Inventory Build Up and Future Pricing

[PungoteagueDave]

I think we can all agree that Cybertrucks would sell better if prices dropped by $15K or $20K. But this is not going to happen.

For one thing, Tesla is currently taking orders for the "low-priced" RWD Cybertruck, which costs $70K (or $62.5K after the $7.5K federal tax credit). The first RWD deliveries are currently scheduled for July-August. If the AWD Cybertruck (currently starting at $80K) was discounted tomorrow by $15K or $20K, it would be priced lower than the forthcoming RWD Cybertruck, which would make no sense.

It's clear that Tesla overproduced Cybertrucks last year, which is why they still have 2024s (including Foundation Series) in inventory. My guess is that the inventory situation will gradually improve, but not because of price cuts to stimulate demand -- instead, Tesla will cut production and reduce supply. Tesla should release the 2Q 2025 production numbers on July 2, so we should find out then if production is down.

Another factor that could help to clear Cybertruck inventory this year is the (probable) loss of the $7.5K federal tax credit. In the long run, of course, this is bad news for the sales of Cybertrucks (and other EVs). But in the short run, some people will rush to buy in 2025, so they can save $7.5K before the tax credit goes poof.

Bottom line: it's certainly possible that we could see some end-of-quarter incentives on Cybertrucks in June 2025, like the 1.99% APR financing deal that was offered in March. But I don't expect to see any new discounts. The inventory situation will gradually improve, even without discounts, as Tesla cuts back on production.

We have a historical precedent regarding what will occur when Tesla loses all access to tax credits at the end of this year, assuming the current version of the tax law is enacted, probably likely with respect to EV tax credits.

Tesla lost tax credits beginning in the second quarter of 2019, which is when its sales surpassed the former 200k cumulative per-manufacturer EV sales figure that caused tax credits to end. I purchased a 2019 MX in September 2019 and received a half-credit of $3,750 on that year's tax return. By the end of 2019 the tax credit was entirely phased out for Tesla. The response? Tesla immediately reduced the price for all models by $7,500.

That's what will likely occur this time. The $62k base model 2wd CT will become $55k MSRP. There will still be two problems for Tesla at that point. First, at that price point it is likely that there will be a flat or negative sales margin, something Tesla has never been willing to accept in it's history. And it's not as though this can be made up by increasing sales volumes.

Second, there are still plenty of full size pickup trucks selling for well under $40k for work and industrial use. I just paid $38k for a new 2025 basic gasoline-powered F250 for our aquaculture farm.

For Tesla's CT to become competitive in the broader truck market, it would have to do things to remove costs that may not be possible with the base CT format and cost structure. The battery format and cast aluminum frame structures are game-changing in some respects, but the are so expensive that this only works for higher-priced trucks.

The basic modular cab-and-bed-on-steel-frame truck format is still the most versatile and economical for the 80% of pickups that are sold to government, fleets, and contractors. Tesla has no answer for that huge demand sector at this point, despite having initially targeted the average truck market.

There was no way to meet both the CT design objectives and the average price levels for utility pickup trucks. I refer to this as the Rivian Conundrum, a trapbtyat I was quite surprised to see Tesla fall into given its historical profit discipline. There was clearly some hubris, and Tesla was ultimately forced into compromises all along the way, hence the delays in initial CT deliveries, and eventual inability to meet many of its targets, culminating in last month's decision to abandon the range extender project and the loss of AP from the promised feature set. Reality is a b*tch.

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[PungoteagueDave]

According to Tesla, their "Current Installed Annual Vehicle Capacities" in North America are as follows:

100,000 Models S/X in Fremont
>550,000 Models 3/Y in Fremont
>250,000 Model Y in Austin
>125,000 Cybertruck in Austin

Add those up, and the total capacity for North America is >1,025,000 units. But the use of the ">" symbol shows that these are lowball figures; the actual capacity is higher. The analysts think that Tesla actually could produce around 1,300,000 to 1,400,000 units annually with the existing US facilities, if demand was there.

In 2024, Tesla sold an estimated 633,762 vehicles in the US. Add another 10% for Canada, and let's call it 700,000. That's well below US production capacity, whether you use Tesla's lowball numbers or the higher analyst estimates. The analyst estimates imply that Tesla was only using around 50-55% of production capacity in 2024. And so far, 2025 is not looking better.

