Tesla's Impressive 2020 Earnings Report

Tesla's Impressive 2020 Earnings Report

by Gill D on January 29, 2021

On January 27, Tesla released its 2020 last quarter earnings at the end of the day’s trading session. The report released this week was the first earnings call since the EV manufacturer joined the S&P 500.

While the results of the earnings per share fell short of analysts’ expectations, dropping its shares by 5%, the US electric vehicle manufacturer reported its fifth consecutive profitable quarter for its combined solar and car business.

Earnings: 80 cents adj. vs expected $1.03 per share

Revenue: $10.74 billion vs expected $10.4 billion

Tesla also offered sales guidance in its report adding: “Over a multi-year horizon, we expect to achieve 50% average annual growth in vehicle deliveries.”

With Tesla’s Gigafactories in Berlin and Texas becoming operational this year, as well as the updated Model S and X vehicles going into production, the EV company is expecting to see a rapid increase in its delivery numbers growth. In addition to that, the car maker’s latest Model Y crossover SUV will also be on the assembly lines at its new Gigafactories. Tesla will also be incorporating its latest tabless battery cells that the company announced at last year’s Battery Day.

In the report released this week, Tesla included a gallery of impressive photos to show the progress of the Texas Gigafactory construction.

Photo of its Model Y die cast machines installed at the Shanghai plant:

Tesla is also improving on its premium Full Self-Driving mode that will be offered as a subscription, so Tesla owners don’t have to fork out the costly $10,000 up-front. Tesla CEO, Elon Musk has said that for drivers who already purchased the FSD, they will not be able to transfer it to a new vehicle – the software price will be included in the trade-in value.

Tesla’s gross margins hit 19.2% in Q4 2020, which was the lowest since Q4 2019 and capital expenditures were at the $1.15 billion mark for period ending 31 December 2020. The company also revealed its positive free cash flow for 2020 was $2.79 billion, which is a massive increase from $1.08 billion in 2019.

In December, Tesla announced its annual vehicle delivery figures of 499,550 which fell just short of its previous guidance target of 500,000. The numbers reported by Tesla were based on its estimated sales although the company produced 509,737 EVs during last year.

Its numbers for both production and deliveries were new records for the electric vehicle manufacturer and this is a great achievement for the automobile industry especially as the global pandemic took hold disrupting millions of businesses across all industries.

In the report, Tesla’s vehicle revenue increased to $9.31 billion, its solar generation and energy storage got to $752 million, while other revenue services that included merchandise sales (such as its own tequila brand, vehicle accessories, and apparel) reached $678 million. The EV company’s expenditure on research and development was $522 million and spent just under a billion on sales, general, and administrative costs in Q4.

Tesla’s energy sector saw significant growth between 2019 and 2020. Its total deployment of batteries exceeded 3 GWh, being an 83% increase. The Megapack was a primary reason for the leap in production and supply. The Tesla Solar Roof also increased by 18% enabled by their competitive pricing strategy and improvements in the product and installation.

Sales in China was a big driver for Tesla to reach its delivery numbers supported by the introduction of the new Model Y when production was ramped up at the Fremont facility. However, in the last quarter of 2020, Tesla instituted price cuts and shifted to selling more of the less expensive Models 3 and Y causing the average sales to fall about 11%.

All-in-all, Tesla had a remarkably successful year ending with a market capitalization of over $800 billion. And we can still expect to see many more great innovations still to come from this leading EV company.

Click here to listen to the Earnings Call webcast.

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