By Rebecca Elliott

Tesla Inc. is expected to report its first full-year profit, a milestone powered by record vehicle deliveries in the face of a global pandemic and a growing appetite for electric cars.

The Silicon Valley car maker delivered around half a million vehicles last year, up more than a third from a year earlier, even as world-wide auto sales plunged roughly 14%, according to researcher LMC Automotive.

Wall Street expects such resilience to help Tesla generate around $1.3 billion in 2020 annual profit when the company posts earnings Wednesday afternoon, according to FactSet, on sales of about $31.1 billion. That compares with an $862 million loss in 2019 on sales of $24.6 billion.

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.

Wall Street forecasts Tesla will report a record quarterly profit of around $746 million in the fourth quarter, up from $105 million a year earlier. Sales for the October-December quarter are expected to be roughly $10.5 billion, up around 40%, according to FactSet.

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 sales brought in nearly $1.2 billion in the first three quarters of last year, up from $594 million in all of 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 meet the growing appetite for electric vehicles, Mr. Musk last year suggested that Tesla would seek to deliver around 840,000 to one million vehicles in 2021. To support those ambitions, 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 0544ET