Tesla CEO Musk Admits to Snags in Cybertruck Launch

CEO Elon Musk acknowledges Tesla will lose money on each Cybertruck it builds over the next year and a half.

Joseph Szczesny

October 19, 2023

4 Min Read
Tesla Cybertruck screenshot
More than 1 million people have reserved Cybertruck, Tesla CEO Musk says.

It will take at least another 18 months to push production of the Cybertruck to an annual rate of 250,000 units, according to Tesla CEO Elon Musk, and the ramp-up of the often-delayed vehicle will face significant challenges before the truck is profitable.

Additionally, the official introduction of Cybertruck will now take place after Thanksgiving. Earlier this year, Musk was promising the Cybertruck, which he first previewed in November 2019, would be ready by the end of September.

“I know a lot of people are excited about the Cybertruck,” Musk (pictured, below left) notes during a quarterly call with investors and analysts. “I am, too. I’ve driven the car. It’s an amazing product.

Musk in SF for trial 1-23-23 (getty).jpg

Musk in SF for trial 1-23-23 (getty)_0

“I do want to emphasize that there will be enormous challenges in reaching volume production with the Cybertruck, and then in making Cybertruck cash-flow positive. This is simply normal for when you’ve got a product with a lot of new technology or any new-vehicle, brand-new-vehicle program, but 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.

“So, I just don’t want to emphasize that while I think this is potentially our best product ever,” says Musk, it will require immense work to reach volume production and “be cash-flow positive at a price that people can afford.”

Making a profitable production vehicle takes time and patience, Musk says.

“So, I just want to temper expectations for Cybertruck. It’s a great product, but financially it will take, I don’t know, a year to 18 months before it is a significant positive cash-flow contributor,” he says.

“I wish there was some way for that to be different, but that’s my best guess,” adds Musk as he acknowledges Tesla will lose money on each Cybertruck it builds over the next year and a half. 

“But if you want to do something radical and innovative and something really special, like the Cybertruck, it is extremely difficult because there’s nothing to copy. You have to invent not just the car, but the way to make the car. So, the more uncharted the territory, the less predictable the outcome.”

Nonetheless, Musk insists Tesla will build 1.8 million vehicles worldwide even as its once sky-high profit margins shrink. Operating margin for the third quarter came in at 7.6% of sales to fall from 9.6% in the second quarter and 17.2% a year ago as the company’s net income dropped by 37%. 

He also suggests the company’s plans for Tesla’s next round of new products, including a smaller, more affordable model, are on hold in an economic environment characterized by high interest rates.

“We’re definitely making the factory in Mexico,” says Musk during the call with analysts. “The question is really just one of timing. It’s just (that) the interest rates have to come down. Like, if interest rates keep rising, you just fundamentally reduce affordability. It is just the same as increasing the price of the car.”

The Tesla CEO also discloses another issue for the BEV maker: It is running into difficulty in finding employees for its Austin, TX, factory complex, which is the home of Model Y and Cybertruck production as well as a battery factory.  “The greater Austin area only has 2 million people. So, people are moving here and they’re willing to move here, but there is somewhat of a housing crisis,” says Musk.

However, Musk, echoing language used by UAW President Shawn Fain, also notes many potential BEV buyers simply cannot afford an electric vehicle even with federal subsidies.

“A large number of people are living paycheck to paycheck, and with a lot of debt. They’ve got credit card debt, mortgage debt. So, that’s reality for most people. It’s sometimes difficult for people who are high income – and I’d say ‘high’ to be, like, someone who’s earning over $200,000 a year – to understand what life is like for someone who is earning $50,000 or $60,000 or $70,000 a year, which is most people,” Musk says.

Tesla said at the Cybertruck’s 2019 introduction that it hoped to sell the BEV for under $40,000, but the cost of raw materials for batteries has risen since then. The company plans to announce pricing on Nov. 30.

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