Do Tesla’s (TSLA) Cybertruck Discounts Put Margins at Risk?

Tesla (TSLA) has slashed Cybertruck prices, offering one of its steepest discounts yet to attract buyers amid sluggish demand.

While the aggressive price cuts are great news for prospective buyers, they raise a critical question for investors: how much pressure will this put on Tesla’s already scrutinized profit margins? As demand signals soften and competition in the EV market intensifies, the move could reflect deeper challenges behind the scenes.

Great for Buyers

Through the end of June, Tesla is offering 0% APR financing on new Cybertruck purchases. However, this offer is only for buyers who also opt for the $8,000 Full Self-Driving (FSD) package. The limited-time offer was announced via the official Cybertruck account on X, highlighting that the interest-free financing applies over a full 60-month term.

According to EV news website Electrek, the value of this incentive effectively amounts to roughly $10,000 in savings for qualified buyers. For instance, one Cyberbeast demo unit, with 479 miles on the odometer, is listed at $94,940 after a $10,550 discount. Factoring in the $7,500 federal tax credit, the effective purchase price drops further to $87,440.

Trouble for TSLA Investors?

Tesla’s Cybertruck debut sparked widespread excitement, thanks to its bold, unconventional design and promises of full off-road capability. But the initial hype has faded. Since its launch, the vehicle has encountered significant roadblocks, including production constraints, lukewarm demand, and quality issues. All these have not only slowed sales but also eroded its perceived value in the market. In the first quarter of 2025, the company reported a sharp decline in vehicle sales across its lineup.

Tesla’s latest price cut signals persistent demand challenges for the Cybertruck, reinforcing concerns over its sluggish sales trajectory. While the discounts may be appealing to buyers, ongoing quality issues surrounding the vehicle cast doubt on whether these offers will meaningfully boost demand.

Additionally, such aggressive pricing strategies could further compress profit margins and add pressure to Tesla’s stock. This marks a growing concern for investors who are already uneasy about the declining sales momentum. Notably, Tesla’s Q1 2025 gross margin came in at 16.3%, marking a 1.1 percentage point drop year-over-year and remaining unchanged from the previous quarter.

The bigger concern lies in its operating margin, which plunged to just 2.1%, casting serious doubt on the company’s profitability story.

Outlook for Tesla Stock?

Overall, Cybertruck’s ongoing struggles could drag on Tesla’s stock performance and deepen investor skepticism about the company’s growth outlook. According to TipRanks, TSLA stock has received a Hold consensus rating, with 14 Buys, 12 Holds, and nine Sells assigned in the last three months. The average Tesla stock price target is $286.14, suggesting a potential downside of 12% from the current level.

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