Tesla’s Botched CyberTruck Launch (NASDAQ:TSLA)

Four years ago, supposedly over one million people placed $100 refundable deposits on the Tesla (NASDAQ:TSLA) CyberTruck, in the belief that it would buy them a place closer to the front of the line to take delivery by the end of 2021. Now we learn that it may all have been in vain.

Tesla’s product launches used to be dramatically better than this. Let’s take a trip through memory lane:

2012: Model S

This was epic for no other reason than it was the first product from Tesla’s own factory, which it had effectively been given in exchange for a minor investment from Toyota (TM). The Model S was also – by far – the first product of its kind: An attractive and practical long-range battery-electric vehicle (BEV). It had 265 miles of range, fit five adults and potentially two kids, but without the two kids, it had a huge and practical trunk. It took several years for the competition to match most of its specs.

2015: Model X

This X had all sorts of problems because of its overly complicated doors, and the quality issues stemming from that part alone took years to resolve. It’s a model Tesla surely wished it had done differently. However, the product launch itself was of some interest. I attended the event, and Elon Musk was in fine form. It was a great show.

2016: Model 3

The whole Model 3 situation was masterful. It was Tesla at its peak. The first non-premium priced Tesla opened up a whole new market. This is when Musk was fighting for the company’s survival.

2020: Model Y

The Y was the single most obvious of all Tesla models, because it was right in the center of the market, and the most natural one to make at that point. Tesla did its job, and Musk didn’t have to do much in terms of showmanship. The car sold itself. It remains the bestseller today and likely will continue to do so for at least another two or three years.

2023: CyberTruck

Let’s start with the name: I find it so childish. The delivery event got off to a catastrophic start when Chief Designer Franz von Holzhausen threw what looked like a baseball at the truck. In 2019, he had thrown a steel ball and the window cracked — twice. Why repeat it now with a measly baseball? Maybe it’s just me, but that seemed like cheating. He looked so extremely sheepish when throwing the baseball, as if he really didn’t want to be there.

That brings us to the other “macho” claim, the bulletproof situation. As Tesla had shown before, they claim that the CyberTruck is bulletproof. They showed a picture of a guy firing a submachine gun at the CyberTruck. There was no independent verification of either the gun, ammunition or the vehicle’s fidelity to the production version. This time, Elon repeated the claim that it’s bulletproof. I can’t wait to watch a third-party person take a stock CyberTruck and put this bulletproof claim to the test. Tesla had better be sure that there is no hole in their claim.

The Big One: Reservations

Fanboys don’t like it when they get treated poorly. Four years ago, an alleged million or more piled into the CyberTruck production line to the tune of $100 per “refundable deposit” thinking that it meant something important in terms of getting ahead. Now, you can all go to Tesla.com and try to order a CyberTruck, and it says “You will be invited when your CyberTruck is ready to be configured. Due today: $250”

So basically, the $100 you put down four years ago may have meant nothing. It sure seems that all that happens at this point is that you put down another $250, and then you may be somewhere in line, invisibly and without transparency, to one day be allowed to order your CyberTruck. Talk about a bait-and-switch! This is hugely disappointing. Are you now ahead of where you were in 2019? Behind? When am I getting my truck? 2024, 2025 or later?

The CyberTruck as a Design Fad

I appreciate the original design of the CyberTruck, and I like some aspects of it, especially the front profile. It sure makes a design statement, sort of like when the Soviets and Cubans invaded in Red Dawn (Patrick Swayze, 1984).

If I were guaranteed to be the only one owning a CyberTruck within a radius of five zip codes, it would have value as being the area original. It would be parked in front of the main entrance at the country club.

The problem arises when I’m no longer the only person with a CyberTruck in my home area. It would be highly un-funny if another person showed up with one, parking next to me. The line between “cool” and “douche” is extremely thin here. I would be disappointed. The other owner would be disappointed. And everyone around us would look at us and say, “Wow, what a bunch of douches.”

As such, the CyberTruck could go from “hot” to “not” in a record-short time. Once you have seen it a few times, it’s not funny anymore. It’s like coming up with the most extreme and unusual Halloween outfit, and then finding out that someone else has copied it. Well, then it’s just not interesting anymore. Not funny at all.

As a result, I estimate that after the initial sugar rush of attention for the first owners, sometime in 2024 the CyberTruck will fade from “cool” to “douche” faster than a jetliner falling to the ground if its wings come off. Maybe it can find a second career as a riot control vehicle in The Middle East or Hong Kong.

Price and Range: Not What Was Promised

When the CyberTruck was unveiled in December 2019, the base price was supposed to be $40,000 and the range was going to be 500 miles – without any range-extender (an extra battery taking up one-third of the bed). Well, in the end, what is now being delivered is a $61,000+ truck with 320 miles of range.

It looks like the price of the range-extender is $16,000.

The range extender looks like this.

No word on the weight of this contraption. Is it nearly a thousand pounds? Can you remove it with a forklift?

One argument for the 50% higher price is that there has been inflation. Of course, there has! However, the CyberTruck is two years delayed – it was supposed to be available near the end of 2021 – and therefore, it’s reasonable to give Tesla a total of roughly 15% slack here (7.5% per year).

On this basis, the CyberTruck price should have been $46,000 (up from $40,000), but not $61,000. More expensive variants start at $80,000 and they also saw similar price increases.

The Market for All-Electric Pickup Trucks: Small

Rivian (RIVN) was the first to market with an all-electric pickup truck. Then came Ford (F). General Motors (GM) joined with the expensive GMC Hummer, and followed with a less expensive Chevrolet version. A GMC version will follow soon. Ram (STLA) will enter the market in various stages between late 2024 and late 2025.

The sales numbers for Rivian and Ford F-150 all-electric are modest, to say the least. The GMC Hummer has sold only in tiny numbers, and the Chevrolet Silverado is so new that we don’t have meaningful data yet, as it began sales in late September.

Clearly, the Tesla has the ability to sell more than all of those others, to its most fanatical cult members. But how many more? And how sustainable will those initial sales levels be? What will be the second-hand prices in a couple of years when the CyberTruck fad has faded? The answers to all of these questions are not good.

Musk and Tesla have at various points talked about an initial 250,000 a year production capacity, going to 500,000. Clearly, there will be an initial back-order fill that could exceed 100,000 units. However, after that, in years 3, 4, 5, et cetera, will the demand persist? Or will sales sink to well below 100,000 units per year?

CyberTruck Unlikely to Help Tesla Profits or the Stock

At this point, I am skeptical that the CyberTruck will be able to contribute to long-term sustainable profitability for Tesla. Earnings estimates for Tesla fell dramatically throughout 2023, and so far I don’t see an end to the downward revisions for 2024. In a normal and sane word, that usually leads to a falling stock price. Look out below.