INTRO: Recently, I was watching an episode of millennial
money when I heard this.
While the article was an April Fool’s joke, it did get me wondering: what happened to
the Cybertruck?
When Elon Musk announced the vehicle at the end of 2019, we saw some of the most polarizing
reactions.
Many were quick to laugh at it calling it a polygon on wheels, while others felt that
this is exactly what Tesla needed in order to stick out inside of the saturated pick
up truck market.
Following the announcement, hundreds of thousands of people put in pre orders which eventually
turned into millions.
While this level of interest is great, it doesn’t exactly mean much given that the
deposit amount is only $100 and the lowest end cyber truck starts at just under $40,000.
With all of that being said though, the cybertruck was supposed to hit the road months ago at
the end of 2021.
This was originally postponed to 2022, but at the beginning of the year, this was postponed
indefinitely.
Tesla has gone ahead and removed all delivery estimates from their website, and you can’t
even configure a cybertruck anymore.
You have to wait until production nears to do that.
On top of this, in the latest quarterly earnings call, when Elon was questioned about whether
Tesla would start roadster or cybertruck production this year, he responded with quote that “wouldn’t
make any sense”.
Clearly, it doesn’t look like the Cybertruck will be coming out anytime soon.
So, here’s when the Cybertruck may actually hit the roads and the main factors that are
holding back Cybertruck production.
PRICE: One of the biggest factors holding back Cybertruck
production is rampant inflation.
I’m sure you guys have seen the numbers.
Month after month, we’re seeing CPI readings come in at 5, 6, 7%, and one of the biggest
culprits boosting these readings is car prices.
Originally, this price hike was mainly manifesting within the used car market as supply was extremely
low, but this has slowly carried over to the new market as well.
After all, basically every raw material you can think of, semiconductors, and manual labor
have all risen substantially.
So, it’s not surprising that it costs a lot more to produce the same vehicle today
than it did a few years ago.
And Tesla is just as susceptible to these price hikes as any other automotive company.
The model 3, for example, reached a price of $35,000 at the start of 2019.
Now, it should be noted that you had to jump through a lot of hoops and give up a lot of
features to get a model 3 for this price.
But, it was possible.
Today, however, the lowest end model 3 costs $47,000 or $12,000 more.
Not to mention, the self driving package price has increased to $12,000 itself.
Meanwhile, hundreds of thousands of people have locked in a cybertruck for $40,000 and
self driving for $8,000.
This means that these guys literally got a cybertruck with self driving for the same
price as a base level model 3.
Realistically, Tesla would charge a minimum of $70,000 for such a vehicle today meaning
that they’re in the hole by $22,000 on each base model cybertruck.
Now, while Elon promised that FSD prices would be honored if locked in, Tesla doesn’t have
to honor the purchase price of the Cybertruck itself, but at the same time, they kind of
do.
While Tesla won’t face any hurdles legally when it comes to increasing the price of Cybertrucks,
they would likely face a PR nightmare if they increased prices.
Just take a look at what happened to Rivian.
Similar to the Cybertruck, Rivian revealed their R1T pick up truck well before the pandemic,
and they priced these models accordingly.
But, with rampant inflation, Rivian decided to increase prices by as much as $20,000 even
for preorder customers.
Over the next few days, Rivian received so much backlash and so many people canceled
that Rivian reversed this decision and announced that they would honor pre order prices.
Considering this, it would be extremely difficult for Tesla to get away with raising pre order
prices, and the longer the wait to start production the worse.
The last thing you wanna do is to tell someone who’s been waiting 6 years for the cybertruck
that they have to now pay $30,000 more to get it.
So, the best option Tesla has is to simply take a loss on these vehicles and move on.
But, when it’s basically guaranteed to be a loss, there’s no urgency to push out the
Cybertruck.
It makes a lot more sense to scale model 3 and y production first and get to an even
better financial position before launching the cybertruck.
And with the Germany and Austin factories just now starting production, these factories
will likely have their plates full with just scaling production till at least 2024.
So, in my opinion, 2024 is likely the earliest that Tesla will focus on Cybertruck production.
LACK OF INTEREST: Aside from increasing prices, something else
that’s pushing back cybertruck production is a lack of interest from average consumers.
Now, before Tesla fanboys go to the comment section and vigorously type about how many
pre-orders Tesla has and how Tesla is going to crush the competition, let me explain.
While people who preordered the Cybertruck and Tesla enthusiasts are still super pumped
up about cybertruck, the average person never really cared.
At the end of the day, given how the cybertruck looks, it’s simply not even a consideration
for a significant proportion of the population.
And if you don’t believe me, just take a look at Google Trends.
If we compare Model 3 and cybertruck interest, we’ll see that not only was initial excitement
for the model 3 slightly higher than the cybertruck, but model 3 interest has stabilized at a significantly
higher level.
On average, Model 3 interest has been 3-4 times higher than the Cybertruck over the
past 12 months.
Now you might be saying that, well, so many people have already received the model 3 and
by this point, most people in developed countries see model 3s quite regularly on the road.
So, naturally, interest for the model 3 is going to be a lot higher.
