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Tesla brags it's the most profitable car company while Elon Musk says Cybertruck price has to rise

The Cybertruck will have to cost more (image: Tesla)
The Cybertruck will have to cost more (image: Tesla)
Tesla is operating at the highest profit margins in the industry, its own shareholder meeting charts revealed, at close to 15%, followed by BMW and Mercedes. Nevertheless, Elon Musk said that Tesla will have to release the Cybertruck at a higher price due to component inflation.

Speaking before an annual shareholder meeting in Texas, Elon Musk said that parts and materials inflation may be abating, but Tesla would still have to raise the Cybertruck's pricing for its release in 2023. The Cybertruck debuted at a sub-US$40,000 base price which can only be dreamt of in today's environment of rampant inflation and supply chain challenges.

While noting that Tesla's procurement department has started to forecast a downward trend in the price of some raw materials that go into its electric cars, and that "we are past peak inflation,” Elon Musk said the Cybetruck's price would still have to be higher next year when it launches:

Cybertruck pricing, it was unveiled in 2019, and the reservation was $99. A lot has changed since then, so the specs and the pricing will be different. I hate to give sort of a little bit of bad news. But I think there’s no way to sort of anticipate the inflation that we’ve seen and the various issues. But what I can say is that the Cybertruck will be one helluva product. It’s going to be like a damn fine machine.

Recently, an aerodynamics engineer put the updated Cybertruck design through a drag coefficient simulation and concluded that Tesla has done a pretty good job given the angular chopped-with-ax design of its electric pickup truck. While Rivian's R1T aerodynamics remain unbeatable, its form is a bit more orthodox compared to the Cybertruck, too. As other examples of updates specs, Tesla is waiting on the mass production start of the 4680 cells that will be used by the Cybertruck's battery, too.

Thus, if Tesla wants to keep its profit margins, which Ford's CEO said are the envy of the car industry, it will most likely have to start the Cybertruck price from closer to US$50,000 rather than the original forty grand. Virtually all of its models underwent significant price hikes in the span of just a couple of quarters to compensate for the rising price of raw materials, batteries, and the general shortage of components, so the Cybertruck won't be an exception.

Elon Musk himself noted that Tesla's car prices are already at "embarrassing" levels not long ago, but was careful to add that the world's largest EV maker will lower them only if it sees inflation on a sustainable downwards path. "I think inflation is going to drop rapidly," he now said at the Texas shareholder meeting, as "most of our commodities, most of the things that go into a Tesla - not all, but more than half - the prices are trending down in six months."

It remains to be seen if Tesla will follow the trajectory and start lowering the Model 3 or Model Y price after those six months, but in the meantime Elon Musk couldn't help but brag with Tesla's profit chart. At close to the whopping 15% operating margin, Tesla is now the most profitable carmaker, followed by some premium German brands like BMW or Mercedes, and it apparently intends to stay that way with the Cybertruck release, too.

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Tesla bragged with the industry's highest profit margins
Tesla bragged with the industry's highest profit margins

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> Notebook / Laptop Reviews and News > News > News Archive > Newsarchive 2022 08 > Tesla brags it's the most profitable car company while Elon Musk says Cybertruck price has to rise
Daniel Zlatev, 2022-08- 5 (Update: 2022-08- 7)