With a great delay compared to the first plans, Tesla will begin delivering its first units of the Cybertruck model, more than four years after its eventful public presentation on November 30, as the company announced this Wednesday on the occasion of the presentation of the results of the third quarter . In a conference with analysts, Musk indicated that he expected to ship a quarter of a million units of this large model, which he portrayed as revolutionary. In the same conversation with investors and analysts, the visionary tycoon avoided jeopardizing the opening date of his planned factory in Mexico, adjusting the timing according to the development of the economy and interest rates.
“Cybertruck production continues through the end of this year, with first deliveries scheduled for November 30 in Giga, Texas,” the company announced. “A lot of people are excited about the Cybertruck,” Musk said on the third-quarter earnings call. “So am I, I drove the car, it’s an incredible product. “I would like to emphasize that there will be enormous challenges in achieving large-scale production with the Cybertruck and then achieving positive cash flow.”
“This is normal when you have a product with a lot of new technologies or a new vehicle range, but especially one as different and advanced as the Cybertruck,” he added. “If you want to do something radical, innovative and really special like the Cybertruck, it’s extremely difficult because there’s nothing to copy. You have to invent not only the car, but also the way to make it. “So the more unexplored territory there is, the less predictable the outcome is,” he continued. Musk has indicated that he expects to sell about 250,000 units per year, although he estimates that cruising speed will not be reached until 2025.
Investors have also asked Musk about the timeline for opening the future gigafactory in Mexico. The first to respond was new finance director Vaibhav Taneja, who cooled expectations somewhat by pointing out that his priority at the moment is to optimize existing production lines and increase efficiency.
Then Musk intervened: “In Mexico we are laying the foundation to start construction and carrying out all the necessary procedures.” But I think we want to get an idea of what the global economy looks like before we plunge headlong into the Mexican factory. I am concerned about the high interest rate environment we find ourselves in. I can only insist that the vast majority of people who buy a car do so with one monthly payment, and that as interest rates rise, the proportion of that monthly payment as interest naturally increases. So if interest rates stay high or go up even further, it will be much harder for people to buy a car, they just won’t be able to afford it,” he said, without specifying a time frame.
Sharp decline in profits
The profit of the electric car manufacturer Tesla fell by 44 percent to 1,853 million dollars (around 1,760 million euros at the current exchange rate) in the third quarter of the year due to price cuts made to increase sales. Although the Elon Musk-led company delivered 435,059 cars, up 27%, revenue from vehicle sales rose only 5% to $19,625 million. Higher sales of batteries and revenue from services led the group’s total revenue to rise 9% to 23,350 million, according to data released by the company at market close on Wednesday.
Although units sold are growing strongly, they are doing so less than analysts expected before the company announced this data a few weeks ago. Now the company has disappointed with the level of sales and profits and its margins have also fallen more than the market had expected. Operating margin, which was 29.1% in the first quarter of 2022, fell to 7.6%, the lowest level since the first quarter of 2021.
In its report to shareholders, the company noted that in addition to price cuts, profitability was also impacted by increased operating costs due to its large-scale vehicle Cybertruck, investments in artificial intelligence and other research and development projects. Also due to the costs of lost production and inactivity related to the modernization of factories and the negative impact of exchange rates. Tesla has announced that it expects to begin delivering the first units of its Cybertruck on November 30, after repeated delays in its launch.
The company aims to achieve 50% average annual growth in the number of units sold. Taking into account the fact that the growth rate was significantly higher in recent years, the rate has now weakened. For this year, the goal is to deliver 1.8 million cars, around 40% more than in 2023. To achieve this, the company only needs to grow by 17% year-on-year in the fourth quarter, although this is a record sales of 1.5 million means 475,000 vehicles. Of course, when prices fall, income grows much more slowly.
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