By Rebecca Elliott
Tesla Inc. posted its first full-year profit, powered by record
vehicle deliveries amid a global pandemic and growing demand for
electric cars that is driving the company to pursue a sharp rise in
output this year.
The Silicon Valley car maker said Wednesday it expects to
increase production about 50% on average for the coming years --
and top that rate in 2021. The company delivered around half a
million vehicles to customers last year.
Chief Executive Elon Musk last year suggested a delivery target
of about 840,000 to one million vehicles in 2021. Wall Street's
projection is for about 796,000 vehicles.
For 2020, Tesla reported a profit of $721 million on about $31.5
billion in sales, supported by the increase in deliveries and
higher revenue from regulatory credits. That compares with an $862
million loss and sales of $24.6 billion in 2019. The company topped
Wall Street's revenue expectation of about $31.1 billion, according
to FactSet, though it missed profit estimates.
Tesla said its bottom line in the latest quarter was weighed
down by a range of factors, including supply-chain costs and
preparations for updated versions of its Model S luxury sedan and
Model X sport-utility vehicle. Costs linked to Mr. Musk's
stock-based compensation package also dented earnings. Mr. Musk,
who doesn't accept a salary from Tesla, became eligible for
multiple tranches of stock options last year.
Shares in the car maker slumped more than 3% in after-hours
Tesla delivered quarterly profits during the pandemic despite
the temporary shutdown of the company's U.S. car plant because of
the health crisis. To manage the impact, Mr. 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.
Tesla is one of several American tech giants on a path to emerge
from the pandemic stronger than before. Apple Inc. on Wednesday
said profit in the most recent quarter rose 29% with sales in the
three months topping $111 billion for the first time, aided by
demand for laptops and iPad tablets in the work-from-home era.
Microsoft Corp. on Tuesday also reported record sales and issued an
upbeat outlook for the rest of its financial year. Social-media
giant Facebook Inc. Wednesday posted record quarterly revenue and
The car maker generated a profit of $270 million in the fourth
quarter, up from $105 million a year earlier. Sales rose about 46%
to roughly $10.7 billion.
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 credits brought in roughly $1.6
billion last year, up from $594 million in 2019.
Tesla has benefited from growing electric-vehicle demand in
China, where it 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 support its growth, the company aims to open two new vehicle
factories this year, one near Austin, Texas, and the other near
Berlin, its first in Europe. The company reiterated those plans
Wednesday and said that it would deliver its first semitrailer
truck later this year. Mr. Musk said last year that the company
hoped to begin delivering its electric pickup truck to customers
toward the end of 2021.
To help sustain consumer appetite, the company said it is
preparing new batteries and other enhancements for the Model S --
which it began delivering almost a decade ago -- and for the more
than five-year-old Model X. Production is set to resume before
April, Tesla said. Deliveries of those higher-end models fell 3% in
the fourth quarter from the year-earlier period. Tesla said it has
capacity at its plant in Fremont, Calif., to make 100,000 of those
models, or 11% more than previously.
Tesla said it now has the capacity to produce more than one
million cars a year. It said its Shanghai plant could make 450,000
combined Model 3 and Model Y vehicles, or 200,000 more than it
reported in the prior quarter.
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 finances.
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
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
Tesla has shored up its cash position recently by selling
billions in new stock. The company's cash holdings totaled around
$19.4 billion as of year-end, up from around $6.3 billion at the
end of 2019. Mr. Musk has said the company would use the funds to
pay down debt and amass what he described as a war chest.
Write to Rebecca Elliott at firstname.lastname@example.org
(END) Dow Jones Newswires
January 27, 2021 18:17 ET (23:17 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.