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Tesla misses on earnings, expects 50% average annual growth in deliveries going forward

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Key Points
  • Tesla missed on earnings in Q4 but beat on revenue.
  • The company said it expects annual average delivery growth of 50% going forward.
  • Tesla also said it would begin producing its latest model -- a crossover SUV, the Model Y -- at new plants in Austin, Texas, and Brandenburg, Germany, in 2021 using the company's own new battery cells.

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Tesla earnings miss on bottom line, but revenues come in higher than estimates

Tesla reported quarterly results after the bell, missing analysts' estimates on earnings but notching another profitable quarter for the electric vehicle and solar business.

Shares were down about 5% after hours following an earnings call to discuss the quarter and year ahead.

Here are the results, versus what analysts were expecting according to estimates compiled by Refinitiv:

  • Earnings: 80 cents adj. vs $1.03 per share expected
  • Revenue: $10.74 billion vs $10.4 billion expected

The company also gave some guidance on sales going forward, writing "Over a multi-year horizon, we expect to achieve 50% average annual growth in vehicle deliveries." Tesla expects faster delivery growth than that for 2021, with two new factories expected to come online this year and updated versions of its Model S and X vehicles now in early stages of production.

CEO Elon Musk said on the call Wednesday that deliveries of the updated version of Model S would begin in February.

Tesla also plans to make its premium driver assistance software, marketed as the Full Self Driving option, available on a subscription basis. That means drivers won't have to pay the high up-front price of $10,000 to use FSD if they want it.

Musk also said that drivers who previously purchased FSD for their Tesla vehicle could not transfer the software to another Tesla, should they buy another. The price of the software is included in the value of a trade-in by Tesla he said, but not transferable.

Gross margins reached 19.2% for Tesla in the fourth quarter of 2020, the lowest since the last quarter of 2019. Capital expenditures hit $1.15 billion for the period ending Dec. 31.

The company also reported positive free cash flow for 2020 of $2.79 billion, more than double its 2019 figure of $1.08 billion.

Tesla previously said it had delivered 499,550 vehicles in 2020, falling barely shy of its guidance for half a million vehicle deliveries in 2020. (Deliveries are the closest approximation of sales numbers disclosed by Tesla.) It produced 509,737 vehicles during the year.

Both deliveries and production numbers set a new record for the maturing electric car company, seen as a triumph in a year when auto sales and factory operations were dampened by a global pandemic.

Automotive revenue grew to $9.31 billion in Q4, while revenue from energy generation and storage reached $752 million, and services and other revenue grew to $678 million. "Other" revenue includes sales of Tesla merchandise including the company's own tequila, apparel and more essential vehicle accessories like car charging adapters.

Tesla spent $522 million on research and development and nearly a billion on SG&A, sales, general and administrative costs in the last quarter of 2020.

Looking ahead, Tesla said it would begin producing its newest model -- the crossover SUV known as the Model Y -- at new plants in Austin, Texas, and Brandenburg, Germany, in 2021. Tesla intends to incorporate its own new "tabless" battery cells, which it unveiled at an annual shareholder meeting and battery presentation in September last year in those vehicles.

Photos from Tesla's Q4 2020 earnings report, released Jan. 27, 2021, show progress on the company's new factory near Austin, Texas.
Tesla
Tesla's factory near Berlin under construction in this photo from the company's Q4 2020 earnings report, released Jan 27, 2021.
Tesla

Wednesday's report is Tesla's first since its addition to the S&P 500.

Vehicle sales in China largely enabled Tesla to hit record deliveries in 2020. So did the introduction of a new crossover SUV, the Model Y, which Tesla began to produce in serious volumes in the first quarter last year out of its Fremont, California car plant.

In the fourth quarter, after multiple price cuts and a shift from selling more expensive Model S and X vehicles to cheaper Model 3 and Y vehicles, including in China, Tesla's average sales price dipped by about 11%.

Since Tesla's third quarter earnings call in October, the price of the company's stock has more than doubled, giving it a market capitalization of more than $800 billion and making it the fifth-most valuable company in the U.S.

Even so, Musk said "the stock market undervalues how good FSD is going to be." He said Tesla's robotaxi technology, still in development, helps justify the company's massive valuation.