diff --git a/esphome/components/substitutions/__init__.py b/esphome/components/substitutions/__init__.py
index ef368015b1..2d3a79ccae 100644
--- a/esphome/components/substitutions/__init__.py
+++ b/esphome/components/substitutions/__init__.py
@@ -116,7 +116,7 @@ def do_substitution_pass(config, command_line_substitutions, ignore_missing=Fals
     if CONF_SUBSTITUTIONS not in config and not command_line_substitutions:
         return
 
-    substitutions = config[CONF_SUBSTITUTIONS]
+    substitutions = config.get(CONF_SUBSTITUTIONS)
     if substitutions is None:
         substitutions = command_line_substitutions
     elif command_line_substitutions:
diff --git a/esphome/config.py b/esphome/config.py
index 1f6867eb59..73aa7077e0 100644
--- a/esphome/config.py
+++ b/esphome/config.py
@@ -756,11 +756,11 @@ def validate_config(
     CORE.raw_config = config
 
     # 1. Load substitutions
-    if CONF_SUBSTITUTIONS in config:
+    if CONF_SUBSTITUTIONS in config or command_line_substitutions:
         from esphome.components import substitutions
 
         result[CONF_SUBSTITUTIONS] = {
-            **config[CONF_SUBSTITUTIONS],
+            **config.get(CONF_SUBSTITUTIONS, {}),
             **command_line_substitutions,
         }
         result.add_output_path([CONF_SUBSTITUTIONS], CONF_SUBSTITUTIONS)
diff --git a/script/test_build_components b/script/test_build_components
index 2396353198..4d91256572 100755
--- a/script/test_build_components
+++ b/script/test_build_components
@@ -37,9 +37,9 @@ start_esphome() {
 
   # Start esphome process
   echo "> [$target_component] [$test_name] [$target_platform]"
-  echo "esphome -s component_name $target_component -s test_name $test_name -s target_platform $target_platform $esphome_command $component_test_file"
+  echo "esphome -s component_name $target_component -s component_dir ../../components/$target_component -s test_name $test_name -s target_platform $target_platform $esphome_command $component_test_file"
   # TODO: Validate escape of Command line substitution value
-  esphome -s component_name $target_component -s test_name $test_name -s target_platform $target_platform $esphome_command $component_test_file
+  esphome -s component_name $target_component -s component_dir ../../components/$target_component -s test_name $test_name -s target_platform $target_platform $esphome_command $component_test_file
 }
 
