Tesla reported its first annual profit on Wednesday, an 18-year performance.
The electric car maker, which was founded in 2003, said it would earn $ 721 million in 2020, as opposed to a loss of $ 862 million in 2019, although the pandemic greatly hurt sales and production in the United States. . The company earned $ 270 million in the last three months of the year, compared to $ 105 million in the same period of 2019.
But earnings in the fourth quarter were below analysts’ expectations, and Tesla’s share fell 5 percent on Wednesday.
Tesla’s move to profitability is a major turning point for the company and for a car industry that has had few new successful entrants in recent decades. The company’s success was largely made possible by rising sales in China and Europe, and the addition of a fourth car, the Model Y, which apparently became the top seller in the United States.
“Last year was a very important year for us,” Tesla CEO Elon Musk said in a telephone conversation with analysts. “Despite a challenging environment, we have reached an important milestone in the production and delivery of half a million cars.”
Sales of Tesla increased by about 36 percent in 2020 to 499,550 cars. The increase was fueled by a factory in Shanghai that opened a year ago and now manufactures the Model Y as well as its predecessor, Model 3.. China is the world’s largest market for electric and conventional cars.
The company had revenue of $ 10.7 billion in the fourth quarter, up 45.5 percent from the previous year. Revenue for the full year rose to $ 31.5 billion, from $ 24.6 billion in 2019.
Business and Economics
But Tesla said its operating profit margin, a measure of how much money it makes for every dollar of sales, fell to 5.4 percent in the fourth quarter from 9.2 percent in the third quarter. The gross profit margin in its automotive industry was 24.1 percent, the lowest level of any quarter in 2020.
Tesla’s revenue and key point were helped by $ 401 million in fourth-quarter emissions credits to other automakers in need of regulatory compliance.
Mr. Musk has proposed that the company could sell more than 800,000 cars by 2021, as it expands production at its Chinese plant and opens a third plant under construction near Berlin. It is also building a factory near Austin, Texas, which is expected to take out cars by the end of the year.
In a statement, the company predicted that 2021 sales would grow by more than 50 percent, implying a total sales of at least 750,000 cars. The company also said that annual sales growth in the next few years will average about 50 percent, and delivery of its semi-truck will begin before the end of the year.
But the carmaker also faces challenges. Tesla earns less money than some of its larger and more established competitors. In the third quarter alone, General Motors made a $ 4 billion profit – more than five times Tesla’s total for the full year. GM will report its earnings in the fourth quarter on February 10
In Europe, Tesla is facing increasing competition from Volkswagen, Renault, Hyundai, Daimler and other manufacturers that have introduced improved and more affordable electric cars. Some of the models sell Tesla’s Model 3, which was previously the best-selling electric car in the region.
Although Tesla does not break out its sales by region or country, US sales appear to have slowed in 2020, mainly due to the coronavirus pandemic. According to data on registrations for new cars from California, Texas and 20 other states analyzed by Cross-Sell, a market research firm, the company has also seen sales of Model 3 increase.
The competition in the United States is also increasing. Ford Motor recently began delivering the Mustang Mach-E, an electric sports utility vehicle, and Volkswagen says it will launch an electric sports utility vehicle, the ID.4, in March. Both are eligible for federal tax credits that no longer apply to Tesla cars, making it cheaper than the Model Y.