Elon Musk expressed unusual caution Wednesday about Tesla Inc.’s next big vehicle, and his comments may cause some on Wall Street to lower their initial expectations for the Cybertruck.
The sci-fi electric vehicle, which would be more at home on the moon or Musk’s favorite planet, Mars, has already created missed expectations. First presented as a prototype in 2019, production was repeatedly delayed.
At the start of the company’s conference call with analysts and investors on Wednesday, CEO Musk said he wanted to emphasize that “there will be enormous challenges in achieving mass production of the Cybertruck and then making the Cybertruck cash flow positive.”
Previously, Tesla TSLA, -4.78% reported third-quarter earnings that fell short of Wall Street expectations, and coupled with Musk’s comments about “tempering expectations,” the stock fell more than 4x in after-hours trading after an initial rally %. Musk may have caused confusion among investors with his positive tweets on Wednesday afternoon that the first Cybertruck deliveries were scheduled for November 30, but then sounded a bit overcautious in the conference call.
He didn’t say exactly how many Cybertrucks he thought Tesla could produce in its first attempt this year, saying mass production wouldn’t happen until 2025.
An investor asked how many Cybertrucks Tesla could deliver in 2024.
“The more unknown the area, the less predictable the outcome,” Musk said. “If you say, ‘Well, where are things going to end?’ I think we’ll end up with about a quarter of a million Cybertrucks per year. And I don’t think we’ll reach that production rate next year. I think we’ll probably get there sometime in 2025. That’s my best guess.”
In its shareholder presentation, Tesla noted in a factory capacity chart that its gigafactory in Texas had a capacity of more than 125,000 units. But the way Musk has downplayed volume production, it seems unlikely that it will reach that number this year, and 2024 is a different question.
“It’s just normal,” Musk said. “When you have a product with a lot of new technology or a brand new vehicle program, but especially one as different and advanced as the Cybertruck, depending on how many new things you try, you’re going to have problems solving it at scale. “
“We dug our own grave for Cybertruck,” Musk added. “Nobody digs graves alone and that’s how it is – Cybertruck is one of those very special products that only comes around every now and then.”
Not only was Musk cautious about the timing of the Cybertruck, he also said he was concerned about the impact that higher interest rates would have on car buyers, since most consumers buy cars on payment plans that accrue interest.
When asked about the company’s current schedule for robotaxis, he was vague and did not answer specifically. He announced in 2019 that 1 million Tesla robotaxis would be on the road next year.
He said demand for the Cybertruck was “extremely high” with 1 million people making reservations. Cybertruck sightings in the wild are becoming more common in the San Francisco Bay Area, and this columnist actually spotted one on Sunday.
It’s worth noting that Musk is currently being sued by the Securities and Exchange Commission for failing to testify before regulators over his disclosures about his ownership of Twitter shares ahead of his final $44 billion deal to take the social private media company investigated last year. It’s possible that Musk, for once, will listen to Tesla’s or his own lawyers about the risks of overzealous predictions. Or he could fear that production is progressing more slowly than expected.
With Musk, investors never know what kind of shenanigans might be going on. But it is always advisable to proceed with caution in everything he says.