As a result, we can’t really compare model 3 interest with cybertruck interest until
the cybertruck has been on the road for a few years as well.
While this is a valid point, it doesn’t really change much.
From Tesla’s perspective, it makes a lot more sense to double down on a vehicle that
consumers are already convinced about as opposed to trying to convince people about a new vehicle.
Something else to note is that while the Cybertruck has millions of pre orders, we have no clue
how many of these guys would actually follow through.
If the deposit amount was $1000 or $5000, these pre orders would be a lot more meaningful,
but the deposit is only $100 and it’s fully refundable.
So, I feel that a lot of people just paid the deposit to get in line, and they won’t
actually make a purchasing decision until they actually have to pay the full amount.
If we take a look at Tesla’s latest delivery numbers, we’ll see that model s and x only
account for 14,700 deliveries while the model 3 and y account for 295,000 deliveries.
And if the cybertruck is priced closer to the s and x, it's likely that its delivery
numbers will be closer to that of the s and x after the initial delivery hype dies down.
Also, a lot of people who have cybertruck pre orders also have pre orders with other
companies, and in the end, they’re only going to go with 1.
So, not only does Google Trends not paint a pretty picture, but we have no gauge of
how good follow through will be, and these factors just make it even less likely that
Tesla commits to production anytime soon.
SUPPLY & DEMAND: While the demand for the Cybertruck isn’t
quite clear yet, the demand for Tesla’s lower end vehicles is extremely high.
Even though Model 3 and Y prices have risen substantially over the past several months,
people still can’t get enough of these cars.
Tesla is still selling every car they produce, and they’re struggling to even keep up with
demand.
If I were to order a model 3 today, it would take them 2 to 4 months to deliver it to me.
If I ordered a model y, it would take them 6 to 9 months to deliver it.
And, if I order the model x, it would take them 8 months to 1 year to deliver it.
Also, I should mention that I live in Austin, so you would think that deliveries are even
slower in other parts of the country.
Considering this, a vehicle that has yet to enter production is clearly not going to have
faster delivery estimates than vehicles that have already been in production for years.
Something else to consider is the supply shortage.
Not only has the supply shortage been leading to higher prices, but it’s also making it
even harder for Tesla to meet demand.
And the last thing you want to do is put the limited resources that you do have into a
vehicle with high requirements.
Take motors for example.
Elon Musk has confirmed that initial Cybertruck production will be quad motor cybertrucks.
Meanwhile, the base level model 3 only has 1 motor.
So, instead of building one quad motor cybertruck, they could build 4 base level model 3s which
would be significantly more profitable.
The same argument could be made for battery cells as well.
If resources were plentiful, it would be alright to divert some resources into this behemoth,
but when you’re strapped for resources, it makes no sense to divert the resources
that you do have into a relatively low production vehicle with high specifications.
It’s simply not as profitable, and it sacrifices the extra market share Tesla would have gained
by simply sticking to the model 3 and y.
So, given the extraordinarily high demand for the model 3 and y, it makes no sense to
focus on the cybertruck or any other vehicle until Tesla can meet the demand for the 3
and y first.
And by the looks of it, that’s not happening till at least the second half of this decade.
PR MOVE: On top of supply chains, inflation, and lack
of follow through data pushing back the cybertruck, we also have other promised releases pushing
back the cybertruck.
The new Tesla roadster and the Tesla semi were both announced years before the cybertruck
in 2017.
Now, let’s say that supply chain concerns, inflation, and demand for Tesla’s lower
end vehicles all cool off by 2025.
At this point, which vehicle do you produce first?
Sure, Cybertruck reservation holders would have been waiting 6 years, Tesla roadster
reservation holders have been waiting for 8 years.
Not to mention, they had to pay $45,000 to reserve their vehicle.
And what about Tesla Semi reservation holders?
These guys are institutional customers like Walmart and Pepsi who paid millions to reserve
dozens of trucks.
The last thing you wanna do is lose one of these guys as a customer.
Now, Tesla has started deliveries on the semi truck, but I think you get the point.
Tesla has other promised products that may take higher priority than the cybertruck which
will just push back production even more.
Considering all of these factors, the most obvious conclusion that we come to is that
the Cybertruck was more or less just a PR move.
It was designed to generate a bunch of hype for Tesla, and it did precisely that.
The Cybertruck unveil literally kicked off Tesla stock’s insane parabolic move which
has garnered the company more attention than ever before.
And this attention is likely leading to more vehicle sales than ever before.
So, whether the Cybertruck ever makes it to the road or not, it was an extremely successful
product.
Now, this isn’t to say that the Cybertruck will never make it to the road either.
One of Elon’s pet peeves is concept cars that never make it to the road, so I’m sure
Elon will eventually pump out the Cybertruck at least out of principle.
But, if you have a reservation and/or are thinking about getting one, just know that
you’re likely going to be waiting at least till 2024 and that’s if you spring for the
flagship quad motor version.
If you buy a lower end cybertruck, you’re probably going to be waiting till 2026, but
that’s just what I think.
When do you guys think the Cybertruck will hit the roads?
Comment that down below.
Also, drop a like if you agree that the cybertruck was a brilliant marketing move.
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