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Record Fourth Quarter Deliveries Reported By Tesla But Profits Miss Expectations


01/29/2021


Record Fourth Quarter Deliveries Reported By Tesla But Profits Miss Expectations
An increase in demand globally for its electric cars propelled the United States based Tesla to report record deliverie3s o fits vehicles in the fourth quarter.
 
However after the company reported a lower than expected profits for the quarter, shares of the company dropped in after-hours trading in the United States.
 
2020 has been a bad year for the global auto industry because of the pandemic forcing closure of factories and showroom and many global auto companies have been hit hard. However that trend has been apparently bucked by Tesla.
 
During the course of 2020, the share price of the company has soared by more than 700 per cent which has propelled the company to become the most valuable auto company of the world.
 
According to Rebecca Crook, chief growth officer at digital agency Somo, Tesla has been unwittingly helped in its cause and has been able to generate interest among consumers about its cars as governments around the world have been "setting tougher targets for switching to electric vehicles". "Tesla had an incredibly successful 2020, joining the likes of Amazon as the unofficial 'winners' of a turbulent year," she added.
 
"It's been a challenging past 12 months for car manufacturers," she said. "It's critical for Tesla to maintain this momentum because its success sends optimism into the wider automotive industry," she said.
2020 was a good year for tesla and its billionaire founder and CEO Elon Musk as the company reported steady sale revenues and profitable quarters even as most other major auto makers were hit hard because of the pandemic.
 
However other auto companies are racing to develop their own electric cars to meet the ever growing stringent emission targets and to rival the market leader Tesla in this segment.
 
Tesla said that it delivered 180,570 vehicles in the fourth quarter which is a record for the company for the fourth quarter. The company however just missed its overall target of deliveries for 2020 of half a mission cars.
 
Compared to $386m last year, the company’s net income, excluding share-based compensation payouts to Musk, increased to $903m which was short of market expectations of a quarterly profit of $1.08bn.
 
The shares of the company however dropped by 4 per cent in after-hours trade because of the profits missing market expectations as well as a lack of a clarity on the company’s 2021 target of vehicle deliveries.
 
"Over a multi-year horizon, we expect to achieve 50% average annual growth in vehicle deliveries. In some years we may grow faster, which we expect to be the case in 2021," Tesla said in a statement.
 
But according to Nicholas Hyett, equity analyst at Hargreaves Lansdown, investor focus was "always going to be on profitability" which turned out to be lower than market expectations. "We think that reflects the shift from premium Model S and X vehicles to lower priced Model 3s and Model Ys," he said.
 
"Tesla will argue... as more vehicles are fed through production lines profitability will improve. That's true, but it relies on global demand for an ever-increasing number of Teslas," Hyett said.
 
(Source:www.bbc.com)


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