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Tesla’s record 2019 has bought it some breathing room

Tesla’s record 2019 has bought it some breathing room


Back-to-back quarterly profits to finish the year

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Photo by James Bareham / The Verge

Tesla’s record-setting number of sales in 2019 also helped the electric automaker generate more money in one year than ever before, the company announced Wednesday afternoon. Tesla generated $24.6 billion in revenue in 2019, buoyed by a fourth quarter revenue figure of just shy of $7.4 billion.

Tesla still didn’t turn an annual profit — in fact, it lost $862 million in 2019. But that was better than the $1 billion loss the company posted in 2018. The company pulled down a $105 million profit in the fourth quarter, though that was boosted by the sale of $133 million worth of regulatory credits to other automakers. Tesla finished the year with back-to-back profitable quarters, something it did for the first time ever in 2018.

Combine that performance with the fact that Tesla recently opened up and started making deliveries from its factory in China — the first non-Chinese automaker to do so on its own in the country — and began work on a fourth factory in Germany, and one can start to understand why Tesla’s stock has gone nuclear over the last month or so. Tesla finished Wednesday trading at $580 per share, more than double the share price it traded at for most of 2019, and as a result has become the most valuable automaker in the US by market cap (and the second-most valuable in the world behind Toyota).

No wonder why Tesla’s stock price is through the roof

All of this means Tesla has bought itself more breathing room than it’s had in years, maybe ever. The company spent the last few years — especially 2017 onward, as it started spinning up production of the Model 3 — moving at breakneck speed with little margin for error. Tesla CEO Elon Musk even said in late 2018 that his company was single-digit weeks away from death at one point. Its workforce suffered through what Musk dubbed “production hell” as he pushed to make the Model 3 — the company’s most affordable electric car — at mass-market scale.

The company also did this at the expense of other products, like its solar panel business, which dipped to an all-time low in 2019 (including the days when it was a separate entity, Solar City). And while Tesla did finally achieve mass-market success of the Model 3, the company has struggled to scale its customer and vehicle service operations accordingly.

Tesla said Wednesday that it “almost doubled” the size of its mobile service fleet in 2019, and added 51 store and service locations, but didn’t offer any more specifics. It also said that its solar business grew 26 percent in the fourth quarter, though there was really no way but up. So questions still remain, but Tesla now has room to address them. Tesla finished 2019 with $6.3 billion in cash, more than ever before. Its stock price is high enough to absorb any litigation-inducing tweets from Musk, bad news from regulators, or negative Wall Street soothsaying.

That doesn’t necessarily mean that Tesla will address some of the most sincere criticisms it faces — after all, Musk is well-known for looking past short-term problems in favor of focusing on the horizon, and he even opened a call with analysts Wednesday that he was “super fired up about where Tesla will be, you know, in the next 10 years.” But if ever there was a time for the company to button up parts of its business that don’t grab headlines, it’s now.

Tesla didn’t just spend 2019 focused on the Model 3. The company debuted two new vehicles: the Model Y compact SUV and the monstrous metal Cybertruck. And it did all this while recovering from a $702 million loss in the first quarter, the company’s fourth-worst quarterly loss since becoming a publicly traded company in 2010.

On Wednesday, Tesla announced it’s going to deliver the first Model Ys ahead of schedule — a feat that’s practically unheard of when it comes to Elon Musk’s companies.

Looking forward, Tesla said Wednesday that the addition of Model Y to its fleet, as well as the increased deliveries of locally-made Model 3s in China, should help the company “comfortably exceed” 500,000 cars shipped worldwide in 2020. Tesla also once again said that it expects to turn a profit each quarter moving forward “with possible temporary exceptions, particularly around the launch and ramp of new product.”