Following an incredible 2020 for Tesla (NASDAQ: TSLA) stocks, expectations were high going into the company’s fourth quarter earnings report on Wednesday afternoon. Growth stock investors were looking for another quarter of significant profits and signs that rapid sales growth may persist in 2021 and beyond.
The automaker probably delivered. Free cash flow skyrocketed, management geared to vehicle deliveries to grow even faster in 2021 than in 2020, and the company unveiled an entirely new Model S interior.
“Last year was transformative for Tesla,” said management in the company’s fourth-quarter update. “Despite the unforeseen global challenges, we have overcome many trends seen in other parts of the industry as we have significantly increased volumes, profitability and cash generation.”
New Tesla Model S interior. Image source: Tesla.
Here is a detailed analysis of five of the most important metrics in the quarter.
1. 46% revenue growth
Mainly fueled by a 61% increase in vehicle deliveries from one year to the next, Tesla’s fourth quarter revenue increased 46%, helping the company end a strong year. This put annual revenue at $ 31.5 billion, up from $ 24.6 billion in 2019.
2. Free cash flow of $ 1.9 billion
Tesla’s free cash flow (cash provided by operations less capital expenditures) was $ 1.9 billion, up from $ 1 billion in the same period last year. The company has “sufficient liquidity” to finance its “product roadmap, long-term capacity expansion plans and other expenses,” said management.
3. Installed energy storage capacity of 1,584 megawatt-hours
Tesla’s energy storage business has grown dramatically recently – and the fourth quarter was no exception. Quarterly energy storage facilities totaled 1,584 megawatts-hour, compared to 530 megawatts-hour in the same quarter last year. Total energy storage deployments in 2020 megawatt hours were more than 3 gigawatt hours, an increase of 83% year on year.
4. An operating margin of 5.4%
Tesla’s operating margin in the fourth quarter of 5.4% put its total operating margin in 2020 at 6.3%, compared to 0.3% in 2019. Management said it expects its operating margin to continue to expand, eventually reaching “industry-leading levels”.
5. An expected increase in vehicle deliveries of more than 50%
Tesla’s year-over-year growth of 36% in vehicle deliveries in 2020 was impressive. But 2021 will be even more remarkable, according to management projections. In the fourth quarter update, Tesla said it expects vehicle deliveries to increase by more than 50% year on year. That would put a total of 2,021 deliveries in more than 750,000 – up from about 500,000 deliveries in 2020.
As if these metrics were not enough for Tesla’s shareholders to be enthusiastic, Tesla also reiterated some important progress in its product plans. This includes the start of production of the Model Y at its plants in Berlin and Texas and the launch of the Tesla Semi – both this year – along with an entirely new interior design for the Tesla Model S sedan.