Record sales from 2020 helped turn the very first annual profit for Tesla, the new-age, Silicon Valley automobile company. According to financial figures released this past Wednesday, however, the profit margin isn’t huge by any means. With the addition of $270 million fourth-quarter revenue, the total revenue for 2020 spiked up to $31.5 billion. At the end of this past year, the company finished with $721 million in total profit.
To reach over the profit line, Tesla had to book $401 million in fourth-quarter regulatory credit sales. Essentially, Tesla sells credits to automakers that do not manufacture as many clean-air vehicles as the United States government and European Union require. In the past year and a half, these credit sales have been extremely beneficial for Tesla, generating hundreds of millions of dollars each quarter.
In the fourth quarter of 2020, Tesla shipped over 180,000 vehicles, almost 17,000 of which were Model Ys and Model 3s. At the end of the year, Tesla had shipped out almost 500,000 vehicles, which didn’t quite live up to the estimate for the year.
However, when considering the fact that Tesla had to deal with lengthy factory shutdowns in China and California during the widespread pandemic, it is quite an incredible accomplishment for the company.
Tesla has not yet laid out an estimate for total deliveries in 2021, though with factories now in Shanghai, Chine and Fremont, California, they believe that they have the ability to make well over one million cars this year. By the end of 2021, Tesla also predicts that it will be able to begin distributing cars out of its factories in Austin, Texas and Berlin, Germany, both of which are currently under construction.
One of the biggest accomplishments for Tesla this past year was the massive success of the Model Y SUV in the Chinese market, which flew out into distribution shortly after the factory opened. Pairing those developments with the continuous success of the Model 3, Tesla was able to absorb the loss of European market shares after its fight with Volkswagen Group.
The ability to create sustainable profit has always been Tesla’s biggest problem, mostly because the company spent quite a bit of money its first decade to expand its customer base. When the first Tesla vehicle, The Model S sedan, hit the market, the company was well underway working on other expensive and complex vehicles, including the Model X SUV. As the Model X hit the market, the company began working on the Model 3.
Unfortunately, it was the Model 3 that put Tesla back in the red, as there were plenty of production drawbacks for the company to worry about. After smoothing out production methods through 2018 and 2019, Tesla has been performing well ever since.
Just this past Wednesday, the company shared that it had increased its energy storage product sales by more than 200% in a year. Their solar division also grew by 59% in one year.
As of right now, Musk is the richest man on Earth with the most valuable auto manufacturing company to show for it.