Tesla posts first profit after stellar year for electric car maker

Tesla posted its first ever annual profit capping a year which saw its surging share price have seen it become the world’s most valuable car maker.

The electric vehicle firm, led by Elon Musk, reported a profit of $721m for 2020 compared to a loss of $862m a year earlier.

However there was disappointment for investors as the company’s fourth quarter earnings fell short of expectations, sending shares 4% lower in after-hours trading.

The stock has surged by 700% in the past 12 months, taking the company’s value to more than $800bn and surpassing Toyota.

Tesla’s bottom line for the year was boosted by $1.58bn worth of environmental regulatory credits, which it is able to sell to other less environmentally-friendly car makers – and without these it would have remained in the red.

Still, its delivery of more than 180,000 vehicles during the fourth quarter was a record, though it narrowly missed a target to ship 500,000 for the year as a whole.

Total revenues for the year rose 28% to $31.5bn.

But investors hoped for clearer guidance than Tesla gave about the growth it expected in the year ahead.

Asked by an analyst whether it was targeting deliveries of between 840,000 and 1 million vehicles, Mr Musk said the target was “in that vicinity”.

Tesla also revealed that while deliveries had increased, the average selling price had fallen by 11% as more customers opted for its cheaper Model 3 and Model Y.

Over the last year the California-based company’s expansion has seen it ramp up production in China as well as start to build new battery and car making facilities in Germany and Texas.

It faces a challenge as traditional car giants such as Ford and Volkswagen release electric models which compete with its offerings.

Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: “The good news is that electric vehicles have caught the public imagination, and Tesla is very much the poster-boy for the industry.

“Joe Biden’s entrance to the White House is probably good news for the industry in the US and Tesla will hope to benefit.

“However, an increasingly competitive landscape means Tesla will have to work harder in the future.”