In March, Elon announced that Tesla would double its US vehicle production over the next two years, as "an act of faith in America". That may sound bold, but it doesn't actually mean new factories, or major expansions of the existing factories. Tesla could double production simply by boosting the factory utilization rate, from around 50% to 100%.

I don't actually expect Tesla to double US production in two years, because I doubt that demand for Teslas will double. But I will acknowledge that it's theoretically possible, given the surplus production capacity.

Yeah, I remember when the fanbois chortled about production constraints and theoretically unlimited demand levers. It was never true, even in the early days when shipments were small and the Fremont factory was being ramped up. Even in the first year of MS delivery, 2012, it was possible to order a standard S and take delivery within 60 days. I did it with my first MS.

There were always claims of supply constraints but it was pure Tesla marketing, akin to the million+ preorder list for the CT. It was always BS.

I've owned six Teslas, all purchased new, the first four during the periods of claimed production constraints, all delivered withing 6 weeks of order. They basically begged us to take the last two in March even though the MY was a brand new model iteration and theoretically limited supply.

You can now purchase any model Tesla from inventory, any color, any iteration, right now, delivery today. That's not true for a lot of auto manufacturers with high-demand models, such as several of Honda's hybrid models.

This will be an interesting year for Tesla, one of transition into a matured market for EVs. That market is bouncing up against the limits of overall acceptance for the format, as well as headwinds from political change and reduced conceptual support from over-hyped (hysterical?) green thinking, translated into stupid tax credits.

Starting in 2026 EVs will need to stand on their own merits, without government artificially picking winners and losers. That was always Elon's goal for Tesla and the EV market, so mission accomplished there. He’s on the record supporting the elimination of EV subsidies at this stage. It’s no surprise that GM is transitioning one of its planned EV plants back to producing a new generation of V-8 engines. The market gets what buyers actually want when government interference is eliminated.

 

[PungoteagueDave]

So where are these cheaply available second hand Cybertrucks I keep hearing about?
Go look for one at the price Tesla is offering for trade in. I challenge you to find even one.
No. They are still about 70-75k used.

And they will never sell at that pricing now that brand new CTs can be had for less. There’s a very wide bid/ask differential right now because so many owners, including dealers, are in denial on what’s happened with the CT. At some point the dam will break. We are already seeing it in Tesla and CarMax trade/purchase offers. Meanwhile a lot of inventory sits with “hope” asking prices, looking for the greater fool.

That ‘23 or ‘24 $130k Foundation Cyberbeast is really worth $60k in the used market, and in reality would still be avoided by a knowledgeable purchaser who understands how much better the new builds have become.

 

[TCybertruck]

And they will never sell at that pricing now that brand new CTs can be had for less. There’s a very wide bid/ask differential right now because so many owners, including dealers, are in denial on what’s happened with the CT. At some point the dam will break. We are already seeing it in Tesla and CarMax trade/purchase offers. Meanwhile a lot of inventory sits with “hope” asking prices, looking for the greater fool.

That ‘23 or ‘24 $130k Foundation Cyberbeast is really worth $60k in the used market, and in reality would still be avoided by a knowledgeable purchaser who understands how much better the new builds have become.

60k for a FS CB is not realistic, that’s way low. I’ve seen two sell for 89k & 93k in the last week.

 

[PaulWantsACyberTruck]

I read somewhere that the Austin plant is running at 30% of capacity. Tesla has significantly cut back on CT production at the plant due to demand.

Wish there was some way to determine why cybertruck sales are lagging. I am certain cost is one factor, and likely auto insurance costs another, but beyond that I don't insight into other factors.

I do still feel firm in the belief if prices were to drop and thus overall cost of ownership it would do far better.

 

[PaulWantsACyberTruck]

So where are these cheaply available second hand Cybertrucks I keep hearing about?
Go look for one at the price Tesla is offering for trade in. I challenge you to find even one.
No. They are still about 70-75k used.

That's exactly what I've seen practically everywhere and what fool would pay higher for used than new.