 # Find all test yaml files.
diff --git a/tests/test_build_components/build_components_base.bk72xx.yaml b/tests/test_build_components/build_components_base.bk72xx.yaml
index d74cc651eb..9fd9431826 100644
--- a/tests/test_build_components/build_components_base.bk72xx.yaml
+++ b/tests/test_build_components/build_components_base.bk72xx.yaml
@@ -12,8 +12,4 @@ packages:
   component_under_test: !include
     file: $component_test_file
     vars:
-      component_name: $component_name
-      test_name: $test_name
-      target_platform: $target_platform
       component_test_file: $component_test_file
-      component_dir: "../../components/$component_name"
diff --git a/tests/test_build_components/build_components_base.esp32-ard.yaml b/tests/test_build_components/build_components_base.esp32-ard.yaml
index e345adcafc..31b7067acc 100644
--- a/tests/test_build_components/build_components_base.esp32-ard.yaml
+++ b/tests/test_build_components/build_components_base.esp32-ard.yaml
@@ -14,8 +14,4 @@ packages:
   component_under_test: !include
     file: $component_test_file
     vars:
-      component_name: $component_name
-      test_name: $test_name
-      target_platform: $target_platform
       component_test_file: $component_test_file
-      component_dir: "../../components/$component_name"
diff --git a/tests/test_build_components/build_components_base.esp32-c3-ard.yaml b/tests/test_build_components/build_components_base.esp32-c3-ard.yaml
index 136ee62d4b..8aad447693 100644
--- a/tests/test_build_components/build_components_base.esp32-c3-ard.yaml
+++ b/tests/test_build_components/build_components_base.esp32-c3-ard.yaml
@@ -14,8 +14,4 @@ packages:
   component_under_test: !include
     file: $component_test_file
     vars:
-      component_name: $component_name
-      test_name: $test_name
-      target_platform: $target_platform
       component_test_file: $component_test_file
-      component_dir: "../../components/$component_name"
diff --git a/tests/test_build_components/build_components_base.esp32-c3-idf.yaml b/tests/test_build_components/build_components_base.esp32-c3-idf.yaml
index 4e809dd7ce..18584497f4 100644
--- a/tests/test_build_components/build_components_base.esp32-c3-idf.yaml
+++ b/tests/test_build_components/build_components_base.esp32-c3-idf.yaml
@@ -14,8 +14,4 @@ packages:
   component_under_test: !include
     file: $component_test_file
     vars:
-      component_name: $component_name
-      test_name: $test_name
-      target_platform: $target_platform
       component_test_file: $component_test_file
-      component_dir: "../../components/$component_name"
diff --git a/tests/test_build_components/build_components_base.esp32-idf.yaml b/tests/test_build_components/build_components_base.esp32-idf.yaml
index 3c4532a958..a62a995e68 100644
--- a/tests/test_build_components/build_components_base.esp32-idf.yaml
+++ b/tests/test_build_components/build_components_base.esp32-idf.yaml
@@ -14,8 +14,4 @@ packages:
   component_under_test: !include
     file: $component_test_file
     vars:
-      component_name: $component_name
-      test_name: $test_name
-      target_platform: $target_platform
       component_test_file: $component_test_file
-      component_dir: "../../components/$component_name"
diff --git a/tests/test_build_components/build_components_base.esp32-s2-ard.yaml b/tests/test_build_components/build_components_base.esp32-s2-ard.yaml
index db62cdff6a..b8f2639127 100644
--- a/tests/test_build_components/build_components_base.esp32-s2-ard.yaml
+++ b/tests/test_build_components/build_components_base.esp32-s2-ard.yaml
@@ -15,8 +15,4 @@ packages:
   component_under_test: !include
     file: $component_test_file
     vars:
-      component_name: $component_name
-      test_name: $test_name
-      target_platform: $target_platform
       component_test_file: $component_test_file
-      component_dir: "../../components/$component_name"
diff --git a/tests/test_build_components/build_components_base.esp32-s2-idf.yaml b/tests/test_build_components/build_components_base.esp32-s2-idf.yaml
index 19fb657d8b..62f0f4f7bc 100644
--- a/tests/test_build_components/build_components_base.esp32-s2-idf.yaml
+++ b/tests/test_build_components/build_components_base.esp32-s2-idf.yaml
@@ -15,8 +15,4 @@ packages:
   component_under_test: !include
     file: $component_test_file
     vars:
-      component_name: $component_name
-      test_name: $test_name
-      target_platform: $target_platform
       component_test_file: $component_test_file
-      component_dir: "../../components/$component_name"
diff --git a/tests/test_build_components/build_components_base.esp32-s3-ard.yaml b/tests/test_build_components/build_components_base.esp32-s3-ard.yaml
index 39e12de08c..25cad038b6 100644
--- a/tests/test_build_components/build_components_base.esp32-s3-ard.yaml
+++ b/tests/test_build_components/build_components_base.esp32-s3-ard.yaml
@@ -15,8 +15,4 @@ packages:
   component_under_test: !include
     file: $component_test_file
     vars:
-      component_name: $component_name
-      test_name: $test_name
-      target_platform: $target_platform
       component_test_file: $component_test_file
-      component_dir: "../../components/$component_name"
diff --git a/tests/test_build_components/build_components_base.esp32-s3-idf.yaml b/tests/test_build_components/build_components_base.esp32-s3-idf.yaml
index 95c73f917e..b1d08fcdf8 100644
--- a/tests/test_build_components/build_components_base.esp32-s3-idf.yaml
+++ b/tests/test_build_components/build_components_base.esp32-s3-idf.yaml
@@ -15,8 +15,4 @@ packages:
   component_under_test: !include
     file: $component_test_file
     vars:
-      component_name: $component_name
-      test_name: $test_name
-      target_platform: $target_platform
       component_test_file: $component_test_file
-      component_dir: "../../components/$component_name"
diff --git a/tests/test_build_components/build_components_base.esp8266.yaml b/tests/test_build_components/build_components_base.esp8266.yaml
index 0019298ef0..ecf9acd2ba 100644
--- a/tests/test_build_components/build_components_base.esp8266.yaml
+++ b/tests/test_build_components/build_components_base.esp8266.yaml
@@ -12,8 +12,4 @@ packages:
   component_under_test: !include
     file: $component_test_file
     vars:
-      component_name: $component_name
-      test_name: $test_name
-      target_platform: $target_platform
       component_test_file: $component_test_file
-      component_dir: "../../components/$component_name"
diff --git a/tests/test_build_components/build_components_base.host.yaml b/tests/test_build_components/build_components_base.host.yaml
index ec7570d99a..5492cfddd2 100644
--- a/tests/test_build_components/build_components_base.host.yaml
+++ b/tests/test_build_components/build_components_base.host.yaml
@@ -12,8 +12,4 @@ packages:
   component_under_test: !include
     file: $component_test_file
     vars:
-      component_name: $component_name
-      test_name: $test_name
-      target_platform: $target_platform
       component_test_file: $component_test_file
-      component_dir: "../../components/$component_name"
diff --git a/tests/test_build_components/build_components_base.rp2040.yaml b/tests/test_build_components/build_components_base.rp2040.yaml
index cb1cb6359b..335642374b 100644
--- a/tests/test_build_components/build_components_base.rp2040.yaml
+++ b/tests/test_build_components/build_components_base.rp2040.yaml
@@ -15,8 +15,4 @@ packages:
   component_under_test: !include
     file: $component_test_file
     vars:
-      component_name: $component_name
-      test_name: $test_name
-      target_platform: $target_platform
       component_test_file: $component_test_file
-      component_dir: "../../components/$component_name"