(Reuters) – Tesla Inc.’s fourth-quarter profit fell short of Wall Street expectations on Wednesday and the company did not provide a clear target for vehicle deliveries in 2021, which pushed shares down 5 % in the extended trade.
The disappointing results come after electric vehicle maker shares led by CEO Elon Musk grew nearly 700% over the past twelve months, a valuation rooted in expectations that Tesla will expand quickly and profitably.
Investors had expected a significant increase over the company’s 2020 delivery target of half a million vehicles, but Tesla only provided a vague outlook and did not pinpoint any specific delivery target.
“On a multi-year horizon, we expect to achieve 50% average annual growth in vehicle deliveries. In a few years we may grow faster, which we hope will be the case in 2021, ”Tesla said in a statement.
Fuzzy guidelines also come after Musk waited for hopes during an October earnings call. Asked by an analyst whether Tesla aimed to supply between 840,000 and one million vehicles by 2021, based on the current maximum capacity of its factories, Musk replied that the goal was “in this environment”, while another Tesla executive said the company would provide guidance next quarter.
Tesla chief financial officer Zachary Kirkhorn said Wednesday the company was “working very hard” to manage a global semiconductor shortage that has plagued the auto industry, but did not elaborate.
Tesla delivered 180,570 vehicles during the fourth quarter, a quarterly record, though it narrowly lost its ambitious 2020 target of half a million deliveries.
“After Tesla’s unprecedented trajectory in 2020, investors predicted a substantial gain in earnings and another big target for vehicle deliveries in 2021,” said Haris Anwar, senior analyst at Investing.com.
Investors and analysts during a profit call were interested in learning more about Tesla’s growth rate, even when it would reserve more revenue for its automated driving functions, but received few concrete responses.
Tesla allows customers to purchase a $ 8,000 software update called “Full Self Driving,” but has yet to reserve a large portion of that revenue, as the feature has yet to be released to consumers.
WARMING UP OF THE COMPETITION
While Tesla has increased overall deliveries, the company said Wednesday that the average selling price per vehicle fell 11 percent each year, with more consumers switching to the less expensive Model 3 and Model Y models.
Net income, excluding stock-based compensation payments to Musk, rose to $ 903 million from $ 386 million last year, but the company fell short of analysts ’average expectations for a quarterly profit of $ 1.08 million, according to Refinitiv data.
Tesla’s quarterly revenue slightly exceeded analysts ’expectations of $ 10.4 billion.
Under Musk’s leadership, Tesla significantly expanded its footprint in 2020, causing an economic and pandemic revolution with steady sales and profitable quarters at a time when many vehicle manufacturers reported losses. Its success allowed Tesla to join the S&P 500 index, challenging long-term skeptics who had bet against the company.
The CEO, who is also at the helm of rocket maker SpaceX, said Wednesday that he hopes to run Tesla for several more years, but added that it would be “good to have a little more free time on hand.”
Throughout 2020, Tesla increased production in China and last month began selling its locally manufactured Model Y sports utility vehicle there at a price analysts say will disrupt the conventional premium vehicle market. But the company faces growing competition from local competitors, including Nio Inc. and Xpeng Inc.
Tesla has also begun building vehicle and battery manufacturing factories near Berlin (Germany) and Austin (Texas), and on Wednesday said it would continue on the right track to start deliveries from each location this year.
But within the automotive industry, the race to develop electric vehicles is now being developed to meet emissions targets and challenge Tesla’s market leadership.
Several vehicle manufacturers are expected to launch new EV models this year, including sport utility vehicles to compete with the Model Y, such as Ford Motor Co’s Mustang Mach-E and Volkswagen AG ID. The Cybertruck’s challenges, yet to be launched, come from General Motors Co.’s electric Hummer truck.
Tesla said Wednesday that Cybertruck’s volume production would begin in 2022.
Increased competition in electric vehicle sales will also dry up Tesla’s revenue from environmental regulatory credits, which it sells to other automakers.
In the fourth quarter, $ 401 million, or 4% of Tesla’s automotive revenue, came from these loans.
Reports from Akanksha Rana in Bengaluru and Tina Bellon in New York; Edited by Sriraj Kalluvila, Peter Henderson and Matthew Lewis