Ok, I admit it, the Cybertruck is getting to me, I am struggling to remain cool, calm
and collected. This vehicle is just so cool. Yes, I believed Tesla could do it, but at
the same time, it is such bad ass vehicle, it almost felt too good to be true, that citizens
could legally own a product just this extreme.
And yes, the stock price is up almost half the entire market cap of Ford just today,
because Tesla was able to make one Cybertruck in Texas. How is that for some perspective?
Is it crazy that the market is pricing in the Cybertruck success that extreme? Talking
of Ford, they also dropped the price of their Lightning by about $10,000, and their stock
is down 5%, despite the Lightning accounting for about 1/3 a percent of Ford's sales, and
about -2% of their earnings. Although after this price drop, perhaps that will be -3%
now.
Is no one ordering a Lightning now, because they believe the Cybertruck is on the way?
Probably. Not that there is anything wrong with the Lightning, except perhaps the price
is a bit too high, and the range too low. Which brings us to the Cybertruck, where will
that slot in to the electric pick up truck market?
Some of you out there think that Tesla has to launch with the most range, beating the
Rivian's 400 miles, and the Cybertruck might come in at, oh I don't know, how about 420
miles of range. And then Tesla can charge whatever they want, even $100,000 and every
single one will sell, and the gross profit margin will be huge when ramped. Yes, that
is one way Tesla can go. But then it looks like another niche product from Tesla that
can join the S and X pile, and not a vehicle for the masses.
I don't think range is going to be what the market is looking for. We all know Tesla can
get as much range as they wanted from this vehicle if they chose. We know they could
pack in 2170s and double layer them and hit 500 miles if necessary. And like I said sell
it for over $100,000. But how will consumers react to that, and what will the headlines
be like? Tesla make another unaffordable electric pick up truck, and dont keep their promises
of it starting at just $40,000.
I think range is not as important, and I think Rivian is superfluous. I think the benchmark
is the F-150 Lightning. And this might be why Ford have just lowered the price. They
don't want Tesla to undercut the Lightning.
The Lightning offers 230 miles of range, and an extended range version with 320 miles.
Using 100 kWh and 130 kWh battery. If Tesla do use 4680 cells, which I am starting to
think might be likely now, if they are aiming for about this level of range. Then I think
with 100 kWh battery Tesla could be around 280 miles, and with 120 kWh battery perhaps
around 340 miles. And I believe there is enough room in that battery pack to enough 4680 cells
for those results.
And I think that there is a good chance the Cybertruck could start at $69,420. Then you
have the tax credit on top of that. Taking it down to about $62,000. This is a great
price for such an incredible car, and there will be plenty of people ready to buy.
I know youre going to say I am wrong, people need more than that for towing, etc. Well
these people might not buy this Cybertruck, and they will wait for a longer range one,
that I think will come out half way through next year. Tesla likely dont have the energy
density yet, 4680 cells are as energy dense as LFP cells, unless the Texas cells have
made a break though and are using silicon, which is a possibility and perhaps being stock
piled for the Cybertruck. But I think Tesla will launch the long range version next year,
when Panasonic's 4680s are in production, that do include silicon.
I mean I hope I am wrong, and Tesla are making more progress on 4680s, and perhaps I am overly
negative about 4680 progress, as it has obviously been a big disappointment, with big promises,
that haven't come anywhere near. But even with Panasonic Tesla could get up to about
150 to 160 kWh battery then, likely without having to double layer the cells. Then we
are probably up to or over the mid 400 mile range.
But my guess is the first Cybertruck to launch will be a dual motor, with about 340 miles
of range, 120 kWh 4680 battery, 0 to 60 in 4.5 seconds, and a price of about $69,000.
The price might be even lower, it might be $60,000, I meant that is still $10,000 more
than Tesla said it would be for the dual motor. And I am guessing $20,000 more, but bear in
mind the initial prices were announced was before so much inflation and the tax credit.
But $60,000 is a possibility, taking it down to a ridiculous $52,500 after tax credits.
Tesla know they can charge whatever they want for the first Cybertrucks, but this isn't
about profits. I mean if they charge $10,000 more for the first 100,000 trucks, then thats
$1b extra gross profit. Which might look good eventually, although margins will be negative
anyway for the first year or so. I think for the stock price, it will look much better
if the price is lower, as that will give the market confidence that Tesla are getting their
costs lower. Remember its all about what the vehicle will eventually cost to build. As
no matter what Tesla charge, eventually when all the early adopters have paid their premium,
the price needs to reset to the market price, in order for it to sell, so that Tesla's demand
meets their supply.
Why not start with a more realistic price, and have a price war with Ford instead. If
Tesla can start taking away from Ford, then that is going to be serious. Not just the
Lightnining of course, but the entire F-150 line including ICE. The Lightning is just
a lightning rod for now, until Tesla starts going deeper and taking on Ford's ICE, their
most profitable line remaining. Ford is in serious trouble here, no wonder they are starting
the price war already. Like I said forget about Rivian, they are just treading water
for the next 2 years until they go bankrupt, and possibly Amazon buys out their electric
van division, if they can even manage to make a decent EV van, which may not be likely either.
Ford will be in serious trouble if F-150 sales start to dwindle, as will GM and Stellantis
with their pick up truck sales too. The Cybertruck is going to be terrifying for them.
Anyway, I think it fairly soon, that Tesla actually do give us these details regarding
range, price, performance, motors, and a whole lot of other features that we have not yet
heard, that are going to blow us away. It's been almost 4 years since the reveal, can
you imagine what Tesla have been working on since.
There is so much exuberance behind this car, the stock price could go crazy, beyond rational,
I am not even sure if this is going to be a sell the news event, the excitement might
continue, I can see it getting to 350, and it could keep sailing. Tesla could announce
something big on top of it all, like Mexico breaking ground, or a gen 3 reveal, and more
excitement will be flooded into the stock. It wont take much for it to see all time highs.
I think it could be this year.
Remember I was the one saying Tesla could hit $300 this year, back when the stock was
just $160, it seemed unlikely, but I managed to get my head around this company and how
it is truly valued. I had based too much on fundamentals, when its about the story.
Is it rational that the Cybertruck is probably pricing in about 20% of Tesla's market cap,
or around $200 billion or 4 times Ford? Well if Tesla can sell 350,000 a year, and profit
$15,000 per vehicle, then that is $5 billion a year. Thats a p/e ratio of 40 for the Cybertruck
business, that is actually not too out of order. Because we do also get to include the
FSD potential there. Along with the fact that perhaps Tesla wont stop at 350,000, and perhaps
will go for 500,000 or 750,000 or more. Remember the F-150 is really only popular in the US.
The Cybertruck is going to be popular everywhere. Although it is too big for most roads or car
parks outside the US. So possibly they do not need a smaller version, which means a
new factory, and more design. So I am not sure that will actually happen, I think Tesla
will apply more effort into cars that sell in the multiple millions.
There is also the 4680 advances, that this truck will benefit from, as they become lower
cost and more energy dense, then the Cybertruck will become more profitable as time goes on.
For me just seeing it on the line, and seeing the castings and witnessing it all really
happening, is getting me excited, and I think this excitement will proliferate through to
the market and it wont be able to help itself take Tesla to potentially new highs this year.