Tesla reports record profit but cautious amid supply chain issues
Electric car giant Tesla on Wednesday lifted growing demand for electric vehicles to a record $5.5 billion profit in 2021, but warned that supply chain bottlenecks would continue to dampen growth. production until 2022.
CEO Elon Musk’s upbeat outlook came after the world’s most valuable automaker posted record quarterly revenue that beat Wall Street expectations.
The electric car maker, which saw an 87% increase in auto deliveries last year despite global semiconductor shortages, reported a 71% increase in revenue to $53.8 billion.
But the cautious note on supply chain issues showed that even Tesla couldn’t avoid the shortages that were pitfalls for many big automakers last year, and shares fell 0, 8% after hours.
“We plan to increase our manufacturing capacity as quickly as possible,” he said in a press release reiterating the company’s 50% annual growth target.
“The rate of growth will depend on our equipment capacity, operational efficiency, and supply chain capacity and stability,” Tesla said.
“Our own factories have been operating below capacity for several quarters as the supply chain has become the main limiting factor, which is expected to continue through 2022.”
Musk said he was encouraged by the announced new semiconductor capacity that should ease the imbalance by late 2022 or early 2023.
He said Tesla’s volume growth would comfortably exceed 50% over last year, meaning Tesla expects to deliver more than 1.4 million vehicles this year.
But “there could be other issues” this year, he said on a conference call with analysts and investors.
Musk cited supply chain issues as a factor in the decision to postpone the rollout of new products this year, adding that the company will take care of the engineering of its “Cybertruck” electric pickup truck in preparation for a possible launch in 2023.
“Tesla’s fundamental goal is to scale vehicles,” Musk said, adding that had the company introduced new models in 2021, it would have resulted in lower overall production.
Musk also previously discussed the introduction of a $25,000 electric vehicle, but said that product was not front and center either.
“We have too much to do,” Musk said.
More factories to come?
Revenue hit $17.72 billion in the fourth quarter, above analyst estimates of $16.57 billion, according to data from Refinitiv’s Institutional Broker Estimation System (IBES).
Tesla has ramped up production at factories in California and Shanghai, while building new facilities in Germany and Texas.
Tesla said its Texas plant will deliver its first vehicles with its California-made next-generation 4680 batteries this quarter as planned.
Tesla said it began building Model Y vehicles in Texas in late 2021, while it began testing equipment in Germany around the same time.
“We are still in the process of finalizing the manufacturing permit from the local authorities” in Germany, Tesla said.
Musk said he plans to add more manufacturing sites, with further announcements likely in late 2022.
CFRA Research analyst Garrett Nelson called the company’s cautious remarks about supply chains unwarranting.
“Tesla is a master at under-promoting and over-delivering and has now beaten (expectations) in nine of the past 10 quarters,” Nelson wrote. “We reiterate a ‘Buy’ notice,” he added.
Shares of Tesla gained 0.8% to $944.50 after hours trading.
“I would be shocked if we didn’t achieve fully autonomous driving”
Musk said he expects Tesla’s vehicles to reach full self-driving capability this year. Currently, humans are required to sit behind the wheel to drive the car when necessary.
“I would be shocked if we didn’t achieve fully autonomous, safer-than-human driving this year,” he said.
The number of fully autonomous beta vehicles in the United States has risen to nearly 60,000, from a few thousand at the end of September. Tesla tested the upgraded version of its automated driving software on public roads, but said the features did not make the cars self-driving.
Tesla’s adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $4.09 billion exceeded the consensus estimate of $3.89 billion, according to Refinitiv. That appeared to qualify Musk for an additional option payout as part of his 2018 compensation package.
Quarterly profits took a $340 million hit due to payroll taxes related to Musk’s exercise of options tied to his 2012 compensation package.
Profits also reflected higher raw material, commodity and logistics costs as well as expenses related to warranties and recalls. For example, Tesla is recalling more than 475,000 of its Model 3 and Model S electric cars to fix rear-view camera and trunk issues that increase crash risk.