Tesla Builds Its First Cybertruck Two Years Behind Schedule

Tesla CEO Elon Musk unveils the Cybertruck at the TeslaDesign Studio in Hawthorne, Calif., on Nov 21, 2019. Robert Hanashiro/USA TODAY

Tesla produced its first Cybertruck off the assembly line in Austin, Texas, over the weekend after two years of delays. The first Cybertruck finally rolled off the factory line on July 15 to much celebration at Tesla’s Gigafactory.

Tesla CEO Elon Musk first announced the first prototype of the electric pickup truck back in 2019 to great fanfare. But in the years since Musk unveiled his Cybertruck, Tesla had delayed the mass production of the electric vehicle (EV) multiple times.

The EV manufacturer initially expected production to begin in late 2021, but it witnessed delays due to supply chain issues.

Cybertruck Delayed Due to Supply-Chain Problems

The Cybertruck is designed with a wedge-shaped stainless-steel body that gives it a sleek and futuristic-looking design. The electric pickup, though, has undergone some design changes since it was first announced.

Tesla, however, will have to compete in the already crowded pickup market, with the already existing Ford F-150 Lightning and the Rivian R1T, which resemble more traditional designs. General Motors will be launching the electric Chevy Silverado this year.

After the initial announcement in 2019, Tesla released little information about the electric pickup; but in late 2021, the company announced that an updated model would be released.

In January 2022, Tesla said that production would be delayed until 2023.

Then in November 2022, Musk said on a call with financial analysts that mass production would begin at the end of the 2023 following an “early production” phase “in the middle this year, reported Reuters.

Musk blamed pandemic-era supply-chain shortages for affecting the sourcing of essential components and consequently pushing Cybertruck’s initial release into 2023.

The company finally celebrated the roll out on Twitter with a photo of workers in hats and yellow vests surrounding the electric truck at its factory near Austin.

“First Cybertruck built at Giga Texas!” Tesla announced in a tweet, while Musk retweeted the photo, saying, “Congrats Tesla Team!”

The electric pickup is the company’s first major launch since the Model Y in early 2020.

Musk told shareholders at a meeting in May that the company was aiming to produce about 250,000 Cybertrucks a year, depending on demand.

Tesla’s plans for putting the Cybertruck into mass production are likely to be discussed when the company releases its second-quarter earnings report on July 19.

At his 2019 announcement, Musk said that would-be buyers could pay $100 to reserve a future Cybertruck, which had a then projected initial price of less than $40,000—but this was before inflation took hold.

Pricing details have yet to be announced, and Tesla stopped taking orders for the Cybertruck from outside of North America last May.

Tesla in the Middle of a Price War With EV Rivals

In early July, the company announced that it had delivered a record number of vehicles in the second quarter through a strategy of boosting its sales volume by aggressively discounting prices to stimulate demand.

Tesla said it delivered 466,140 vehicles in the second quarter, a 10 percent increase from the prior quarter and up from 83 percent in the same period in 2022.

On the other hand, this move has sparked a price war with legacy automakers such as Ford and Chinese rivals like BYD.

Tesla’s earnings report is expected to show its gross profit margin decline to 18.9 percent in the second quarter due to the price cuts, according to analysts polled by Visible Alpha.

That is a drop from 20.2 percent in the first quarter and a 25.9 percent from a year earlier.

Tesla was only able to deliver slightly more cars in the last quarter at the cost of its margins due to the discounts, Vitaly Golomb, an investment banker, told Reuters.

“It is clear they are very much a car company with the same supply chain and demand pressures as other manufacturers. They even have a growing inventory of their three- and six-year-old design Model 3s and Model Ys and really seem to have hit a certain saturation point on demand.”

Investors Expect Tesla Earnings to Increase in Second Quarter

Barron’s reported that investors expect Tesla to earn about $2.7 billion in operating profit from $24.8 billion in sales, compared with the $2.7 billion in profit from $23.3 billion of sales in the previous quarter.

The second-quarter estimates are not much different, especially since Tesla delivered more than 466,000 vehicles in the second quarter, up from about 423,000 in the first.

Investors told Barron’s that Tesla’s operating profit margins in the last quarter will still be around 11 percent, a slight dip from the first quarter.

The EV manufacturer’s operating profit margins already fell short of expectations for the first quarter, which caused shares to plunge almost 10 percent after earnings were reported on April 19.

“This should be the low point of auto margin, but commentary about future price cuts versus benefits to margin will be key,” wrote Baird analyst Ben Kallo on July 17 regarding the second-quarter report.

“Margin tailwinds should trump additional price adjustments.”

Tesla stock has gone up since falling earlier this year, led by rising deliveries, its deal with rival automakers to make its supercharging network the de-facto standard for powering EVs, and the final release of the Cybertruck.

Reuters contributed to this report.