Cybertruck won’t be profitable until 2025, Elon Musk cautions, “this is simply normal”
Elon Musk, the CEO of Tesla, cautioned on Wednesday about the upcoming Cybertruck, which will sound familiar to anyone who followed the firm during the “production hell” period of the Model 3.
The essence? A vehicle like the Cybertruck is difficult to scale, and it will take some time before it becomes lucrative. Musk predicted that the Cybertruck won’t turn a profit for roughly 18 months. Musk projected that after overcoming these manufacturing obstacles, Tesla will be producing “roughly” 250,000 Cybertrucks annually by 2025.
The Cybertruck’s pilot production has commenced at the company’s Giga Texas factory, which is located close to Austin. The first Cybertrucks will be delivered at a manufacturing ceremony on November 30, according to Musk’s statement on Wednesday.
He further stated that since the Cybertruck’s 2019 debut, more than a million refundable reservations have been made.
Cybertruck won’t be profitable until 2025, Elon Musk cautions
During Wednesday’s third-quarter earnings call, Musk stated, “I do want to emphasize that there will be enormous challenges in reaching volume production with the Cybertruck and then making the Cybertruck cashflow positive — this is simply normal,”
Later he added that he thinks this could be the company’s best product ever. “When you’ve got a product with a lot of new technology or any brand new vehicle program, especially one that is as different and advanced as the Cybertruck, you will have problems proportionate to how many new things you’re trying to solve at scale.”
“It is going to require immense work to reach volume production, and be cashflow positive, at a price that people can afford,” he added later.
Tesla’s profits have already suffered due to the Cybertruck. The business on Wednesday revealed its third-quarter net income of $1.85 billion, a 44% decrease from the same time last year. This decline was attributed to both growing operating costs for its R&D programs, including Cybertruck and AI, and declining margins brought on by the company’s periodic price reductions of its EVs. In the third quarter, Tesla’s operational expenses totaled $2.4 billion, a 43% increase over the same period the previous year.
For Tesla, this gap in Cybertruck profitability is a problem.
The business keeps expanding, which means it is spending more money on personnel, projects like Cybertruck, and physical space. Furthermore, despite maintaining a significant lead in EV sales in North America, the company’s price-cutting tactics have significantly lowered its profitability. Industry observers are concerned that given certain signs of waning demand for EVs, Tesla and other automakers may need to keep slashing prices.
Additionally, the absence of any upcoming new Tesla models could further hurt earnings in the near future.
Tesla still has a lot of room to maneuver even though its free cash flow decreased to $848 million in the third quarter due to its $26 billion worth of cash, cash equivalents, and investments. It’s questionable if investors will have patience.
Cybertruck won’t be profitable until 2025, Elon Musk cautions. now we wait to see what becomes of the products in 2025.