Tesla Cybertruck launch, price cuts in focus for Q2 earnings

The highly anticipated Cybertruck pickup will be a likely focus of Tesla Inc.'s second-quarter earnings call with investors Wednesday after the automaker announced the start of production over the weekend.

But Wall Street is also watching Tesla's bottom line after the EV maker slashed prices for its current models and reduced its industry-leading profits. The company's net income fell 24 percent to $2.51 billion in the first quarter compared with the same period last year.

Tesla will post its second-quarter financial results after the market close on Wednesday, the company said, followed by the earnings call with a question-and-answer session. Tesla CEO Elon Musk is expected to be on the call.

"This is a company that's still in the early innings of finding its potential," Daniel Ives, managing director at Wedbush Securities, said on CNBC last week. Ives expects a positive earnings report despite margin pressure. He considers Tesla a tech company.

But Gordon Johnson, head of GLJ Research, said Tesla's deep price cuts are a red flag for investors.

"You're talking about a company now that's going to see gross margins drop from roughly 27 percent in Q2 of last year to roughly 16 percent in Q2 of this year," he said on CNBC. Johnson considers Tesla an overpriced automotive company.

Among questions submitted by investors for consideration on the earnings call: "When will you get more information about our Cybertruck orders? Estimated delivery schedules, pricing and specifications?"

Musk commented briefly on the start of Cybertruck production at the company's Texas factory, which was announced on Tesla's Twitter account Saturday.

"Congrats Tesla Team!" Musk wrote on the platform, which he bought last year.

In April, on Tesla's first-quarter earnings call, Musk said the automaker is likely to deliver the first Cybertrucks to customers at the end of the third quarter but that volume production would not be reached until next year. He said he expects annual sales to be between 250,000 and 500,000 pickups.

But Tesla has not updated pricing plans for the Cybertruck since its reveal in 2019, and some reservation holders are braced for sticker shock, according to their social media posts.

At its reveal, Tesla quoted a base starting price of $39,900, excluding shipping, for a single-motor version with 250 miles of range. The top trim level, with three motors and 500 miles of range, was to start at $69,900 before shipping, Tesla said.

Since that 2019 event, Musk has suggested that Cybertruck prices would likely rise because of higher costs. Tesla removed official pricing from its website in 2021. An informal online tracker of reservations, which require only a $100 refundable deposit, puts the number of preorders at more than 1 million. Tesla has not given an official figure.

The Cybertruck is the EV maker's sixth model, including the original roadster that launched the brand, and the first new nameplate since the debut of the Model Y compact crossover in 2020.

Competition includes the Rivian R1T, which starts at $74,800 including shipping. The R1T is smaller than the Cybertruck; both are considered lifestyle pickups rather than work trucks.

Investor questions about Cybertruck pricing come after Tesla slashed stickers for its current four vehicles — the Model 3 sedan, Model Y crossover, Model S sedan and Model X crossover. The company said this month it posted record global sales in the second quarter following the price cuts, delivering 466,140 vehicles.

Another question submitted by investors for the conference call asks whether Tesla's automotive gross margins have stabilized or even improved as the company reduces production costs.

Tesla reported a total gross margin of 19.3 percent for the first quarter, compared with market expectations of 22.4 percent, Reuters said, while for the second quarter, Wall Street expects total gross margin to dip to 18.6 percent.

The automaker's strategy of cutting prices to maintain growth in the global EV market has not hurt its stock price, which has more than doubled since the start of the year. Tesla first cut prices in January.

A top question submitted for the earnings call asks whether Tesla's Supercharger network will grow fast enough to avoid congestion now that the EV maker has reached agreements to open the network with other automakers. Ford, General Motors, Rivian and others will be able to access the majority of Tesla's Superchargers starting in spring 2024.

Investors are also interested in hearing about progress on Tesla's future manufacturing plant in Mexico and about the company's advanced driver-assistance software, which Tesla calls Full Self Driving. Tesla is working toward autonomous vehicle operation but the Full Self Driving feature still requires a human driver to be in control at all times.

Shares in Tesla rose 3.2 percent to close Monday at $290.38.