In 2021, Tesla once again perfectly defended the supremacy of global electric vehicles.
In the context of global car production cuts in 2021, Tesla achieved a record annual profit, with a record profit of $5.5 billion and total revenue of $53.8 billion. Although chip shortages have limited production across the auto industry, Tesla has delivered more than 936,000 electric vehicles, an 87 percent increase from 2020.
This is a year of Tesla's big breakthrough, and it is also a year of great harvest. The global electric vehicle leader has successfully demonstrated market viability and profitability, and electric vehicles have more market prospects than fuel vehicles.
2021 is decisive for Tesla, and 2022 marks the beginning of the global commercialization of electric vehicles, and start-ups and traditional car companies have begun to launch product offensives.
In the face of more fierce competition, Tesla's market competitiveness will be determined by its overall supply chain and production ramping capabilities, and it is urgent to accelerate the increase of production capacity and realize the commissioning of new factories such as Austin and Berlin as soon as possible in order to continue to maintain its market leadership and development scale. In 2022, we expect Tesla to hand over a new record of 1.5 million units.
Profitable, profitable
"We face supply chain challenges like all of our peers, and in the end we try to write down nearly 90 percent growth," said Tesla CEO Elon Musk.
In the fourth quarter of 2021, Tesla's total revenue increased 65% year-over-year to $17.7 billion as deliveries improved and other business segments grew. Compared with the same period last year, operating profit increased to US$2.6 billion, operating margin reached 14.7%, and bicycle costs were further reduced.
Cash and cash equivalents continue to increase, with Tesla already holding $17.6 billion in the fourth quarter, and total debt fell to $1.4 billion at the end of 2021, excluding auto and energy product financing.
Tesla continues to face challenges from global supply chains, logistics, labor and other manufacturing aspects. At the end of 2021, the Texas Gigafactory in the United States began production of the Model Y. The Model Y, manufactured at the Austin facility, is delivered to customers after completing all certification procedures.
The Fremont, California plant will have record production in 2021, with annual production expected to exceed 600,000 units. Tesla's goal is to maximize the capacity of the new plant while expanding it.
The Shanghai Gigafactory remains Tesla's main export center, and production of the Model 3 and Model Y continues to climb, which is critical to reducing the cost of bicycles and improving the stability of the global supply chain. Tesla's sales in China reached 473,078 units in 2021, exceeding the expectation in the third quarter earnings report that the Shanghai plant has a potential annual production capacity of more than 450,000 units.
In Europe, the Berlin Gigafactory launched testing of vehicle production equipment at the end of 2021, and Tesla will begin delivering German-made vehicles in Europe after obtaining a manufacturing license from the local area. The first hearing on the court proceedings over water used at Tesla's factory will take place on Feb. 11. The market expects tesla's Berlin plant to officially start construction in February and March.
Musk, who is expected to visit Berlin in mid-February, said last year that he expected the Berlin plant to obtain a license for mass production of the Model Y by December. However, lawsuits and protests surrounding environmental protection have left Tesla still in court, and production plans have been delayed.
According to Musk, the Berlin Gigafactory has a target production of 5,000-10,000 units per week, with an annual production target of 500,000 units. In addition, Tesla is also expected to invest $5.8 billion to build a battery production line.
Core competencies
Fully autonomous driving capability (FSD) remains one of Tesla's key areas, and software revenue will help the overall profitability to a greater extent.
As of now, the fully autonomous driving capability (FSD) beta software has continued to iterate, with a total of seven updates released, and the number of software test vehicles in the United States has increased to nearly 60,000.
In the fourth quarter of last year, Tesla released a new user interface with a customized app launcher, simplified control menus, and support for night mode. It also includes real-time image of the car's blind spots when the car's turn signal is lit, editable navigation passpoints, and a range of new gaming, entertainment, and audio features. In addition, a real-time image of the car's camera when the Sentinel mode is activated has been developed in the APP.
In addition, Tesla reduced the cost of a bicycle to around $36,000 in the third and fourth quarters of last year through manufacturing innovations. The current projects, which include large castings, structural battery packs, 4680 batteries and many more, will further promote the continuous reduction of product costs and accelerate the popularity of electric vehicles.
Musk revealed on the earnings call that Tesla is producing the Model Y equipped with 4680 batteries at its Austin factory, and the first vehicles equipped with 4680 structural battery packs are likely to begin deliveries by the end of the quarter.
