By Rebecca Elliott

Tesla Inc. posted its first full-year profit, powered by record vehicle deliveries in the face of a global pandemic and growing appetite for electric cars that is driving the company to pursue a sharp hike in output this year.

The Silicon Valley car-maker Wednesday said it expects to grow production on average about 50% throughout the coming years and top that rate in 2021. The company delivered around half a million vehicles to customers last year. Last year's vehicle-delivery growth of more than a third over 2019 levels came even as world-wide auto sales plunged roughly 14%, according to researcher LMC Automotive.

Chief Executive Elon Musk last year suggested that Tesla would seek to deliver around 840,000 to one million vehicles in 2021. Wall Street projected this year's figure at around 796,000 vehicles.

Tesla reported about $31.5 billion in sales in 2020 to generate a net profit of $721 million. That is up from an $862 million loss in 2019 and sales of $24.6 billion. The company beat Wall Street's revenue expectation of about $31.1 billion, according to FactSet, though missed profit estimates.

Shares in the car maker slumped more than 6% in after-hours trading.

Tesla delivered quarterly profits during the pandemic despite the temporary shutdown of the company's lone U.S. car plant because of the health crisis. To manage the impact, Chief Executive Elon Musk battled with local authorities to reopen the factory, temporarily reduced salaries, furloughed workers and sought rent breaks. Later in the year, he tested positive for Covid-19.

The 17-year-old company's performance, coupled with wider investor enthusiasm about electric vehicles, sent the stock soaring more than 700% last year and turned Tesla into the world's most valuable auto maker. The string of quarterly profits also allowed it to secure a spot in the S&P 500 index.

Tesla generated a profit of $270 million in the fourth quarter, up from $105 million during the year-earlier period. Sales for the October through December period rose around 46% from the final three months of 2019 to roughly $10.7 billion.

Tesla's financial results have been buoyed by the sale of regulatory credits to rival auto makers that need them to comply with emissions-related rules. Such credits brought in roughly $1.6 billion last year, up from $594 million in 2019.

Tesla has benefited from growing electric-vehicle demand in China, where the company began delivering locally made vehicles in 2019. The company has expanded production capacity at its Shanghai facility and this month delivered its first made-in-China Model Y sport-utility vehicles.

But Tesla also faces increased competition from incumbent auto makers such as General Motors Co. and Ford Motor Co. and a fleet of startups that are developing their own plug-in models, including in China.

To support its growth, the company aims to open two new vehicle factories this year, one near Austin, Texas, and the other near Berlin, its first in Europe. Tesla also plans to introduce a pickup truck and semitrailer truck.

Tesla's ascendancy from plucky startup to the world's most-valuable auto maker has been rocky at times. The company has often struggled to introduce new vehicles, such as the Model 3 compact car, and grappled with production challenges that have strained its finances.

Tesla also hasn't delivered on some of Mr. Musk's more grandiose promises, such as launching a robot taxi service by the end of 2020.

More recently, federal regulators this month asked Tesla to recall roughly 158,000 vehicles over touch-screen failures that can affect safety functions, including backup cameras. Tesla hasn't responded to a request for comment about whether it intends to follow through with the recall, which would be one of its largest safety actions to date.

Tesla has shored up its cash position recently by selling billions in new stock. Mr. Musk has said the company would use the funds to pay down debt and amass what he described as a war chest.

Write to Rebecca Elliott at rebecca.elliott@wsj.com

(END) Dow Jones Newswires

01-27-21 1646ET