Four years after it was first announced, Tesla’s much-anticipated Cybertruck was released.
This launch is a historical moment for Tesla and its CEO Elon Musk, since the Cybertruck is the company’s first completely new vehicle in three years, and represents the company’s first move into the lucrative but highly competitive pickup trucks market.
It is the perfect vehicle for anyone who wishes to stand out, and it is good for Tesla’s brand, which is built on high-tech and futuristic flourishes. What better product to promote the brand than the Cybertruck?
But, the Cybertruck looks nothing like the popular pickup trucks in the market, leading many to question its purpose and target audience.
Some see it as Musk’s vanity project, and as Tesla fights to keep its place as the leader in a rapidly growing market, a vanity project is the last thing it needs.
Even though Musk boasted that the Cybertruck launch would be the biggest product launch of anything in the world this year, investors found the chaotic launch event disappointing. Still, despite the criticism, the Cybertruck does not appear to be lacking in enthusiasts, with 2 million pre-orders.
This raises the question: Is Cybertruck an innovation that will transform the industry? Or will it be an overpriced flop?
The launch
Tesla held an event to celebrate the Cybertruck’s release at its factory in Austin, Texas. The first 10 Cybertrucks were delivered to customers during the event, meaning 2024 will be the first full production year.
This launch is a big deal for Tesla since the Cybertruck is the company’s first truck, allowing it to expand and compete with pickup trucks from companies like Ford and General Motors.
But, with its stainless steel body and sharp design, the Cybertruck is nothing like pickups from Ford and General Motors that dominate the market. In fact, this unusual design was the main driver behind the Cybertruck’s delays in the first place.
For example, the use of stainless steel in its design, instead of the lighter steel or aluminum typically used in cars and trucks, caused various production issues. Additionally, the truck’s weight made achieving an adequate battery range difficult.
He also said that Tesla could only produce the trucks on a large scale by 2025 and acknowledged the reason for this is the truck’s different design.
Along with that, investors and fans alike weren’t optimistic when Tesla’s CEO Elon Musk warned them that the company may not be able to manufacture the truck in large numbers until 2025.
But now, most of these hurdles are out of the way, and the Cybertruck could be just what Tesla needs to stop its strategy of cutting prices and reducing profit margins in order to preserve market share.
The Tesla Cybertruck will be available in three variants: Rear-wheel drive, all-wheel drive, and cyberbeast. They will go for $60,990, $79,990, and $99,990, respectively, all without including taxes and incentives.
While high prices are to be expected since Tesla vehicles are more premium products, they were hard to justify when the battery range was revealed.
Fans who anticipated the Cybertruck were disappointed by its battery range. The Cybertruck’s first variant has a small 250-mile range. And the $100,000 Cyberbeast has a range of just 320 miles.
That’s just over half of what Musk initially promised in 2019. At the time, he promised a top trim tri-motor variant with a 500-mile range for just $69,900.
The problems with Cybertruck
Tesla is lucky enough to have a reported 2 million reservations for the Cybertruck, with a five-year waiting list. But there is no guarantee that $100-$150 refundable preorders will actually translate into sales.
Another turnoff is the truck’s unusual design. It slowed production and might do the same to the truck’s sales.
This is because the Cybertruck is unlikely to have as much appeal to the traditional customers or corporate operators who use the services of pickup trucks. Nor is the model likely to be practical or affordable for small business owners.
Some businesses buy pickup trucks without cargo beds in order to install specialized boxes or platforms matching their needs. With the way Cybertruck is designed, this will be impossible.
Also, when many fans expressed their disappointment with the Cybertruck’s battery range, Tesla came up with the awkward solution of offering customers a separate battery pack that could push the top trim’s range to 440 miles. Still, the pack takes up a large portion of the truck’s already small cargo bed, which again disconnected the Cybertruck from its pickup truck image.
This begs the question, what kind of customer is Tesla looking for for its Cybertruck?
