Last year was a difficult run for automakers — except Tesla Inc. The California-based EV-maker reported that it basically met or exceeded all of its financial expectations, despite the COVID-19 pandemic and expects more of the same this year. However, its fourth-quarter results fell short of analyst expectations.
The company’s automotive revenue, which split from its storage and solar businesses, was $9.31 billion, up 46% compared with the year-ago period. It’s adjusted EBITDA was $1.85 billion for the quarter, resulting net income of $270 million or 24 cents per share.
For the full year, the company’s auto business reported revenue of $27.24 billion, representing a 31% jump versus the 2019 result. It’s adjusted EBITDA was $5.82 billion with net income of $721 million for the year, or an EPS of 64 cents on a GAAP basis.
“For the full year 2020, we achieve an industry-leading 6.3% operating margin,” the company said in a report to shareholders ahead of its earnings webcast. “Teams across our organization, including supply chain, manufacturing, logistics and delivery, rose to the occasion to ensure strong execution.”
The company noted the operating margin came despite an increase in stock-based compensation to $1.7 billion. In all, the company finished 2020 with nearly $6 billion in net cash. Add to that the previously announced production numbers, where the company narrowly missed its delivery target of 500,000 vehicles by a mere 450 units, and it could be argued the company has blown away expectations.
“Tesla came out of 2020 with guns blazing, and although the man at the helm has his sights set on Mars, CEO Musk also managed to become the richest man on Earth,” said Jessica Caldwell, Edmunds’ executive director of insights.
While Tesla sells plenty of vehicles, it doesn’t do it at a profit yet as the company sold $1.58 billion in regulatory credits to put it in the black. The credits are sold to other automakers that can’t meet emissions and fuel economy standards.
“Tesla’s fortunes would only seem to look brighter in light of the new presidential administration signaling strong support for electric vehicles, but there are challenges ahead for the company that could take some of the wind out of its sails,” Caldwell said.
She noted that for the first time ever, consumers are going to have a large – or at least larger – selection of EVs to choose from, including the new Ford Mustang Mach-E. In fact, she notes that total will nearly double from 17 to 29 coming from 20 brands.
She concedes that the market hasn’t yet produced a “Tesla killer,” the increased number of options could siphon off some buyers who would’ve selected a Tesla at this time last year.
“And since Musk has already launched the Roadster (literally) and Cybertruck to much fanfare, it does seem like the rest of the market is coming in hot right when the Tesla product pipeline is running a bit dry and is at its most vulnerable. The pressure is on for the company to keep innovating if it wants to keep its EV crown,” she noted.
However, Tesla seems undaunted by the coming influx of new EVs, noting the product pipeline may not be as dry as Caldwell believes. The company is producing its newly updated Model S and Model X vehicle at its Fremont, California plant.
Additionally, it will begin churning out vehicles from Gigafactory Berlin and Gigafactory Texas, including the new Cybertruck as well as the Tesla Semi. The company’s outlook is very positive, officials saying it has plenty of new product coming with “sufficient liquidity to fund our product roadmap.
“We are planning to grow our manufacturing capacity as quickly as possible,” the company said in the report. “Over a multi-year horizon, we expect to achieve 50% average annual growth in vehicle deliveries. In some years, we may grow faster, which we expect to be the case in 2021.
“We are currently building Model Y capacity at Gigafactory Berlin and Gigafactory Texas and remain on track to start deliveries from each location in 2021. Gigafactory Shanghai will continue to expand further through the course of the year.”