Tesla Inc.’s business selling regulatory credits to automakers that need help complying with emissions rules will keep on booming this year, according to Credit Suisse.

Regulatory credit revenue probably will rise to $2 billion from about $1.4 billion in 2020, analyst Dan Levy predicted in a note previewing Tesla’s quarterly earnings Wednesday. He wrote that his estimate for 2021 is higher than consensus of $1.3 billion.

A surge in regulatory-credit revenue had been a major factor in Tesla’s streak of quarterly profits that’s sent shares soaring and made the stock eligible for the S&P 500. Levy suggested in his note that Europe’s stricter limits on automotive carbon-dioxide emissions will present an opportunity for the company this year.

Tesla doesn’t say which carmakers it sells credits to, though General Motors Co. and Fiat Chrysler disclosed in 2019 that they had reached agreements to buy U.S. greenhouse-gas credits from the company. Fiat Chrysler also estimated that year it would spend 1.8 billion euros ($2.2 billion) on credits over several years and announced it would pool its fleet with Tesla’s to comply with the European Union’s CO2 standards.
Fiat Chrysler merged with PSA Group earlier this month to form Stellantis NV. Chief Executive Officer Carlos Tavares said last week that the company will have no CO2 compliance issues once Fiat Chrysler’s agreements with Tesla expire.

BRUSSELS — The European Union has approved a plan that includes giving state aid to Tesla, BMW and others to support the production of electric vehicle batteries, helping the bloc to cut imports and compete with industry leader China.

The European Commission's approval of the 2.9 billion euro ($3.5 billion) European Battery Innovation project, follows the launch in 2017 of the European Battery Alliance that aims to support the industry during the shift away from fossil fuels.

"The EU Commission has approved the entire project. The individual funding notices and funding amounts per company will now follow in the next step," a German economy ministry spokeswoman said of the project that is set to run until 2028.

Alongside Tesla and BMW, the 42 firms that have signed up and could receive state aid include Stellantis, Arkema, Borealis, Solvay, Sunlight Systems and Enel X.

China now hosts about 80% of the world's lithium-ion cell output, but the EU has said it could be self-sufficient by 2025.

Project funding will come from France, Germany, Austria, Belgium, Croatia, Finland, Greece, Poland, Slovakia, Spain and Sweden. It also aims to attract 9 billion euros from private investors, the European Commission said.

The German spokeswoman said Berlin had made almost 1 billion euros available for the initial battery cell alliance and planned to support this project with about 1.6 billion euros.

"For those massive innovation challenges for the European economy, the risks can be too big for just one member state or one company to take alone," European Competition Commissioner Margrethe Vestager told a news conference.

"So, it makes good sense for European governments to come together to support industry in developing more innovative and sustainable batteries," she said.

The European Battery Innovation project covers everything from extraction of raw materials to design and production of cells, to recycling and disposal.

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.



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.

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.

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.

WASHINGTON — Tesla has agreed to recall 134,951 Model S and Model X vehicles with touchscreen displays that could fail after U.S. auto safety regulators sought the recall last month, according to a recall posted on a government website Tuesday.

The National Highway Traffic Safety Administration made the unusual recall request in a formal Jan. 13 letter to Tesla, saying it had tentatively concluded the 2012-2018 Model S and 2016-2018 Model X vehicles pose a safety issue.

The agency said touchscreen failures pose significant safety issues, including the loss of rearview/backup camera images and windshield defogging and defrosting systems that "may decrease the driver’s visibility in inclement weather."

Tesla said in its filing with NHTSA that "in the interest of bringing administrative closure to the investigation and to ensure the best ownership experience for our customers" it agreed to a voluntary recall.

NHTSA opened a probe in June 2020 into complaints that media control unit (MCU) failures led to touchscreen displays not working.

NHTSA said other automakers issued numerous recalls for similar safety issues.

NHTSA said in November when it upgraded its probe that it reviewed 12,523 claims and complaints about the issue.

Many complaints said Tesla requires owners to pay to replace the unit once warranties expire.

Tesla acknowledged the problem but said if the display was not working, "the driver can perform a shoulder check and use the mirrors. If the screen is not visible to control the climate control and defroster settings, the driver will be able to manually clear the windshield."

The recall will begin March 30. NHTSA had sought a recall of 158,000 vehicles, but Tesla said the recall does not include some vehicles that had an upgraded processor.

Tesla Model 3 is still the best-selling electric car in the world, and no other vehicle program is even coming close.

Automakers other than Tesla are going to have to invest more in high-volume electric vehicles.

Tesla Model 3
The Model 3 was the true first high-volume electric car program, and it is still on another level than every other electric car out there.

Tesla invested heavily in the program, including building Gigafactory Nevada with Panasonic to have the battery cell production capacity to support the Model 3.

The automaker went into what it called “production hell” during the ramp-up in 2017-2019, but it came out the other side with an impressive production capacity at Fremont factory, and in 2020, it added Model 3 production capacity at Gigafactory Shanghai.

It enabled the Model 3 program to grow into the market leader in electric vehicles by a wide margin.

Best-selling electric cars in the world
EV Sales Blogspot, which has been tracking electric vehicle sales worldwide for a long time, released its global 2020 sales reports.

Here’s the top 10 list of the best-selling EVs in the world:




As you can see, the Model 3 remains at the top spot with an extremely wide margin of almost 250,000 vehicles.

The difference between Tesla Model 3 and the second best-selling model is bigger than the total sales of the next two best-selling EVs combined.

Also, the second best-selling vehicle, the Wuling HongGuang Mini EV, is a very small and inexpensive city car that isn’t really comparable with the Model 3 or most EVs on that list.

The Renault Zoe is the most comparable vehicle and next best-selling EV on the list, and it remains consistent with another great year of sales now surpassing 100,000 units.

Tesla also owns the fourth spot with the Model Y, though it would be important to note that Model 3 and Model Y sales are estimates since Tesla doesn’t release data about the vehicles individually.

We do have separate data from some markets that release registration data, but that data needs to be reconciled with some estimates.

Elon Musk mentioned in his chat with Sandy Munroe this week at about 22 minutes in that Model 3 was still outselling Model Y.

How is it going to change in 2021?
With Model Y production still ramping up in 2020, Tesla recently starting production of the electric SUV at Gigafactory Shanghai, and plans to start Model Y production at Gigafactory Texas and Berlin later this year, it is likely that Model Y will become the new best-selling electric vehicle in 2021.

But the entire list is likely to get a decent shake-up this year.

VW managed to sell over 50,000 ID.3s in 2020 despite only starting deliveries toward the end of the year.

With production recently starting at the transparent factory, the German automaker is likely going to push the program into the six figures.

The same is likely going to happen for the ID.4.

But it will be harder for other lower-volume vehicle programs, like Mustang Mach-E, to make the top 10 list.

Some Chinese EV programs from Xpeng and Nio are likely going to reach six figures too, which could make the top 10 all over 100,000 units.