Tesla's net profit increased by 760% in Q4 last year! There are still supply chain restrictions to continue to expand this year

On January 27, Beijing time, the US electric vehicle giant Tesla announced unaudited results for the fourth quarter of 2021 and the whole year. According to the financial report, Tesla achieved revenue of $53.823 billion in 2021, an increase of 71% year-on-year; net profit attributable to shareholders reached $5.519 billion, an increase of 665% year-on-year.

This is the third consecutive year that Tesla has achieved profitability, and the data in this earnings report is generally in line with investors' expectations.

Tesla said in its earnings report that 2021 is a breakthrough year for the company, and there should be no more questions about whether the production of electric vehicles can be profitable. Tesla believes that the supply chain is still a limiting factor affecting the company's vehicle delivery, and the supply chain restrictions may continue until 2022. For future delivery targets, Tesla maintained last year's claims, saying that in the coming years, the company expects the average annual growth rate of deliveries to reach 50%.

Elon Musk, who has not attended the earnings call since the second quarter of last year, has reappeared, and he said on the fourth quarter earnings call that Tesla is looking for a location for a new gigafactory, which will be announced as soon as the end of this year. He revealed that this year's Tesla focus is to expand production capacity, the company is expected to easily complete more than 50% of the delivery volume growth, in order to maintain production capacity growth, Tesla will not launch new models this year, electric pickup truck Cyberruck, electric van Semi and sports car Roadster will be postponed to next year production and delivery.

Deliveries are at record highs and vehicle production costs are further reduced

Tesla's global sales exceeded the 900,000 mark for the first time last year, reaching 936,000, of which 313,000 units were delivered in the fourth quarter, up from 240,000 units in the third quarter, and it was also the first time that Tesla achieved quarterly sales of 300,000.

Thanks to the significant increase in deliveries, Tesla's overall revenue and net profit continued to hit quarterly and annual highs. In the fourth quarter, Tesla's revenue reached $17.72 billion, up 65% year-on-year, and net profit attributable to shareholders was $2.321 billion, up 760% year-over-year.

Tesla said the increase in profitability is due to the company's further reduction in production costs per vehicle, although the cost of raw materials, goods and logistics has risen sharply, but the increase in car delivery and the profitability of services such as car rental have allowed the company's auto business to achieve a gross margin of 30.6% in the fourth quarter, a figure that increased by 6.5% year-on-year, setting a new quarterly high for Tesla.

Tesla said that manufacturing is a key core competitiveness of the company, although due to the high price of power batteries, led to the widespread perception that electric vehicles are structurally unprofitable, Tesla believes that manufacturing innovation, specially built vehicles and factories will solve the cost problem. In the third quarter of 2021, Tesla said the company achieved the highest operating margin of any batch OEM, and the cost per vehicle (COGS) fell to about $36,000 in the third and fourth quarters of 2021. Tesla said the projects the company is currently preparing, including large castings, structural battery packs, 4680 batteries and many other projects, will help Tesla continue to reduce production costs.

It is worth noting, however, that while deliveries have increased significantly, regulatory credit from carbon trading has fallen year-on-year. Tesla's regulatory credit income for the full year last year was $1.465 billion, down 7 percent year-over-year, according to the earnings report. Regulatory credit has always been an important means of Tesla's profitability, and now with a significant increase in delivery, Tesla has shed its dependence on regulatory credit income.

In addition to reducing production costs, Tesla also hopes that the profits related to automotive hardware will accelerate with software-related profits. The software here mainly refers to Tesla's assisted driving Autopilot and full self-driving (FSD), and Tesla said that there are currently nearly 60,000 beta fully autonomous vehicles in the United States. Musk believes that the FSD will be completed by the end of this year.

In addition, Musk said that this year is expected to allow 80% of U.S. car owners to use the insurance provided by Tesla, and the insurance business is expected to go online in the European market. Tesla launched a "real-time insurance" service in Texas last year, through the specific features of the vehicle, Tesla will evaluate the premium based on the actual driving situation of the owner, the average car owner can save 20% to 40% of the premium, the safest driver can save 30% to 60%.

The Berlin and Austin plants were put into operation to boost production capacity

With a bumper harvest in 2021, Tesla's goal for 2022 will be to maximize production capacity, and the company believes that competitiveness in the electric vehicle market depends on the ability of overall suppliers to increase production capacity. In the earnings report, Tesla said that in addition to adding two new factories in Berlin and Austin, the Fremont plant in California and the Shanghai Gigafactory will continue to increase production capacity, of which the Fremont plant is expected to exceed the existing 600,000 capacity.

At present, the Berlin and Austin plants have not yet been put into operation, and the financial report shows that the two new plants are still in the equipment commissioning stage, of which the Approval of the Production License for the Berlin Plant in Brandenburg, Germany, is still in progress, and the Austin Plant is in trial production of the Model Y at the end of 2021. Tesla expects production speeds at the Austin and Berlin factories to be affected by the introduction of new products and manufacturing technologies at new locations, and said the first vehicles produced at the Berlin plant still use 2170 batteries instead of the latest 4680 batteries.

Musk revealed on the conference call that the two plants in Austin and Berlin have produced a lot of cars last quarter, of which the company is producing the Model Y equipped with 4680 batteries at the Austin plant, which is expected to start delivery this quarter.

Shanghai Gigafactory was an important production base for Tesla last year, and according to the statistics of the Association of Automobiles, the delivery volume of Shanghai Gigafactory reached 484,130 units in the whole year of 2021, accounting for 51.7% of Tesla's global delivery of 936,000 last year. In its earnings report, Tesla said that localized production plays a crucial role in reducing vehicle production costs and stabilizing the supply chain, and the Shanghai Gigafactory will continue to be Tesla's main car export center.

After becoming the most productive gigafactory, Tesla China did not stop there, and the Shanghai factory is expected to continue to expand production capacity towards the level of millions of annual output. In December last year, Tesla announced the EIA of the second phase of the Shanghai Gigafactory (Phase I) production line optimization project, and the EIA report said that the total investment in the production line optimization project was as high as 1.2 billion yuan, and the project would increase production capacity by increasing working hours, increasing the number of employees, and increasing the frequency of material turnover.

Recently, there is supply chain news that the production capacity of the Shanghai factory will be further increased in March this year, with a monthly output of 25,000 Model 3 and 50,000 Model Y, and the annual production capacity has increased to 900,000 vehicles, almost twice the current existing production capacity, but Tesla China has not confirmed this news.

Musk said Tesla will continue to face chip restrictions this year, and the chip shortage will not be alleviated until next year. He believes that Tesla can achieve 50% increase in deliveries this year with the Fremont and Shanghai factories alone, which means that the Austin and Berlin factories are successfully put into production, and Tesla's deliveries will exceed 50% this year.

Musk said that the company has not started work on a new model priced at $25,000, and Tesla needs to solve many problems, pointing out that the company's key research and development product this year is tesla robot Optimus (Optimus Prime), which was unveiled at Tesla's AI day last year and is expected to be used in Tesla's factory this year for mobile factory parts.

Beijing News shell financial reporter Lin Zi Editor Song Yuting Proofreader Zhao Lin