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Tesla announced its first annual profit on Wednesday, a feat of 18 years.
The electric automaker, which was founded in 2003, said it earned $ 721 million in 2020, down from a loss of $ 862 million in 2019, even as the pandemic has dragged down sales and production in the United States. The company earned $ 270 million in the last three months of the year, up from $ 105 million in the same period of 2019.
But fourth-quarter earnings were lower than analysts’ expectations, and Tesla’s stock was down about 5% in extended trading on Wednesday.
Tesla’s move towards profitability is an important turning point for the company and for an auto industry that has seen few new entrants thrive in recent decades. The company’s success was made possible in large part by increased sales in China and Europe and the addition of a fourth car, the Model Y, which appears to have become its top seller in the United States.
Last year was “a defining year for us on many fronts,” Tesla chief executive Elon Musk said on a conference call with analysts. “Despite a difficult environment, we have taken an important step in the production and delivery of half a million cars.”
Tesla’s sales rose by around 36% to 499,550 cars in 2020. The increase was fueled by a factory in Shanghai that opened a year ago and is now starting to produce the Model Y as well as its predecessor, Model 3. China is the largest in the world. electric and conventional car market.
The company reported fourth quarter revenue of $ 10.7 billion, up 45.5% from the previous year. Its annual revenue soared to $ 31.5 billion, from $ 24.6 billion in 2019.
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But Tesla said its operating profit margin, a measure of how much money it made for every dollar in sales, fell to 5.4% in the fourth quarter from 9.2% in the third quarter. The gross profit margin of its automotive business was 24.1%, the lowest level of any quarter in 2020.
Tesla’s revenue and results were aided by the sale of $ 401 million in fourth-quarter emissions credits to other automakers who need them to meet regulatory standards.
Mr Musk has suggested the company could sell more than 800,000 cars in 2021 as it ramps up production at its Chinese plant and opens a third plant under construction near Berlin. It is also building a plant near Austin, Texas, which is expected to start producing cars by the end of the year.
In a statement, the company predicts that sales in 2021 will increase by more than 50%, implying a total sales of at least 750,000 cars. The company also said it expects annual sales growth of around 50% over the next several years, and said deliveries of its semi-trailer will begin before the end of the year.
But the automaker also faces challenges. Tesla makes less money than some of its bigger, more established rivals. In the third quarter alone, General Motors generated $ 4 billion in profits – more than five times Tesla’s total for the year. GM to release fourth quarter results on February 10
In Europe, Tesla faces increasing competition from Volkswagen, Renault, Hyundai, Daimler and other manufacturers who have introduced improved and more affordable electric cars. Some of these models sell better than Tesla’s Model 3, which was previously the best-selling electric car in the region.
Although Tesla does not break down its sales by region or country, it appears that the company’s sales in the United States slowed in 2020, mainly due to the coronavirus pandemic. But the company has also seen Model 3 sales stagnate as Model Y deliveries surged, according to new car registration data from California, Texas and 20 other states analyzed by Cross-Sell, a company in the United States. ‘marketing studies.
Competition in the United States is also increasing. Ford Motor recently began shipping the Mustang Mach-E, an electric sport utility vehicle, and Volkswagen has announced that it will introduce an electric SUV, the ID.4, in March. Both are eligible for federal tax credits that no longer apply to Tesla cars, making them more affordable than the Model Y.
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