Elon Musk's Tesla Expected to Record First Full Year of Profitability
By Rebecca Elliott
Tesla Inc. is expected to report its first full-year profit, a
milestone powered by record vehicle deliveries in the face of a
global pandemic and a growing appetite for electric cars.
The Silicon Valley car maker delivered around half a million
vehicles last year, up more than a third from a year earlier, even
as world-wide auto sales plunged roughly 14%, according to
researcher LMC Automotive.
Wall Street expects such resilience to help Tesla generate
around $1.3 billion in 2020 annual profit when the company posts
earnings Wednesday afternoon, according to FactSet, on sales of
about $31.1 billion. That compares with an $862 million loss in
2019 on sales of $24.6 billion.
Tesla delivered quarterly profits during the pandemic despite
the temporary shutdown of the company's lone U.S. car plant because
of the health crisis. To manage the impact, Chief Executive Elon
Musk battled with local authorities to reopen the factory,
temporarily reduced salaries, furloughed workers and sought rent
breaks. Later in the year, he tested positive for Covid-19.
The 17-year-old company's performance, coupled with wider
investor enthusiasm about electric vehicles, sent the stock soaring
more than 700% last year and turned Tesla into the world's most
valuable auto maker. The string of quarterly profits also allowed
it to secure a spot in the S&P 500 index.
Wall Street forecasts Tesla will report a record quarterly
profit of around $746 million in the fourth quarter, up from $105
million a year earlier. Sales for the October-December quarter are
expected to be roughly $10.5 billion, up around 40%, according to
Tesla's financial results have been buoyed by the sale of
regulatory credits to rival auto makers that need them to comply
with emissions-related rules. Such sales brought in nearly $1.2
billion in the first three quarters of last year, up from $594
million in all of 2019.
Tesla has benefited from growing electric-vehicle demand in
China, where the company began delivering locally made vehicles in
2019. The company has expanded production capacity at its Shanghai
facility and this month delivered its first made-in-China Model Y
But Tesla also faces increased competition from incumbent auto
makers such as General Motors Co. and Ford Motor Co. and a fleet of
startups that are developing their own plug-in models, including in
To meet the growing appetite for electric vehicles, Mr. Musk
last year suggested that Tesla would seek to deliver around 840,000
to one million vehicles in 2021. To support those ambitions, the
company aims to open two new vehicle factories this year, one near
Austin, Texas, and the other near Berlin, its first in Europe.
Tesla also plans to introduce a pickup truck and semitrailer
Tesla's ascendancy from plucky startup to the world's most
valuable auto maker has been rocky at times. The company has often
struggled to introduce new vehicles, such as the Model 3 compact
car, and grappled with production challenges that have strained its
Tesla also hasn't delivered on some of Mr. Musk's more grandiose
promises, such as launching a robot taxi service by the end of
More recently, federal regulators this month asked Tesla to
recall roughly 158,000 vehicles over touch-screen failures that can
affect safety functions, including backup cameras. Tesla hasn't
responded to a request for comment about whether it intends to
follow through with the recall, which would be one of its largest
safety actions to date.
Tesla has shored up its cash position recently by selling
billions in new stock. Mr. Musk has said the company would use the
funds to pay down debt and amass what he described as a war
Write to Rebecca Elliott at email@example.com
(END) Dow Jones Newswires
January 27, 2021 05:44 ET (10:44 GMT)
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