Tesla profits plunge 22% as Elon Musk admits the firm ‘dug its own grave’ with the much-anticipated Cybertruck

  • Tesla profits fell to their lowest level since 2020 in the third quarter of the year
  • Shares in the EV manufacturer slid by around 9 percent on Thursday
  • Elon Musk told investors firm was struggling to ramp up production of its much-anticipated cybertruck 

Tesla profits have fallen by 22 percent – as Elon Musk admitted the firm had ‘dug its own grave’ over the rollout of its ambitious Cybertruck. 

Revenue for the third quarter of the year was $23.4 billion down from analysts’ expectations of $24.09 billion.  

Year-on-year gross profits fell 22 percent – prompting Tesla shares to plummet around 9 percent to $220 as of midday on Thursday. 

The slump is largely being driven by the company’s aggressive price slashing campaign to compete with its growing pool of competitors. 

Elon Musk admitted the firm had ‘dug its own grave’ over the rollout of its ambitious Cybertruck

The futuristic pick-up truck was first announced in 2019 and was expected to start selling in 2021 before being hit with a slew of delays

But during the firm’s Q3 earnings call, Musk also addressed Tesla’s struggles to ramp up production of its Cybertruck. 

The futuristic pick-up truck was first announced in 2019 and was expected to start selling in 2021 before being hit with a slew of delays. 

In comments recorded by Business Insider, Musk told investors: ‘We dug our own grave with the Cybertruck. 

‘It’s one of those special products that comes along only once in a long while. And special products that come along once in a long while are just incredibly difficult to bring to market to reach volume, to be prosperous.’

The first deliveries of the Cybertruck are scheduled for November 30 – but Musk warned it could take as long as 18 months before cash flow from the vehicle was positive.

‘I do want to emphasize that there will be enormous challenges in reaching volume production with the Cybertruck and then making the Cybertruck cashflow positive — this is simply normal,’ Musk added.

Although Tesla dominates the electric vehicle market, its market share has started to slow thanks to the surge in competition from brands like Ford and Rivian. 

Since the truck was first announced, rivals have caught up with their own versions of electric trucks such as Rivian’s R1T, Ford F-150 Lightning and General Motors’ Chevrolet Silverado. 

Despite the chaos being plunged into chaos, Musk reasserted that demand for the truck is ‘off the charts’ with more than 1 million potential buyers reserving one with a $100 downpayment. 

Tesla shares plummeted around 9 percent and were trading at around $220 as of midday on Thursday

Tesla is facing competition from a growing pool of competitors including Ford. A cab of a model of the all-new F-150 Lightning electric pickup truck is seen on an assembly line at the Ford Rouge Electric Vehicle Center in Dearborn, Michigan, U.S., April 26, 2022

Across the board, Tesla’s year-over-year revenue growth was the weakest since the pandemic hit in the second quarter of 2020. 

In all it reported $23.4 billion in sales for the second quarter, down from analyst forecasts of roughly $24.2 billion.

Musk also warned that high interest rates could sap electric vehicle demand.

The comments marked a change in tone from Tesla CEO Musk, who had said last year that his company was “recession-resilient”. The EV maker missed revenue estimates on Wednesday by the most in more than three years despite hefty price cuts.

‘It didn’t have the same zip. We await Tesla’s earnings calls with a sense of excitement and suspense – and they usually deliver. Not Wednesday night,” Canaccord Genuity analysts said.

The company is expected to cut prices further in the current quarter to meet its annual deliveries goal of 1.8 million vehicles, even after its gross margin contracted to 17.9% between July and September from 25.1% a year earlier.

‘We continue to believe that Tesla is a car company, and that the competitive nature of the auto industry will make it difficult for any player to have a sustained profitability advantage,’ Bernstein analyst Toni Sacconaghi said.

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