Tesla (TSLA) conducted its Q3 2023 Earnings Call on Wednesday. The company’s CEO Elon Musk joined the call and like always provided updates for upcoming developments and events.
The major announcement was the Cybertruck Delivery Event, scheduled for 30th November 2023. According to a few Tesla employees previously, Cybertruck deliveries were expected to start at the end of October. But Tesla has pushed it a month further possibly due to production scaling issues.
However, Tesla is moving ahead at a fast pace with the production and testing of its Cybertruck electric pickup truck at its Gigafactory in Austin, Texas.
The automaker started sending Cybertruck Delivery Event invites via the Referral Program in August though it’s not clear how many people Tesla will invite to the event. Tesla has started sending out Cybertruck Delivery Event invitation emails to eligible referral winners for the event that will take place in Giga Texas (screenshot below).
“I know a lot of people are excited about the Cybertruck. I’m too. I’ve driven the car, it’s an amazing product,” Elon Musk started the Cybertruck updates with this statement during his Q3 2023 Tesla Earnings Call opening remarks.
In the next few minutes of his Cybertruck briefing, Elon Musk mostly discussed the production challenges of this unique electric pickup truck. He did not want to set the expectations of investors and Cybertruck reservation holders too high concerning the vehicle’s production ramp-up.
“I do want to emphasize that there will be enormous challenges in reaching volume production and then making the Cybertruck cash flow positive,” Musk said. “This is simply normal for a lot of new technologies or a brand new vehicle program but especially one that is as different and advanced as the Cybertruck,” he added.
Elon Musk indicated that Tesla is ready to face even the unanticipated hurdles that might come in the way of taking the Cybertruck to volume production. And in the end, it’s not just about unlocking the secrets of scaling up Cybertruck production, the product also needs to be profitable (cash flow positive).
According to Tesla’s estimates, Cybertruck will be cash flow positive in 12 to 18 months after the deliveries begin on 30th November 2023.
“I just want to temper expectations for Cybertruck,” Musk added to the comments on the Cybertruck update. “It’s a great product but financially it will take a year to 18 months before it is a significant positive cash flow contributor,” he told the investors during the Q3 2023 Tesla Earnings Call.
“It requires immense work to reach volume production and be cash flow positive at a price that people can afford,” Musk pressed on the challenges that lie ahead in making Cybertruck a successful product.
So, there are 3 main challenges for Tesla to overcome to make Cybertruck a success:
- Reaching volume production
- Making Cybertruck cash flow positive
- Offer it at a price point that the majority of potential customers can afford
According to Elon Musk, it’s 10,000% harder to get to volume production than to make a prototype in the first place and then it’s harder than that to reach positive cash flow. Tesla and Elon Musk have already experienced this back in 2017-2018 with the Model 3 but I think the Cybertruck is even harder because of its design and stainless steel body.
These challenges are the reason that Tesla has been the only successful car manufacturer in the last 100 years in America, Musk explained.
According to Elon Musk’s statement, Tesla has more than a million Cybertruck reservations on its hands. But a public reservation tracker suggests that the Cybertruck pre-orders have crossed 2 million.
Despite Tesla having already started producing Cybertrucks at Giga Texas daily, delivering 1 million trucks will be an enormous challenge for the automaker.