Looking ahead to 2022
With supply chains becoming a major limiting factory, Tesla factories have been running below capacity for several consecutive quarters, and this scenario is likely to continue in 2022.
Musk pointed out that supply chain problems in 2022 are still the main factor hindering Tesla's rapid growth, and it is difficult to replicate last year's performance. He himself estimates that in 2022, revenue will only grow by 50%.
Increasing production capacity as soon as possible remains Tesla's top priority. Vehicle delivery is expected to grow at an average annual rate of 50% over the next few years, depending on equipment capacity, operational efficiency, and supply chain capacity and stability. On the other hand, with the growth of hardware-related profits, software-related profits will also accelerate.
Musk said Tesla will not launch new models this year and has no plans to develop a low-priced model that costs $25,000.
Regarding the mass production process of the electric pickup truck Cybertoruck, Tesla currently plans to start production at the Austin plant after the Model Y model, which is expected to be delayed until early 2023.
Cybertruck in 2019 released a sensation due to the avant-garde design, originally planned to start delivery in 2022, Tesla recently removed the Cyberruck production date, causing outside attention. Sources said that Tesla in the market segment competition increasingly fierce situation, is changing the characteristics and functions of Cyberruck, so it will postpone the Cyberruck listing time, tesla is currently expected to produce Cyberruck in the first quarter of 2023, and then increase production capacity.
According to Global Equities Research analyst Trip Chowdhry, Tesla is building a double version of Cyberruck, and will launch two versions of the Cyberruck mass production version in March, one of which is 15 to 20% smaller than the original version, and the scaled down version of Cyberruck may be the first to launch in the European market. Despite uncertainties about the official delivery time, Cyberruck has ordered more than 1.27 million units and has a potential revenue of more than $80 billion, which is quite popular with the market.
In October 2021, Tesla's market value exceeded $1 trillion for the first time, and its brilliant performance made Wall Street more and more optimistic. Morgan Stanley analyst Adam Jonas believes the industry leader is accelerating its lead. Goldman Sachs analyst Mark Delaney listed Tesla stock as the "first choice" for 2022, raising the price target to $1200 per share.
Moody's Investment Services raised Tesla's debt credit rating from Ba3 to Ba1 on January 25, optimistic that it will maintain its hegemony in the field of electric vehicles. Moody's said the main reason for the upgrade is that Tesla's profitability has improved significantly, and the business scale has also expanded rapidly, and the outlook for these two indicators is also good. Moody's expects Tesla to deliver nearly 1.4 million vehicles this year, and if Tesla can increase its product projects, successfully expand its global territory, and have a way to maintain competitive strength in the global market while competitors compete to launch electric vehicles, it may be upgraded.
In China, the world's largest electric vehicle market, Tesla delivered 70,847 units in December 2021, an increase of 197.6% year-on-year, once again breaking the record of monthly sales since production began in Shanghai in 2019. Wedbush analyst Dan Ives said China will account for about 40 percent of the automaker's 2022 deliveries. Musk hinted last month that the new Model S Plaid version of the luxury sedan may enter China in early March.
Deutsche Bank analysts pointed out that 2022 will be a key year for Tesla's future growth and profitability, citing the expansion of two new plants or the imminent start of production. In addition, Tesla's trajectory in battery technology, specifications, and especially cost may help accelerate the global automotive industry's shift to pure electric and significantly expand its leading edge in electric vehicles.
Electric vehicle warring states era is coming, Tesla is facing more and more fierce market competition, Bank of America on January 19 issued a slightly pessimistic forecast, with Fox, Ford, Daimler, GM and other traditional car companies have entered the electric vehicle market, coupled with Audi, Porsche and other traditional luxury car companies are also marching forward, new electric vehicle manufacturers Nikola, Lucid Motors and Rivian's tiger eye, a large number of new products on the market, may force Tesla's market share in the United States to plummet.
Bank of America analysts predict that the U.S. will sell about 1 million electric vehicles in 2022, 1.8 million in 2023 and 3 million in 2024. By 2024, Tesla's market share in the United States will be only 19%, inferior to traditional automakers, and GM and Ford will be the biggest winners. The main reason for Tesla's market decline is that consumers will soon buy based on the quality of the car manufacturing, rather than Tesla as the only mainstream fashion choice for electric vehicles.