Tesla underwhelms Wall St with hazy 2021 delivery outlook, profit miss

Tesla's fourth-quarter profit fell short of Wall Street expectations on Wednesday and the company failed to provide a clear target for 2021 vehicle deliveries, sending shares down 5% in extended trade.

The disappointing results come after shares of the electric carmaker led by CEO Elon Musk surged nearly 700% over the past 12 months, a valuation rooted in expectations that Tesla will quickly and profitably expand.

Investors had hoped for a significant increase over the company's 2020 delivery goal of half a million vehicles, but Tesla provided only a vague outlook and did not state a concrete delivery goal.

"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.

The fuzzy guidance also comes after Musk fanned hopes during an October earnings call. Asked by an analyst whether Tesla aimed to deliver 840,000 to 1 million vehicles in 2021, based on its factories' current maximum capacity, Musk responded the target was "in that vicinity," while another Tesla executive said the company would provide guidance next quarter.

Tesla's chief financial officer, Zachary Kirkhorn, said on Wednesday the company was "working extremely hard" to manage through a global shortage of semiconductors that has vexed the auto industry, but did not elaborate.

Tesla delivered 180,570 vehicles during the fourth quarter, a quarterly record, even though it narrowly missed its ambitious 2020 goal of half a million deliveries.

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"After Tesla's unprecedented run in 2020, investors were anticipating a substantial earnings beat and another big target for car deliveries in 2021," said Haris Anwar, senior analyst at Investing.com.

Investors and analysts during an earnings call were keen to learn more about Tesla's pace of growth, including when it would book more revenue for its automated driving features, but they received few concrete answers.

Tesla allows customers to purchase an $8,000 software upgrade it calls "Full Self Driving," but has not yet booked a large chunk of that revenue as the feature has yet to be widely released to consumers.

Competition heating up

While Tesla has increased deliveries overall, the company on Wednesday said the average sales price per vehicle dipped 11% on a yearly basis, with more consumers switching to the less expensive Model 3 and Model Y.

Net income excluding share-based compensation payouts to Musk rose to $903 million from $386 million last year, but the company fell short of average analyst expectations for a $1.08 billion quarterly profit, according to data from Refinitiv.

At $10.74 billion, Tesla quarterly revenue slightly surpassed analyst expectations of $10.4 billion.

Under Musk's leadership, Tesla significantly expanded its footprint in 2020, bucking a pandemic and economic upheaval with steady sales and profitable quarters at a time when many carmakers reported losses. Its success allowed Tesla to join the S&P 500 Index, defying long-term skeptics who had bet against the company.

The high-profile CEO, who is also at the helm of rocket maker SpaceX, said on Wednesday he expects to run Tesla for several more years, but added it would "be nice to have a bit more free time on my hands."

Throughout 2020, Tesla ramped up production in China and last month began selling its locally made Model Y sport utility vehicle there at a price analysts say will disrupt the conventional premium car market. But the company faces growing competition by local challengers, including Nio Inc and Xpeng Inc.

Tesla has also begun building vehicle and battery manufacturing factories near Berlin, Germany, and Austin, Texas, and on Wednesday said it remained on track to start deliveries from each location this year.

But within the auto industry, the race is now on to develop electric vehicles to meet emissions targets and challenge Tesla's market lead.

Several carmakers are slated to release 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. Challenges to Tesla's yet-to-be released Cybertruck come from General Motors Co's electric Hummer truck.

Tesla on Wednesday said Cybertruck volume production would begin in 2022.

Competitors' uptick in EV sales will also dry up Tesla's income 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 those credits.