Elon Musk admitted it. The Cybertruck has been a failure and earnings show no progress. Is this the beginning of the end for Tesla?
It was a bad quarter for Tesla, the world’s largest electric vehicle manufacturer with over 60% of the global market share. On Wednesday, the company released its quarterly revenues and earnings, showing a worse outlook than expected.
Revenues came in at $23.35 billion, 9% higher year-on-year but significantly lower than the $24.1 billion expected. Moreover, quarterly earnings declined 37% from the same period in 2022 at $2.3 billion, or 66 cents per share. Wall Street was expecting 73 cents per share.
The catastrophic quarter is the latest setback at Tesla, after one year of increasing competition from the United States and China.
Electric vehicles are entering mainstream territory, and analysts believe Tesla should stop acting like a start-up. US corporations like Ford and General Motors are eating up Tesla’s American market, while China is set to become the world’s largest EV exporter in 2023 dethroning Japan and Germany.
“We have to make our product more affordable so people can buy it,” Tesla CEO Elon Musk said on the quarterly investor call.
Throughout 2023 Tesla slashed prices of their flagship cars, including the Model Y. Unfortunately, that didn’t seem to improve earnings, and the worst might still be ahead.
The failure of the Cybertruck
"We dug our own grave with Cybertruck," Musk added during the call. As a matter of fact, the Cybertruck represents all the problems grappling with Tesla right now.
The Cybertruck was announced four years ago and mass production will start only on November 30th, as confirmed by Musk only yesterday. Since 2019, Tesla has not released any new car model, at a time when increasingly more competitors were entering the market.
The Cybertruck will stop four years of inaction but will be terribly ineffective for Tesla’s needs. According to Musk’s own estimates, one million customers have pre-ordered the Cybertruck, but at current capacity, only 125,000 trucks will be manufactured next year.
According to Musk, capacity should double in 2025. But even at that rate, pre-orders will not be fully met until 2026. Only then will the Cybertruck start becoming profitable, when competitors will have proposed their own version.
And while European carmakers seem to lag behind for the moment, many are ramping up production and investing in new technologies. Both Mercedes and BMW announced models seemingly more convenient and reliable than Tesla’s.
Tesla’s stock price fell 8.72% on Thursday. Markets still seem to trust Elon Musk, but how long will it last?
