Cybertruck Misses Core Truck Buyer, But Still An Incremental Positive
Cybertruck is two years away but will eventually be additive to overall Tesla unit sales, given it appeals to two sub-segments of the pickup and SUV markets. That said, the product misses the core truck buyer. Our takeaways:
- The Cybertruck’s broken glass demo will capture headlines, but it’s not the real story. The episode captures an important piece of Tesla’s culture: a willingness to take risks in order to change the status quo — and Musk’s spontaneous media approach (i.e. Twitter) backfiring.
- Pricing is less than we anticipated, starting at $40k for the 2WD option. The 4WD with full self driving version is priced at $57k. We expect the average selling price with add-ons will be closer to $55k.
- The product ships late in 2021, and production will ramp in 2022. By 2023, we believe Cybertruck could account for 5% of all Tesla units, or about 30k deliveries.
- The product is a striking departure from the company’s design language and will likely appeal to a small segment of truck buyers along with a small segment of SUV buyers. Over the next few years, traditional pickup-buying contractors may resist Cybertruck’s design.
- Cybertruck misses the sweet spot of the truck market, which accounts for 18% of cars sold in the US and 6% globally. There are about 90m vehicles (cars and light trucks) sold globally on an annual basis.
- The $100 pre-order deposit is less than Model Y’s $2,500 deposit (initial deliveries in late summer of 2020), and a sign that the Cybertruck reveal was not intended to generate cash from reservations. This is a directionally positive read on the company’s cash position, which is about $5B.