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.