my right to buy and sell tokens which is what underpins the entire system of dTao,” he added.

Bittensor previously garnered mainstream attention after Nvidia CEO Jensen Huang praised the decentralized training run on Bittensor Subnet 3, calling Covenant’s milestone of pre-training the largest decentralized LLM a “remarkable technical achievement,” during the All-In Podcast on March 19.

Related: Bittensor’s TAO price may plunge 40% within five weeks: Fractal data

TAO’s sales volume skyrockets ahead of Covenant AI’s departure announcement

The governance dispute also weighed on Bittensor’s (TAO) token, which was down around 18% over the previous 24 hours as of Friday morning, according to market data.

However, sell volume on TAO rose to its highest level since December 2024, about 24 hours before Covenant AI announced its departure. “If you think that’s a coincidence, you don’t understand the game you’re playing. This was a calculated exit and execution,” wrote crypto analyst Ardi in a Friday X post.

Cointelegraph reached out to Covenant AI and Bittensor for comment but had not received a response by publication.

The dispute raises wider concerns for projects striving for decentralization, according to David and Daniil Liberman, co-creators of the decentralized layer-1 blockchain Gonka protocol.

“Decentralized networks that want serious builders have to answer one question: can the infrastructure you build on be used against you? If the answer is yes, the decentralization is cosmetic,” they told Cointelegraph.

Magazine: Michael Heinrich loves AI coins Goat, Turbo & Aethir… but not TAO