Tesla announces record profit of $5.5 billion, promises more growth

While the automotive industry suffers from a lack of chips, Elon Musk’s vertical model guarantees the company the best performance in its history

Tesla reported a record profit of $5.5 billion on sales of $53.8 billion last year. It was a significant increase compared to 2020 numbers, when the company had revenues of US$ 31.5 billion and profits of US$ 721 million.

It is only the second time the company has made an annual profit since its founding in 2008.

With a more vertical business model and digital DNA, the company delivered results while the rest of the industry suffered from chip shortages and supply chain problems.

The appeal of electric cars also helped the company. With demand on the rise for the new technology, Tesla is able to continue charging a hefty premium to anyone who wants the privilege of driving a CO2-free car.

In addition to having taken the lead in electrification, Tesla has another important advantage over traditional automakers. In the report released Wednesday afternoon, the company says manufacturing is its “core and critical competence”.

The company founded by Elon Musk has the most efficient car factory in the United States. A Bloomberg analysis of more than 70 plants indicated that the company’s Fremont, Calif., unit produced 8,550 cars a week.

It was more than the units of Toyota (8,427 cars/week), BMW (8,343) and Ford (8,343). Amid the global chip shortage, which has affected the entire industry, Tesla has increased its production by 83% compared to 2020.

Also in the first half of the year, the company should open two more units: one in the Berlin region, in Germany, and another in Austin, Texas.

The California plant was built by GM in the 1960s and was later jointly operated by Toyota. The Austin plant, built from the ground up, was designed with electric cars in mind.

The company’s priority in 2022, says Credit Suisse analyst Dan Levy, will be to get even more productivity out of its plants. These gains will be essential to meet Musk’s announced goal of growing sales by 50% over the near horizon – and likely new plants will have to be built.

Despite successfully navigating the supply crisis, the company announced that no new models will be released this year. The priority will be to increase production of the cars on offer today.

There was an expectation that Musk would announce news about the Cybertruck electric pickup, which looks like something out of a science fiction movie. A “popular” model promised by the CEO, which would cost around $25,000, will also have to wait.

“If the price of our cars didn’t change at all, we would still sell everything we could make,” Musk said at the earnings announcement conference.

Detroit’s reaction

With a forecast of selling 1.5 million cars this year, Tesla’s lead doesn’t look threatened for the foreseeable future. But upcoming Ford and GM launches are considered the first serious step by Detroit’s century-old automakers into the world of electricity.

Ford begins delivering the first F-150 Lightning this year, the electric version of the F-150 pickup – the best-selling car in the American market for over 40 years.

According to the company, more than 200,000 customers queued to buy the new model. Although the reservation does not mean a purchase commitment, the number was considered high by analysts: in 2020, Ford sold 787,000 units of the gasoline-powered F-150.

Production starts in June, and the first deliveries are expected to take place around September. The company expects to produce up to 150,000 pickups a year.

This speed will only be possible because Ford decided to adapt the model to combustion. This will allow you to use many of the same parts and assembly lines.

GM, on the other hand, chose to develop the electric version of the Silverado from scratch, updating the design and developing a battery system in-house – the plan is to leverage the technology in other models.

The electric Silverado will only go on sale in the first quarter of 2023. The company’s bet is that customers are willing to wait a little longer for a pickup with 30% more autonomy.

While not the biggest car market, pickup trucks are especially important in the United States, in sales as well as image.

autonomous car

Musk also promised to “solve” the self-driving car problem: “I’d be shocked if we don’t have safer self-driving cars.” [que os dirigidos por] humans this year”.

It’s not the first time he’s made statements along these lines, but few in the industry believe the technology is this close to hitting the streets – not to mention the regulatory and legal implications still up in the air.

But Tesla is betting that the sale of this type of software will be an important part of the revenues in the future. Today, the company already sells a package that allows the driver to hand over control of the car to the computer (but always in the driver’s seat and ready to take control in case of a problem).

The software is able to change lanes on the road, help with parking and brake when the traffic light turns red. The monthly subscription costs $199 USD, and there is also the option to purchase a license for $10,000.

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About Yadunandan Singh

Born in 1992, Yadunandan approaches the world of video games thanks to two sacred monsters like Diablo and above all Sonic, strictly in the Sega Saturn version. Ranging between consoles and PCs, he is particularly fond of platform titles and RPGs, not disdaining all other genres and moving in the constant search for the perfect balance between narration and interactivity.

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