 

[BlueLightning]

With the increasing number of cybertrucks piling up on dealership lots, how likely will we see incentives, reduced finance rates and any other discounts for the truck over the next year?

My feeling is that if the price were reduced between 15k and 20k they'd move off the lot faster because these are popular vehicles everywhere.

I have been waiting over five years for the $69,990 Tri Motor.

Any facts or speculation on when prices will really drop with all this unsold inventory?

New problems:

Storage!

Old problems:

Yes who knows why so many were made?

Speculate that Tesla usually operated in backlog, five ordered, three made.

Assume for some reason this wasn’t followed with the CT?

Few possible reason why they were not sold!

1. Overpriced.
2. ICE truck owners didn’t buy the hype.
3. Only current Tesla owners initially jumped.
4. D.O.G.E.

 

[Beetlebug62]

Well, we'll see soon, what Elon does with inventory pricing now that we've hit June, the last month of the 2nd quarter.

As for the Austin factory, they seem to have been making castings for the Robotaxi, which I haven't seen anyone mention.

 

[James Cole]

When does the end of quarter incentives normally kick in?

 

[XyberTruck1]

I believe it was March 5th last quarter when 1.99 was announced

 

[PungoteagueDave]

60k for a FS CB is not realistic, that’s way low. I’ve seen two sell for 89k & 93k in the last week.

Greater fools. You’d have to be an idiot to pay over $70k for any used CT at this point. A brand new CT costs about $72k and is way better made than any FS truck.

 

[PungoteagueDave]

60k for a FS CB is not realistic, that’s way low. I’ve seen two sell for 89k & 93k in the last week.

Tesla’s current offer on trade for ‘24 FS is $65k. Just last week when they began accepting them for trades again. And it’s still too high.

 

[PungoteagueDave]

 

[YDR37]

By the end of 2019 the tax credit was entirely phased out for Tesla. The response? Tesla immediately reduced the price for all models by $7,500.

That's what will likely occur this time. The $62k base model 2wd CT will become $55k MSRP

The base model RWD Cybertruck, which is scheduled for delivery in July-August, is currently priced at $69,990, which then becomes $62,490 after the $7,500 tax credit. So if the tax credit goes away, and Tesla reduces the price to compensate, the new RWD CT price will be $62,490 (not "$55k MSRP").

Similarly, the AWD Cybertruck starts at $79,990, which then becomes $72,490 after the tax credit. So if the tax credit goes away, and Tesla reduces the price to compensate, the new AWD CT price will be $72,490.

Cyberbeasts, which start at $99,990, wouldn't be affected by the loss of the tax credit, because vehicles priced above $80,000 aren't eligible for it anyway.

I wouldn't necessarily asssume that Tesla will reduce prices by $7,500 if the tax credit goes away. They may have done this in the past, but there was historically a lot less competition in the EV sector, and Tesla's profit margins were a lot fatter.

In fact, it's not clear that Tesla is making any significant profits from current CT models. Tesla did announce that the CT was profitable in 3Q 2024, but at that time, all CTs sold were "Foundation Series" with a $20,000 markup.

To bring the RWD CT to market at $69,990 (before tax credit), Tesla had to strip out a lot of desirable features (including the adjustable suspension, power tonneau cover, bed outlets, premium interior, extra speakers, ventilated seats, and rear display). This implies that it was difficult to meet that price point, which further implies that a further $7,500 price cut (which would be more than 10%) is unlikely.

 

[YDR37]

The $62k base model 2wd CT will become $55k MSRP

We don't need to use to use the term "MSRP" ("Manufacturer's Suggested Retail Price") when it comes to Teslas.

Most manufacturers sell vehicles on a wholesale basis to dealers, who then mark up the price for retail sale to consumers. The manufacturer can "suggest" an appropriate retail price, but the dealers make the final pricing decisions. Dealers sometimes charge more than the MSRP for a model in high demand -- or they may discount below the MSRP to get rid of a model that isn't moving.

Tesla sells directly to consumers, without a dealer as "middleman". All Tesla stores are owned by Tesla. So Tesla doesn't "suggest" a retail price -- Tesla HQ tells their stores exactly what the retail price is going to be.

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