Since it’s so different from the typical pickup truck, we can probably say that Tesla is looking to sell the trucks as luxury vehicles. It is likely that Cybertruck’s first customers will be collectors, technology enthusiasts, people who want a vehicle that will help them stand out, and Tesla’s hardcore fans looking to buy the newest thing.
Even if Tesla’s first truck isn’t right for businesses, Americans aren’t strangers to buying pickup trucks as luxury vehicles. Many affluent Americans buy Ford F-150s with 18-speaker sound systems and heated steering wheels for vanity reasons, and this could be the same for the Cybertruck.
Perhaps Cybertruck’s lack of appeal to businesses is a relief to traditional automakers like Ford and General Motors, who make a lot of money selling their pickup trucks to businesses. For instance, about one-fifth of the F-150s that Ford sells go to business or government customers.
Most of the money Ford’s pickup trucks make comes from selling the trucks to businesses and organizations. Ford’s division selling electric pickups to normal customers has lost money. This could open an opportunity for Tesla.
However, the delays could negatively impact Cybertruck’s potential since electric pickups have been available since late 2021, courtesy of the young electric vehicle company Rivian. Ford began selling its electric pickup, the F-150 Lightning, in 2022, followed by General Motors’ electric version of its Silverado pickup this year.
So, it seems like Tesla is two years late to the party. And it isn’t helped by the small share electric pickups occupy in the electric vehicle market, only 3% in the first nine months of 2023. Adding to this point, just 2% of all pickups sold in the United States this year were electric.
But this doesn’t discourage Musk, who claimed in a recent interview a day before the launch that the Cybertruck’s launch will be the biggest product launch of anything by far on Earth this year.
This was strange since just last month Musk said that Tesla dug its own grave with the Cybertruck.
He attempted to temper investors’ expectations for the Cybertruck and warned them that it could take up to 18 months to make a profit. But, this is expected from a new special product like the Cybertruck, which Musk called very difficult to bring to the market and to reach volume.
Additionally, the truck has already taken a lot out of Tesla’s earnings during its manufacturing, as the company’s operating expenses increased by 43% year-over-year.
What the Cybertruck is good for
So, the Cybertruck took a heavy toll on Tesla’s costs, and isn’t expected to make money in the short term; what could it possibly be good for?
The Cybertruck is everything the Tesla brand stands for, it looks like something from another era. And the brand can be helped significantly by that.
Tesla’s tech-loving fans and early adopters of the Cybertruck will sing its praises, which could translate into more sales for the truck as the fans function as Tesla’s de-facto marketing department.
Even though Tesla’s financial success is attributed to simpler vehicles like the Model 3 and Y, a huge part of the company is built on high-tech flourishes that have attracted customers and investors for a really long time.
This high-tech aspect is what causes people to go view Cybertrucks displayed in Tesla stores. A lot of people find its unusual design a good selling point because it could get people interested in the truck and engage with it when they see it.
Just like with the Cybertruck, people were saying that the Tesla Model Y would fail in 2020, stating many reasons that are the same as reasons people are using to say the Cybertruck will fail, but the Model Y didn’t fail and ended up becoming the best-selling car globally in 2023.
When Model Y launched in 2020, it had a positive impact on Tesla’s entire lineup, because it led to a substantial increase in volume growth from 36% in 2020 to 87% in 2021, resulting in a seven-fold surge in Tesla’s stock.
It isn’t impossible for the Cybertruck to do the same, but only if Tesla ramps up its production volume.
This opinion is shared by Tesla investor and Future Fund Managing Partner, Gary Black, who went on X to express his belief that critics are underestimating the Cybertruck’s potential to expand Tesla’s Total Addressable Market, which is the overall revenue opportunity available for a product, to the pickup segment, which accounts for approximately 20% of U.S. vehicles.
He also believes that if Tesla comes out with a new smaller and less expensive version of the Cybertruck that it can export to Europe and Asia in a few years, it can increase its market share against global competitors.
