On January 27, 2022, Tesla released its fourth quarter and full year 2021 financial results. According to the financial report data, Tesla has achieved profitability for 10 consecutive quarters, and set a number of records in the fourth quarter of 2021, setting the highest quarterly operating profit margin of the automaker, setting a new high of about 940,000 deliveries in the whole year, and achieving a production efficiency of more than 1.22 million vehicles per year, fully demonstrating the strong potential of electric vehicles to surpass fuel vehicles.
In this earnings report, Tesla also updated the latest situation of the construction of gigafactories around the world, of which the Texas gigafactory has been put into operation at the end of 2021, the products of the Austin gigafactory are about to start delivery, and the Berlin gigafactory has also started the testing of vehicle production equipment. In terms of the fully autonomous driving capability FSD, which is widely concerned by the industry, Tesla announced the latest progress in testing, and the number of software test vehicles in the United States increased from a few thousand in the third quarter of 2021 to nearly 60,000 in the fourth quarter, which will also provide a great boost to the continuous evolution of FSD.
1. Operation
In the fourth quarter of 2021, Tesla's total revenue reached $17.7 billion, an increase of 65% year-on-year, and GAAP operating profit was $2.6 billion, achieving an operating margin of 14.7%. GAAP net profit was $2.3 billion, up 760% year-over-year, and non-GAAP net profit (excluding share-based expenses) was a record high of $2.9 billion.
Fourth Quarter 2021 Financial Summary
Full Year 2021 Financial Summary
For the full year 2021, Tesla generated a NET PROFIT OF $5.5 billion and a FREE CASH FLOW of $5.5 billion in addition to $6.5 billion spent on new plant construction and other capital expenditures.
Interpretation: Excluding capital expenditures, Tesla's operating cash flow (free cash flow) in the fourth quarter of 2021 still reached $2.8 billion, and achieved the highest quarterly operating gross margin of any mass production OEMs, and generated a GAAP net profit of $5.5 billion and a free cash flow of $5 billion for the whole year. This not only shows Tesla's profitability, but also shows that electric vehicles have more market prospects than fuel vehicles.
Strong profitability was driven by further reductions in Tesla's bike costs, increased car deliveries, and increased profits from other businesses such as car rentals. Model Y is the key to Tesla's profit margins, and the localization of the Shanghai Gigafactory is also an important factor. Tesla also said: "We will continue to innovate to reduce manufacturing and operating costs, and over time, we hope that hardware-related profits will accelerate in tandem with software-related profits." ”
Second, the output and factory
In the fourth quarter of 2021, Tesla achieved a new record for production efficiency of more than 1.22 million vehicles per year.
Among the world's major super factories, the Fremont plant in California has broken production records in the past year, and Tesla said its total production capacity is expected to exceed 600,000 units; the Shanghai gigafactory, as Tesla's main global export center, model 3 and Model Y production continues to climb; the Texas super factory has begun production of model Y at the end of 2021; and the Model Y manufactured by the Austin super factory is about to start delivery after completing all certification procedures The Berlin Gigafactory has also started testing of vehicle production equipment at the same time, and the first products are expected to use 2170 batteries.
Tesla has also made progress in industrial production of cybercruck, which is currently planned to start production at the Austin Gigafactory after the Model Y model.
Interpretation: In the fourth quarter of 2021, Tesla is still facing challenges in global supply chain, logistics and transportation, labor and other manufacturing aspects. Although Tesla's factories have been operating below capacity for many consecutive quarters under the restrictions, Tesla once again set a production record in 2021, which also allowed Tesla to climb to a new peak of about 940,000 deliveries in the whole year.
Starting from multiple dimensions such as efficient production, safe driving, and excellent experience, Tesla strives to break through the supply dilemma by improving the vertical integration capabilities of the global supply chain and the technical reserves, including the capabilities of self-developed chips. At present, Tesla is planning to increase production capacity as soon as possible, and it is expected that the average annual growth rate of vehicle delivery will reach 50% in the next few years. Musk also predicted that "chip shortages may ease this year."
Third, the core technology
Tesla has long continued to update beta software that iterates on full self-driving capability (FSD), releasing seven updates in the fourth quarter. Tesla's software test vehicles in the U.S. also increased to nearly 60,000 from a few thousand in the third quarter. Recently, the Model 3 and Model Y, which use a pure visual autonomous driving solution, received the highest safety rating in the Highway Safety Insurance Association (IIHS) crash test and received a single score of "excellent" for collision avoidance.
