Tesla CEO Elon Musk said on the company’s earnings call Wednesday that he wants to "temper expectations for Cybertruck" even though he believes it’s "our best product ever" because it will take time to reach volume production and have the futuristic electric pickup contribute positively to the company’s cash flow.
The Tesla Cybertruck’s production has been delayed on several occasions since it was first announced in 2019. Last year, Musk said that supply chain challenges affecting the sourcing of components was a factor in pushing back production to 2023. Musk said the company is aiming to produce about 250,000 Cybertrucks a year – although it may take until 2025 to reach that level of volume.
"I know that people are excited about the Cybertruck, I am too I’ve driven the car, it’s an amazing product. I do want to emphasize that there will be enormous challenges in reaching volume production with the Cybertruck and then in making a Cybertruck cash flow positive," Musk said.
"This is simply normal when you’ve got a product with a lot of new technology, or for any new vehicle program but especially for 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," he explained. "I just want to emphasize that while I think that this is potentially our best product over, in fact I think it is our best product ever, it’s going to require immense work to reach volume production and be cash flow positive at a price that people can afford."
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Musk said that the Cybertruck, which had its first production model roll off the assembly line at Tesla’s Gigafactory in Texas this July, exemplifies the difficulty in moving from the prototype phase to production at scale in a cash flow positive manner.
"Prototypes are easy, production is hard. The difficulty of going from prototype to production is a 10,000% harder to get to volume production than to make the prototype in the first place. And then it is even harder to reach positive cash flow. That is why there have not been new car startups that have been successful for a hundred years, apart from Tesla," he explained.
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Musk said that he expects it will be about a year to a year-and-a-half before Cybertruck starts contributing positive cash flow to the company’s balance sheet but that there have been one million Cybertruck reservations made to date.
"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," Musk said. "I wish there was some way for that to be different, but that's my best guess. The demand is off the charts, we have over a million people who have reserved the car. So it’s not a demand issue, but we have to make it, and we need to make it at a price people can afford. Insanely difficult things."
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A price point for the Cybertruck is yet to be announced and Tesla hasn’t announced specific details about the EV truck’s specifications or an official date when initial deliveries to dealers will begin. When Tesla first announced it in 2019 and would-be buyers could reserve it by paying $100, it had an estimated initial price of under $40,000. Since then, changes to its design have been made that have fueled speculation it may cost more than originally anticipated.
Tesla’s stock was down over 4% in after hours trading as of 8 p.m. Eastern on Wednesday in the wake of the earnings call. The company’s stock had dropped 4.78% during the day’s trading.
FOX Business' Joe Toppe contributed to this report.
