(Reuters) – Tesla Inc’s fourth-quarter earnings fell short of Wall Street expectations on Wednesday and the company failed to provide a clear target for 2021 vehicle deliveries, causing the shares to drop 5% in expanded trade.
The disappointing results come after the shares of the electric carmaker led by CEO Elon Musk have risen nearly 700% in the past 12 months, an assessment rooted in expectations that Tesla will expand quickly and profitably.
Investors expected a significant increase from the company’s 2020 delivery target of half a million vehicles, but Tesla provided only a vague view and did not set a concrete delivery target.
“Over a period of several years, we expect to achieve an average annual growth of 50% in vehicle deliveries. In a few years, we can grow faster, which we expect to be the case in 2021, ”said Tesla in a statement.
The diffuse orientation also comes after Musk had raised hopes during a profit call in October. Asked by an analyst whether Tesla intended to deliver 840,000 to 1 million vehicles in 2021, based on the current maximum capacity of its plants, Musk replied that the target was “in that neighborhood”, while another Tesla executive said the company would supply guidance in the next quarter.
Tesla’s chief financial officer, Zachary Kirkhorn, said on Wednesday that the company was “working very hard” to manage the global semiconductor shortages that upset the auto industry, but gave no further details.
Tesla delivered 180,570 vehicles during the fourth quarter, a quarterly record, although it narrowly missed its ambitious 2020 goal of half a million deliveries.
“After Tesla’s unprecedented run in 2020, investors predicted a substantial reduction in profits and another big target for car deliveries in 2021,” said Haris Anwar, senior analyst at Investing.com.
Investors and analysts during a earnings call were eager to learn more about Tesla’s pace of growth, including when it would reserve more revenue for its automated driving resources, but received few concrete responses.
Tesla allows customers to purchase a $ 8,000 software update that it calls “Full Self Driving”, but it has not yet reserved a large portion of that revenue, as the feature has not yet been widely publicized to consumers.
HEATING OF THE COMPETITION
Although Tesla increased overall deliveries, the company said on Wednesday that the average selling price per vehicle dropped 11% annually, with more consumers switching to cheaper Model 3 and Model Y.
Net income, excluding share-based compensation payments for Musk, increased to $ 903 million from $ 386 million last year, but the company fell short of analysts’ expectations of a $ 1.08 billion quarterly profit, according to data from Refinitiv.
At $ 10.74 billion, Tesla’s quarterly revenue slightly exceeded analysts’ expectations of $ 10.4 billion.
Under Musk’s leadership, Tesla significantly expanded its footprint in 2020, resisting a pandemic and economic turmoil with stable sales and profitable quarters at a time when many automakers reported losses. Its success allowed Tesla to enter the S&P 500 index, challenging long-standing skeptics who had bet against the company.
The high-level CEO, who is also in charge of rocket maker SpaceX, said on Wednesday that he hopes to run Tesla for several more years, but added that it would be “nice to have a little more free time on my hands”.
Through 2020, Tesla increased production in China and last month started selling its locally made Model Y sport utility vehicle at a price that analysts say will disrupt the conventional premium car market. But the company faces increasing competition from local competitors, including Nio Inc and Xpeng Inc.
Tesla also started building vehicle and battery factories near Berlin, Germany, and Austin, Texas, and on Wednesday said it remains on track to start deliveries from each location this year.
But within the auto industry, the race now is to develop electric vehicles to meet emissions targets and challenge Tesla’s market leadership.
Several automakers are slated 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’s ID.4. The challenges of Tesla’s upcoming Cybertruck come from General Motors Co.’s electric Hummer truck
Tesla said on Wednesday that Cybertruck volume production would begin in 2022.
Rising competitors in EV sales will also wipe 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 credits.
Akanksha Rana in Bengaluru and Tina Bellon in New York; Editing by Sriraj Kalluvila, Peter Henderson and Matthew Lewis