Austin/New York Normally, Tesla’s CFO presents the numbers. But on Wednesday evening, the boss appeared in person: Elon Musk led the conference call on the 2021 annual results. Tesla fans who had hoped for the announcement of a new model were disappointed: Musk did not have groundbreaking news with him. Excellent numbers for that.
Despite the global chip crisis and supply chain problems, the US automaker earned more in 2021 than ever before. In 2021, the group posted a net profit of $5.5 billion (4.9 billion euros) – 665 percent more than in the previous year.
Total sales rose 71 percent to $53.8 billion. Almost 88 percent of this came from the core automotive business. Gone are the days when Tesla made money primarily from the sale of pollution permits.
Musk therefore called 2021 the “breakthrough year for Tesla”: “No one should doubt the profitability of electric cars anymore.” Their profit margin is higher than that of combustion vehicles.
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In 2020, Tesla posted its first annual profit since it was founded in 2003. The group was all the more proud to inform its investors on Thursday that the 2021 profit had made up for the total loss of all previous years. “2021 was amazing,” Musk said.
The stock initially went down in after-hours trading and was last almost unchanged. The good figures were apparently already priced in: Even if the analysts had expected an even higher profit for the fourth quarter on average, sales exceeded the estimates.
Will Tesla continue in 2022? The question-and-answer portion of the conference call focused on four challenges that should determine continued success.
1. The supply chain issues
“Tesla did everything it could to impress investors, right down to having CEO Elon Musk attend the investor conference,” wrote Laura Hoy, an analyst at wealth manager Hargreaves Lansdown. But the sales explosion was expected in view of the 308,000 vehicles delivered in the fourth quarter. And: “The group joins the growing number of companies that name supply chain problems as an obstacle.”
“We’ve struggled with supply chain difficulties and closed factories,” CFO Zach Kirkhorn said. This, combined with a labor shortage, meant that factories remained below capacity in 2021.
Musk warned of the effects of the global chip crisis. We try to grow as fast as possible. But: “We will still feel the effects of the chip crisis this year. The obstacles are not likely to disappear until next year.”
“The problems in the supply chain were made transparent,” said Peter Fintl, head of research and development at the consulting firm Capgemini. “The board has made it clear that the limiting factor is the chip shortage, not an internal battery or vehicle manufacturing issue. That gives hope.”
2. The model range
In 2022, Tesla is pinning all hopes on the Model Y, the SUV that will be produced at the new facilities in Austin, Texas and Grünheide, Brandenburg. New products are hired behind.
“Tesla’s main focus this year is to ramp up production,” Musk said. In 2022, the company will increase deliveries by 50 percent, by 2024 it will have produced more than three million vehicles and thus catch up with the established manufacturers. During the chip crisis, other car manufacturers had also concentrated on higher-priced vehicles – with success.
There was no news about the truck announced in 2017, the semi-truck, the new roadster and the cybertruck that was actually expected for the end of 2021. Musk: “We will not introduce any new vehicle models this year. That wouldn’t make sense.” New launches caused overall production to drop. “There are a lot of new technologies in Cybertruck that will take time to finalize,” Musk said.
Apparently, Tesla has problems bringing the innovative technology in the Cybertruck into series production at a reasonable cost, believes car expert Fintl: “That’s tricky.” The Cybertruck is “of eminent importance for Tesla. Especially since the big manufacturers Ford and GM and rival Rivian have already presented their own e-pickups.”
After all, Musk announced that he would “hopefully” bring the Roadster and Cybertruck into production in 2023. On the other hand, the Tesla boss rejected the announcement of a Model 2 in VW Golf size, which some observers had hoped for: “We are currently not working on a $25,000 car.” The question about it was also “wrong”: “Overwhelming The important question is when the car will become autonomous.”
3. The autopilot
The self-driving car, dubbed the “full self-driving car” by Musk, is something of Tesla’s holy grail. Musk promised on Wednesday evening to solve the associated technical problems in 2022. Currently, a person has to be behind the wheel to take over the steering wheel if necessary.
“I’d be shocked if we don’t reach full self-driving capability later this year,” Musk said. A Tesla would be “safer on the road than with a human” behind the wheel. It’s not the first time Musk has promised that — Tesla has repeatedly failed to achieve this goal in recent years.
Musk made it clear that he considers the autopilot – alongside the software – to be the real feature that will distinguish a Tesla from other electric cars in the future. A “robotaxi mode” would open up completely new sources of income for the owners of the expensive cars: while the owner is sitting in the office, the vehicle could chauffeur people independently.
“There will be a crazy amount of cars on the streets. In the future, a self-driving car can take us 10 miles for $2,” Musk said. That is a historic step – and apparently from his point of view a reason to pay a lot of money for a Tesla. “The appeal of the self-driving car is completely underestimated.”
Industry experts, on the other hand, are skeptical that Tesla will soon master the necessary technology. The electric pioneer relies entirely on cameras and dispenses with secondary systems for road surveillance such as radar and lidar – a problem with pending approval procedures.
4. The new factories
The authorities are likely to act more quickly on another approval issue: the production permit for the two new factories in Brandenburg and Texas. Their launch is central to Tesla’s production goals.
In 2021, Tesla’s spending increased by a whopping 53 percent, according to its own statements, mainly to complete the new factories. After the delivery difficulties and the Covid-related closures, Tesla now wants to ramp up production as quickly as possible. Musk did not give a specific start date. Both factories started test runs in the fourth quarter. Mass production should start in Texas “very soon”. According to government information, the approval process in Brandenburg is in the final stages after Tesla has subsequently delivered the required documents.
“With the two new factories in Berlin and Austin, Tesla is able to scale and be agile,” wrote analyst Alyssa Altman of US consulting firm Publicis Sapient. Musk also announced that he would look for new factory locations and name them by the end of the year. They are also pushing the production of their own batteries.
The Tesla boss himself also benefited from the good development in 2021: his group announced that Musk received $ 245 million in the fourth quarter. Important milestones in his compensation package have been achieved.
And what can shareholders expect? At around $937, the Tesla price is below its record high of around $1,230 in November.
Musk is convinced that he will form the world’s largest automaker, Morningstar analyst Seth Goldstein said on CNBC late Wednesday evening. “I do not believe that. But Tesla will definitely establish itself in the top ten.” According to Goldstein, the major rating agency is leaving its long-term price target unchanged: $700.
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