In the fourth quarter of 2021, Tesla also released a new user interface with a customized application launcher, simplified control menus, and support for night mode. Further enhance the user experience. Technological breakthroughs are also related to the landing of Cyberruck. During the conference call, Musk said: "Cybertruck has a lot of new technologies in it, the price must be reasonable, and the cost of the battery needs to be controlled. The current goal is to build 250,000 Cyberrocks per year. ”
Interpretation: Tesla's scientific and technological strength has laid a leading position in the industry, but Tesla still maintains its pursuit of technology and innovation.
In the fourth quarter of 2021, Tesla's U.S. software test vehicles increased from a few thousand in the third quarter to nearly 60,000, and the growth of several times reflects Tesla's technological achievements in FSD and its growing recognition. At the same time, it once again won the highest safety rating of IIHS, which also shows that Tesla's technical investment in safety has been authoritatively verified.
In the future, Tesla's software business will be the main focus, Musk also said on the earnings call, "the FSD stack will be deeply improved in the coming months", and predicted that "the supercomputer Dojo will begin to come in handy this summer", I believe Tesla will bring better self-driving experience in the future.
In terms of battery technology, Tesla believes that "manufacturing is the core competitiveness.". Tesla believes that cost issues can be further addressed by manufacturing innovative, well-planned products and factories. Due to battery cost considerations, in the past, people often thought that the overall profitability of electric vehicles was not good, but Tesla further solved the cost problem through technological innovation and other means, greatly reducing the cost of a bicycle to about $36,000, and the reduction of battery cost became one of the key factors to achieve this. Tesla said that "large castings, structural battery packs, 4680 batteries and other aspects will help us continue to reduce product costs."
Fourth, energy storage business and services
Driven by the strong energy storage product Megapack, our installed energy storage products in 2021 increased by 32% year-on-year. As market demand continues to outpace capacity, the growth of the energy storage business has been constrained by supply. We are currently building a factory dedicated to the production of Megapack products to meet the growing market demand.
In terms of services, in 2021, Tesla's gross profit in the services and other segments reached its best performance in five years, and broke through the break-even in the fourth quarter of 2021. At the same time, Tesla's used car sales business remained strong, and profits from other businesses such as service, boutique and accessories sales also improved. In addition, Musk said that by the end of 2022, 80% of Tesla customers can choose Tesla insurance.
Interpretation: Tesla has been unremittingly pursuing the goal of "accelerating the world's transition to sustainable energy", not only widely applying clean energy in its major gigafactories, but also bringing energy storage business and solar energy transformation business to more people, affecting more and more people to use clean energy. In China, Tesla deployed optical storage and charging integrated charging stations in Shanghai and Lhasa in 2021, bringing users an excellent energy replenishment experience and making solar charging a new energy application trend.
At the same time, Tesla has not relaxed the construction of charging networks. As of January 2022, the number of superchargering stations opened for tesla in Chinese mainland has exceeded 1,000, and the number of superchargering piles has exceeded 8,000, with more than 700 destination charging piles and more than 1,800 destination charging piles, covering more than 360 cities and regions in the Chinese mainland, so that more car owners can make up for it worry-free and smoothly.
summary:
For Tesla, 2021 was a breakthrough year, with each major development greatly strengthening confidence in the market viability and profitability of electric vehicles.
In 2021, Tesla deliveries increased by 87% and achieved the highest quarterly operating gross margin of any production OEM, and the process of replacing fuel vehicles with electric vehicles continues to accelerate.
According to the data recently released by the Association of Automobile Manufacturers, in 2021, the mainland will retail 2.989 million new energy vehicles, an increase of 169.1% year-on-year. The trend of new energy vehicles and traditional fuel vehicles forms a strong differentiation characteristic, realizes the partial substitution effect of new energy vehicles on the fuel vehicle market, proves the change in consumer demand through the user's market-oriented choice, and accelerates the pace of transformation to new energy in the automobile market.
The era of electric vehicles is accelerating, but the complete replacement of fuel vehicles also requires the joint efforts of the industry. As Tesla emphasized in its earnings report, "After the great success in 2021, we will focus on the future and further accelerate the world's transition to sustainable energy."