Tesla closed out its best year in company history posting quarterly and annual profit records, powered in large part by its booming operations in China, as Elon Musk’s electric car powerhouse is poised to finally face meaningful competition in the fast-growing battery vehicle market. Mercurial CEO Musk also said the carmaker won’t add the Cybertruck or another new vehicles to its lineup in 2022.
The company said today that it earned $2.05 per share on a GAAP basis in the quarter that ended Dec. 31, 2021, up 750% from a year ago. Excluding some items, EPS was $2.54 per share, topping analysts’ expectations of $2.26. Net income for the period was a best-ever $2.32 billion, an eightfold increase, while revenue was on the high side of expectations at $17.7 billion. Full-year net income was $5.5 billion and revenue was $53.8 billion.
“2021 was a breakthrough year for Tesla and for electric vehicles in general. While we battled, and everyone did, with supply chain challenges through the year, we managed to grow our volumes by nearly 90%,” Musk said on a results call. “Additionally, we reached the highest operating margin in the industry, in the last quarter at over 14% GAAP operating margin.”
For a decade Tesla has had little real competition in the EV market, but that’s changing quickly. Automakers including General Motors, Ford, Hyundai, Volkswagen and Toyota are all investing billions of dollars to roll out dozens of new battery models and to upgrade and expand production capacity to build them. At the same time, a new generation of startups including Rivian, Lucid and Fisker are also ramping up production of electric models that will compete directly with Tesla’s lineup. Some of the new vehicles will be priced below those of Tesla, whose cheapest, the Model 3 sedan, costs about $50,000 after taxes and other fees.
The upbeat results come after Tesla said early this month it delivered 936,172 electric vehicles to global customers last year, including 308,600 in the fourth quarter. Sales to customers in China and exports from that market have been the Austin, Texas-based company’s biggest source of growth over the past year, following the opening of its Shanghai plant about two years ago. Analysts expect volume to continue expanding throughout 2022 with the start of production at its new factory in Austin and the opening of Tesla’s Giga Berlin plant in Germany, its first in Europe.
“The all-important Automotive (gross margin) was 30.6% vs. the Street’s 29.2%, highlighting more efficiency Tesla is seeing with Giga in China front and center despite the chip/supply chain issues,” Dan Ives, an equity analyst for Wedbush Securities, said in a research note. “Cash from operations was $4.59 billion vs. the Street’s $2.32 billion speaking to a company on a pace to generate significant cash flow over the coming years.”
Tesla recorded $314 million of pollution credit sales to other automakers during the quarter, a long-time source of free funds. It earned $1.47 billion from those sales in 2022, down from a peak of $1.58 billion in 2020. CFO Zachary Kirkhorn said that revenue will decline next year, though Tesla’s cumulative credit sales total $5.36 billion since 2008.
No Cybertruck Or Tesla Semi In 2022
The company will work to further expand output in 2022 and, as a result, won’t be introducing new models, such as the Cybertruck, Roadster or delayed Tesla Semi.
“The fundamental focus Tesla this year is the scaling output. Both last year and this year, if we were to introduce new vehicles our total vehicle output would decrease,” Musk said, citing tight supplies of semiconductors and other components.
There’s also no $25,000 Tesla vehicle in the works. The company will do a lower-cost vehicle “at some point,” Musk said, but “we have enough on our plate right now, too much on our plate, frankly.”
Neither Musk nor Kirkhorn provided a precise growth target for this year, owing to ongoing concerns about supply chain issues. The company said prior to the call that “over a multi-year horizon, we expect to achieve 50% average annual growth in vehicle deliveries.”
Both the Austin and Berlin plants began building vehicles in the fourth quarter, according to Musk though he didn’t clarify whether those were sellable units or test production models.
Shares of Tesla rose 2% to close at $937.41 in Nasdaq trading ahead of the results release. The stock is down 11% so far this year.
Musk didn’t comment on ongoing reviews by federal safety regulators and California’s Department of Motor Vehicles of the company’s Autopilot driver-assist function that’s linked to numerous accidents. Instead, he repeatedly touted the future benefits of the company’s so-called full self-driving system and eventual creation of Tesla robotaxis.
“There are several profound improvements to the FSD stack that are coming in the next few months,” he said. “I would be shocked if we do not achieve full self driving even sometime this year.”
Despite Musk’s enthusiasm for it, and claim that the company was making progress and might be able to deliver something in the months ahead, Tesla’s ability to deliver true autonomous driving technology remains elusive. He’s repeatedly said the company was close to being able to achieve, previously setting a missed target of late 2020 at the company’s 2019 Autonomy Day.
Coincidentally, Tesla’s results release and Musk’s comments come the same day that President Joe Biden welcomed auto- and engine-makers to the White House, including the CEOs of GM, Ford and Cummins, to discuss his stalled Build Back Better legislation that would provide billions of dollars in new funding to expand EV production and enhanced incentives for consumers to buy them.
Musk, whose company has benefited greatly over the years from federal loans and incentives for electric vehicles, is a vocal opponent of Build Back Better.
