Tesla’s new vehicle deliveries got off to a strong start in 2020, thanks to a successful increase in production in China and continued strong demand for its electric cars in a busier market.
But when Elon Musk’s carmaker reports its latest quarterly results on Monday, Wall Street’s focus will shift to whether it can convert the higher sales into more consistent and robust profit margins.
Solid demand for Tesla’s cars was confirmed earlier this month when it delivered 184,800 vehicles in the first quarter, about 10 percent more than expected. That was despite a drop of more than 80 percent in sales of the older Model S and X prior to the launch of new versions of the cars.
The brisk deliveries have sparked hopes that Tesla’s first-quarter sales will surpass the $ 10.4 billion most analysts predicted, from just under $ 6 billion the year before.
However, the low sales of its older and most profitable models is one factor that clouds the earnings picture at an unusually complicated time for the company. The chip shortages affecting the entire automotive industry have been a concern, and come at a time when Tesla is already facing challenges in setting up its supply chain for new models and production facilities. Higher supply chain costs were one of the reasons for the disappointing earnings performance Tesla reported in the last months of 2020.
Other factors that complicate the picture and potentially increase costs include preparations for the start of production at new plants in Berlin and Texas this year, the recent introduction of Model Y in China and the planned launch of pick-up up and semi trucks.
For the first quarter, most analysts expect Tesla to report an automotive gross profit margin roughly in line with the 24.1 percent of the fourth quarter of 2020. Adjusted earnings before interest, depreciation and amortization are expected to be about $ 1.00. 8 billion, double the level of a year earlier.
Pro forma earnings per share are expected to be 79 cents, nearly double the 41 cents from a year earlier.