Tesla Tempers Expectations on Cybertruck’s Nov. 30 Debut

Tesla Inc.’s long-awaited Cybertruck is set to hit the market on Nov. 30, though it could be a long time before the vehicle becomes profitable.

(Bloomberg) — Tesla Inc.’s long-awaited Cybertruck is set to hit the market on Nov. 30, though it could be a long time before the vehicle becomes profitable.

The stainless steel truck is about two years behind schedule, and shares initially rose after Tesla said the Cybertruck would finally be handed over to its first customer at the end of next month.

Then Chief Executive Officer Elon Musk warned it would take a least 18 months for the vehicle to be “a significant positive cash flow contributor.” He said the company could ship 250,000 Cybertrucks a year, but probably not until 2025.

“We dug our own grave with Cybertruck,” Musk told analysts. “Special products that come along only once in a long while are just incredibly difficult to bring to market, to reach volume, to be prosperous.”

The stock was down 3.1% at 6:15 p.m. in New York. It has almost doubled so far this year.

News about the Cybertruck overshadowed Tesla’s earnings and sales miss in the quarter. The company said profit, excluding some items, fell to 66 cents a share, less than the 74 cents Wall Street estimated. Revenue reached $23.4 billion, Tesla said in a shareholder letter Wednesday. Analysts had expected the company to generate $24.06 billion in revenue. 

Read More: Tesla’s Long-Awaited Cybertruck Will Begin Deliveries on Nov. 30

Automotive gross margin ex-regulatory credits, a figure closely watched by investors, was 16.3% in the quarter. Analysts surveyed by Bloomberg were expecting it to be 17.7%.

“It’s clear price cuts had an impact on margins, but that was known and priced into the stock,” said Seth Goldstein, an equities strategist at Morningstar, in a phone interview. “The Cybertruck announcement is a welcome relief for a vehicle that has had several delays.”

The company has repeatedly slashed prices of its cars this year, and Musk has said he’s willing to sacrifice Tesla’s industry-leading profits to protect sales volumes. Markdowns for its most expensive vehicle, the Model X, have exceeded 30%, making the cars more affordable for customers struggling with high inflation and interest rates.

The Austin-based company already said it delivered 435,059 vehicles globally in the period, its first quarterly decline in a year, after planned factory downtime slowed production. Tesla recently launched a refreshed Model 3 sedan in China and Europe. 

It assured investors it’s on track to make and ship about 1.8 million vehicles this year, a record.

“While production cost at our new factories remained higher than our established factories, we have implemented necessary upgrades in Q3 to enable further unit cost reductions,” the company said in its letter to shareholders.

This will be the company’s first full quarter with new chief financial officer, Vaibhav Taneja. Previously Tesla’s chief accounting officer, Taneja was appointed to the role in August, when then-CFO Zach Kirkhorn abruptly stepped down after 13 years at the carmaker. 

Read More: Tesla’s New CFO Now Has Two Jobs and a Lot of Question Marks 

Kirkhorn was a major presence at Tesla. Throughout his tenure the carmaker became consistently profitable, following years of losses and some quarters in which it burned more than $1 billion. This year, he battled investor concerns about Tesla’s shrinking profits, and urged shareholders to focus on operating margins.

The company’s operating margin has sunk to 7.6% — its lowest since the first quarter of 2021. At its peak in the first quarter of 2022, it was 29.1%.

–With assistance from Anne Cronin and Esha Dey.

(Updates with truck details throughout. An earlier version corrected gross margin.)

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