Along with that, he followed up on Tesla’s 2025 production goal of 250,000 Cybertrucks and estimated production volumes of 400,000 and 600,000 for 2026 and 2027 respectively, which would translate into an increase in Tesla’s stock price.
By assuming an average Cybertruck selling price of $60,000, a 20% auto gross margin and a 15% EV tax rate, the Cybertruck reaching its production goals would add $1 to 2027’s EPS, resulting in an extra $40 in future stock price value, and $25 per share in present stock price value.
While this is a bullish opinion, other experts are neutral on Tesla’s stock.
In fact, Goldman Sachs analysts set a neutral $235 price target on Tesla’s stock and said that they believe that the main focus for Tesla right now should be increasing production so it can make good use of the consumer interest in the Cybertruck.
They also called the Cybertruck’s capabilities impressive, with its zero to 60 acceleration that can be achieved in as fast as 2.6 seconds and its towing capacity of up to 11,000 pounds. They believe that it compares well to other EV trucks.
Goldman thinks that Tesla is positioned for long-term growth, but also sees its current valuation as full. Analysts also think that lowering prices to support higher volumes could remain a headwind for Tesla in 2024.
It seems like the Cybertruck’s success rests solely on increasing production. It is generally accepted that not all 2 million pre-orders will translate into actual sales, but even if 15% of this number is delivered at the average price of $60,000, Tesla would have a revenue equal to the annual U.S. truck sales of Toyota from the Cybertruck.
The good news for Tesla is sales for electric pickups are growing faster than the overall auto market, even if the growth has slowed recently. For example, Ford’s F-150 Lightning sales in the first nine months of the year grew by 40%, while sales of Rivian pickups grew by 28%, so it definitely has a chance to establish itself in that market.
Technical Analysis
When looking at the daily chart, we can see that Tesla stock is trading at a bearish trend, as indicated by the downward channel.
As for the indicators, the stock is above the 200, 50, and 21 moving averages, which is a bullish sign. Meanwhile, the RSI is neutral at 54.13, but the MACD is bearish.
Based on this analysis alone, I’d recommend holding the TSLA stock, since the information we’re getting from the chart and the indicators are conflicted.
It’s also important to note that Tesla’s CFO, Vaibhav Taneja, sold 4,000 shares a day before the Cybertruck release for an undisclosed reason. Still, this move has caught the attention of the market nonetheless.
Over the past year, Taneja has sold a total of 41,592 shares and has not made any purchases. This is a consistent trend with Tesla, which saw 41 insider sales and no insider buys over the same timeframe.
Even though insider sales can be a signal of a lack of confidence, they are not always a bad sign. Sometimes large inside shareholders may sell stock to free up cash for personal reasons or diversify investments.
Tesla Stock Forecast
The Cybertruck was given mixed reactions and was both loved and hated. Surely, fans of Tesla and Musk view it as a symbol of what the company stands for creativity and innovation. Others view it as a strange vehicle with no use.
So, which one is it? That depends on Tesla’s ability to navigate production problems and win people over to the truck’s different look.
The stakes are high since Tesla’s profit margins have shrunk due to price cuts aimed at preserving its market share. In other words, the company needs the Cybertruck to succeed in order to maintain its position in the growing EV market.
As for the launch’s impact on TSLA stock, the event has come and gone, and the Cybertruck didn’t have any immediate impact on TSLA stock, but it’s likely that the new truck will help protect the valuation because it adds so much to the brand, even if it isn’t expected to earn profits in the near term.
In other words, the Cybertruck could be more for the long-term, meant to be part of Tesla’s plans for broader future growth.
TSLA stock is volatile and nowhere near a 100% safe investment, but it has proven many critics and Wall Street analysts wrong more than once. TSLA stock has gained more than 1,200% in the last five years, and it’s so far up by 67% this year.
So, it seems that the stock’s long-term potential is intact, and patient investors could receive high rewards in the future.
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