Tesla posts record annual profit

The electric-vehicle maker books record annual profit but warns of further supply-chain disruptions as it looks to bolster capacity.

Tesla, led by Elon Musk, booked a record annual profit but cautioned that the supply-chain disruptions that dogged automakers last year are likely to continue through 2022. Picture: John Thys/AFP

Tesla cruised to a record annual profit but cautioned that the supply-chain disruptions that dogged automakers last year are likely to continue through 2022.

Elon Musk’s electric-vehicle maker posted a $US5.5bn ($A7.73bn) annual profit on $US53.8bn of sales last year, after increasing vehicle deliveries at its fastest pace in years. That is up from $US721m in profit and $US31.5bn in sales in 2020, when Tesla generated its first full-year profit, and ahead of Wall Street’s expectations.

Tesla delivered more than 936,000 vehicles globally last year, up 87 per cent from 2020, despite global computer-chip shortages that constrained vehicle production across the auto industry.

Despite the chip shortage, automakers are expected to report banner earnings for 2021. Tesla, like many of its rivals, benefited from being able to charge more for its vehicles as demand outran supply. Its in-house software engineering expertise also helped to make the company more agile as it navigated the global semiconductor shortfall.

It wasn’t immune to supply-chain problems, though. Such disruptions, paired with transportation, labour and other challenges, forced Tesla to run factories below capacity, the company said.

Tesla also said that rising raw-materials prices and higher logistics costs dented profit, as did increased costs related to vehicle recalls.

The company’s shares closed up around 2 per cent Wednesday in regular trading and was fluctuating between losses and gains in post-market trading after Tesla released its results.

Automakers are expected to launch more than two dozen new battery-powered vehicles in the U.S. this year, according to Bank of America, and investors will be listening Wednesday for updates on Tesla’s plans to broaden its vehicle offerings. Mr Musk, who didn’t participate in the company’s third-quarter analyst briefing, has said he planned to provide a fresh product road map on the call.

“We believe competitiveness in the EV market will be determined by the ability to add capacity across the supply chain and ramp production,” Tesla said in its earnings release.

It has been nearly two years since the company last delivered a new model — the Model Y compact sport-utility vehicle — to customers. Tesla’s Cybertruck pick-up, unveiled in 2019, is expected to be the next out, but has faced delays. So, too, has the semi-trailer truck, which Tesla revealed in 2017 and, as of October, was due for production in 2023. Mr Musk suggested last fall that parts shortages had contributed to those product delays.

“Oh man, this year has been such a supply chain nightmare & it’s not over!” the chief executive tweeted in November.

Mr Musk has also teased a $25,000 car aimed at making electric vehicles accessible to a wider array of customers and a refreshed version of the company’s first production car, the Roadster sports car.

Analysts expect Tesla to build on last year’s momentum by delivering nearly 1.5 million vehicles to customers in 2022, according to FactSet. That is consistent with the company’s target of increasing deliveries by 50 per cent annually, on average, in the coming years. Tesla said that, as of the fourth quarter, it was producing at an annualised rate of more than 1.22 million vehicles.

Key to those growth plans are new factories in Germany and in Texas. The company has faced delays at both facilities, which it had hoped to have operational last year. Analysts now expect Tesla, which said it had started building Model Ys in Texas, to begin delivering vehicles made at the plants in the next few months.

In Germany, the Brandenburg state government says the approval process for Tesla’s factory near Berlin is in the final stages after the company, in December, provided the last batch of requested documents.

Tesla has received temporary approval at each step of the construction process and has been producing vehicles in small numbers to test machines at the plant, but it isn’t allowed to sell any vehicles made there or shift into mass production, state officials said.

The car maker said it was also looking to expand capacity at its Fremont, California, plant.

Tesla, which has long relied on battery cells from suppliers such as Panasonic, has also been working to produce new, larger cells that it designed in-house. Drew Baglino, the company’s senior vice president of powertrain and energy engineering, told investors in October to expect Tesla to begin delivering vehicles powered by those larger cells early this year.

Meanwhile, the company has been broadening access to an advanced driver-assistance feature designed to help vehicles navigate cities. Tesla said nearly 60,000 vehicles now have access to the city-driving tool, which is part of a package that Tesla has dubbed “Full Self-Driving,” though it doesn’t make vehicles autonomous. Tesla recently increased the price of that package 20 per cent, to $US12,000.

-William Boston contributed to this article.

The Wall Street Journal