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Tesla quarterly earnings fall short, but it posts first-ever annual profit

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Tesla Inc’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 3% in extended trading.

But it was a profit nonetheless, and Tesla reported its first annual net profit in company history.

The disappointing quarterly results capped an otherwise stellar 2020 for the electric carmaker led by CEO Elon Musk, with Tesla shares surging nearly 700% over the past 12 months, making it the world’s most valuable automaker.

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Tesla earned $721 million in 2020, capped by a $270 million profit in the fourth quarter. It was the company’s sixth straight quarterly net profit after years of mostly losses.

In 2019, Tesla lost $862 million. Data provider FactSet says that was at the end of a string of annual red ink that began in 2006.

Once again the company needed regulatory credits purchased by other automakers in order to make a profit. Without $1.3 billion in credits for the year, Tesla would have lost money. Other automakers buy the credits when they can’t meet emissions and fuel economy standards.

Tesla said that excluding special items, it made $2.24 per share for the year, falling short of Wall Street expectations of $2.45. Full-year revenue was $27.24 billion, also less than estimates of $31.1 billion.

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From October through December, the company made an adjusted 80 cents per share, below Wall Street estimates of $1.02. Fourth-quarter revenue was $9.31 billion, below estimates of $10.47 billion.

Tesla’s vehicle sales rose 36% last year, but the company fell just short of its annual goal to deliver 500,000 vehicles. The company delivered 499,500 vehicles for the year, aided by sales from a new factory in China. The company delivered 180,570 vehicles during the fourth quarter, a quarterly record

The sales jump came even though Tesla was forced to close its only U.S. assembly plant for almost two months as the novel coronavirus surged in the spring. The factory in Fremont, California, reopened in May with Musk defying orders from local health authorities.

Shares of the Palo Alto, California-based company are trading about 10 times their value at the start of 2020, closing Wednesday down 2.1% at $864.16. The stock fell 2.5% in extended trading after the earnings announcement.

Looking ahead to 2021, 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.

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

Under Musk’s leadership, Tesla significantly expanded its footprint in 2020, bucking a pandemic and economic upheaval with steady sales and profitable quarters and defying long-term skeptics who had bet against the company.

But within the auto industry, the race is now on to develop electric vehicles to meet emissions targets and challenge Tesla’s market lead, and it is already seeing other automakers cutting into its market share in Europe.

Material from Reuters was included in this report

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