Tesla Inc. (TSLA) has grown rapidly into one of the world's largest all-electric vehicle companies through the sale of cars and pickup trucks in the U.S., China, and other countries throughout the world. The automotive segment accounts for the vast majority of revenue at the Palo Alto-headquartered company, and the U.S. accounts for just under half of sales.
Tesla faces growing competition from other major automakers who are developing and marketing electric vehicles, including General Motors Co. (GM), China-based Nio Inc. (NIO), as well as German-based automakers Volkswagen AG (VOW3) and Daimler AG (DAI).
- Tesla makes, sells, and services all-electric vehicles in the U.S., Europe, and China. It also sells energy generation products.
- The company gets the vast the majority of its revenue and profit from automotive sales.
- Tesla is experiencing rapid growth in China.
- The company posted its first annual profits in 2020.
- Tesla invested recently invested $1.5 billion in bitcoin and expects to accept bitcoin as a form of payment in the near future.
- Tesla was added to the S&P 500 in December 2020.
Tesla posted its first annual profit in its 2020 fiscal year (FY), which ended Dec. 31, 2020. It was a significant milestone for the electric vehicle maker after reporting a loss in each of the last five years. The fourth quarter of 2020 also marked the sixth consecutive quarter of profitability, a notable achievement considering the challenging economic environment created by the COVID-19 pandemic over the past year. Tesla suspended operations at each of its manufacturing facilities worldwide for a part of the first half of 2020 due to the pandemic.
Tesla posted a net income of $862 million in FY 2020, up from a net loss of $775 million in the previous year. Revenue for the year was $31.5 billion, up 28.3% from FY 2019. Just under half, or 48%, of that revenue, was generated in the U.S., while China accounted for 21% of total revenue. Other countries across the globe accounted for the remaining 31%. Each of the above regional categories experienced growth in FY 2020, but revenue from China grew the fastest, at a rate of 123.6% compared to the previous year.
Tesla Business Segments
Tesla operates through two main business segments: Automotive and Energy Generation and Storage. The company provides revenue and gross profit metrics for each segment, as we show below and in the pie charts above.
Tesla's Automotive segment comprises the design, development, manufacturing, sales, as well as the leasing of electric vehicles and sale of automotive regulatory credits. The segment, which accounts for 94% of total revenue and nearly 100% of total gross profit, also includes non-warranty after-sales vehicle services, sales of used vehicles, retail merchandise, and vehicle insurance revenue. The segment posted a gross profit of $6.6 billion in FY 2020, up 70.5% compared to the previous year. Revenue rose 28.2% to $29.5 billion.
Energy Generation and Storage
The Energy Generation and Storage segment, which accounts for 6% of total revenue and a negligible amount of total gross profit, includes the design, manufacture, installation, sales, and leasing of solar energy generation and energy storage products and related services. The segment posted a gross profit of $18 million in FY 2020, down 90.5% compared to the previous year. Revenue for the segment rose 30.2% to $2.0 billion.
Tesla Recent Developments
Tesla announced in early January its vehicle production and delivery results for Q4 FY 2020 and for all of FY 2020. The automaker produced nearly 180,000 vehicles and delivered almost 181,000 during the fourth quarter. For full-year 2020, the electric automaker produced almost 510,000 vehicles and delivered nearly 500,000.
In its annual filing for FY 2020, Tesla said that it had updated its investment policy in order to allow for more flexibility to diversify and maximize returns on cash that is not needed to maintain adequate operating liquidity. The policy was updated to allow for the company to invest a portion of its cash in certain reserve assets, such as digital assets, gold bullion, and others. Following the policy change, Tesla invested $1.5 billion in bitcoin. The company said that it expects to begin accepting bitcoin as a form of payment in the near future.
Tesla became eligible for inclusion in the S&P 500 index after posting a fourth consecutive quarter of profitability according to generally accepted accounting principles (GAAP) in Q2 2020. The decision committee at Standard & Poor's (S&P) initially decided not to include it in the index in early September. However, Tesla announced a fifth consecutive quarter of GAAP profitability in Q3 2020, and on Nov. 16, 2020, the S&P decision committee announced that Tesla would be added to the index before trading began on Dec. 21, 2020. On Dec. 11, 2020, S&P announced Tesla would be replacing Apartment Investment and Management Co. (AIV).
How Tesla Reports Diversity and Inclusiveness
As part of our effort to improve the awareness of the importance of diversity in companies, we offer investors a glimpse into the transparency of Tesla and its commitment to diversity, inclusiveness, and social responsibility. We examined the data Tesla releases to show you how it reports the diversity of its board and workforce to help readers make educated purchasing and investing decisions.
Below is a table of potential diversity measurements. It shows whether Tesla discloses its data about the diversity of its board of directors, C-Suite, general management, and employees overall, as is marked with a ✔. It also shows whether Tesla breaks down those reports to reveal the diversity of itself by race, gender, ability, veteran status, and LGBTQ+ identity.
|Tesla Diversity & Inclusiveness Reporting|
|Race||Gender||Ability||Veteran Status||Sexual Orientation|
|Board of Directors||✔|
Tesla Inc. "Form 10-K for the fiscal year ended December 31, 2019," Page 38. Accessed Sep. 18, 2020.
Tesla Inc. "Form 10-K for the fiscal year ended December 31, 2020," Page 14. Accessed Feb. 12, 2021.
Tesla Inc. "Form 10-K for the fiscal year ended December 31, 2020," Page 55. Accessed Feb. 12, 2021.
Tesla Inc. "Form 10-K for the fiscal year ended December 31, 2020," Page 105. Accessed Feb. 12, 2021.
Tesla Inc. "Tesla Q4 2020 Vehicle Production & Deliveries." Accessed Feb. 12, 2021.
Tesla Inc. "Form 10-K for the fiscal year ended December 31, 2020," Page 55. Accessed Feb. 23, 2021.
CNBC. "Tesla stock jumps on news company is joining S&P 500." Accessed Nov. 16, 2020.
S&P Dow Jones Indices. "Tesla Set to Join S&P 500 & 100; Apartment Income REIT to Join S&P MidCap 400." Click on the article title to open PDF. Accessed Dec. 11, 2020.