Why Tesla's Cybertrucks Failed To Impress Investors

2 Dec 2023

Investopedia

Key Takeaways

Tesla shares fell before paring losses a day after it made the first deliveries of its Cybertruck.Investors were unimpressed as the company struggles to produce and deliver the cybertrucks at scale.The cybertrucks also cost a lot more than they were expected to at the time of the initial announcement in 2019.The cybertruck is unlikely to prove cashflow positive for at least 12-18 months, according to analysts.

Tesla (TSLA) shares fell as much as 3.4% on Friday, before paring back some of those losses, a day after the automaker delivered the first units of its long-awaited Cybertruck.

Despite the pomp and show held in Austin, Texas yesterday, investors remained unimpressed with the Cybertruck and here's probably why:

Not Every One Got Their Truck

Tesla delivered the very first cybertrucks to very few people after years and there are many more still waiting to get their orders fulfilled. The Cyberbeast and all-wheel drive models are expected to be delivered in 2024 while the rear-wheel drive option delivery will only begin in 2025.

Deliveries Will Remain A Challenge

"We dug our own grave with the Cybertruck," Tesla CEO Elon Musk admitted during the company's last earnings call, highlighting the production challenges.

However, Musk said the company could reach a production rate of around 250,000 Cybertrucks a year in 2025, but he added that it brings manufacturing complexity. According to Reuters, analysts at Bernstein believe that to be an aggressive ask, and peg their own estimates at 250 deliveries in 2023 and 75,000 in 2024.

Analysts at Wedbush expect Tesla to deliver 2,000-3,000 cybertrucks this quarter, and 10,000 in the first half of next year.

It Costs More Than It Was Supposed To

The pricing for the cybertruck starts at $60,990 (excluding tax credits) which is almost double the $39,900 price tag that was touted when the vehicle was first announced in 2019.

The Cyberbeast model is tagged at almost $100,000 before any savings, and is expected to fetch north of $96,000 after adjusting for discounts.

Its Not Going To Make Money For At Least A While

Tesla went public in 2010, and while it turned its first quarterly profit in 2013, it took almost a decade to reach a profitable year.

Analysts, don't expect the Cybertruck to bring in any financial windfalls for Tesla in the immediate future.

"Musk & Co. are not expecting to be cash flow positive from this vehicle for another 12 to 18 months (could be longer in our view)," said Wedbush analysts.