Despite the lack of chips, Tesla sets a record for car sales in 2021

Tesla resisted the industry-wide trend of reduced sales caused by shortages of computer chips and other parts. In the fourth quarter, the company posted record sales, up 71% from the previous year.

The strong fourth quarter of 308,600 vehicles gave Tesla annual sales of 936,000, an 87% increase from the 2020 total and above the 900,000 mark that many analysts have set.

“Taking a step back, with chip shortages a major obstacle in the automotive space and logistics issues across the world, these delivery numbers were jaw-dropping,” said Dan Ives, an analyst at Wedbush Securities, in a note to customers on Sunday (2).

He said Wall Street forecasts of 265,000 Tesla sales in the fourth quarter would have pushed full-year sales to 892,000. The 900,000 sales target that Tesla easily surpassed was the “best case in the eyes of the street,” according to Ives.

Other automakers are expected to report reduced fourth-quarter sales when they release US numbers next week. Tesla reports only global sales, but global car sales across the industry are expected to be vastly lower in the fourth quarter.

Cox Automotive is forecasting overall fourth-quarter sales in the US to decline 24% due to a shortage of computer chips. Without the input, factories closed temporarily, vehicle inventory at dealerships was limited and car prices soared to record levels.

“The industry ran out of vehicles and sales stopped in the second half,” said Charlie Chesbrough, chief economist at Cox Automotive.

“Total sales in the second half of 2021 were the slowest in a decade. Demand is healthy, but disruptions in supply and production have kept the industry in check. You can’t sell what you don’t have.”

Tesla had its own chip shortage issues during the year, but was able to deal with them.

The electric vehicle maker’s achievement was all the more impressive considering it is facing increasing competition from traditional automakers, who now offer more electric vehicle models.

For example, the Ford Mustang Mach-E had US sales of nearly 25,000 vehicles through November in its first year on the market.

Ford recently announced plans to triple production to meet demand. There are also new electric vehicle manufacturers that sell vehicles, including Lucid and Rivian, who recently earned MotorTrend’s Car and Truck of the Year honors.

So while Telsa’s share of the electric vehicle market may be dwindling in the face of new competition, demand is growing even faster, allowing the company to continue reporting strong growth.

“Although there are many competitors, Tesla continues to dominate market share, as evidenced again this quarter, as it struggled with chip shortages,” said Ives.

Tesla has predicted that, with new plants near Austin, Texas and Berlin about to start full-scale production in 2022, it is expected to see annual global sales growth of 50% or more, at least for the next few years.

Investors rewarded Tesla, raising its share price by 52% in 2021.

While this is modest compared to the 743% share gain achieved in 2020, it was still better than most automakers, including most other electric-only companies.

It was enough to give Tesla a market cap greater than the combined value of the top 12 global automakers, and make it only the sixth company to be worth more than $1 trillion.