Tesla Cybertruck Launch: A Huge Disappointment

50% higher price with nearly 40% lower range will lead to a decline in orders

After a three-year delay, Tesla finally launched the Cybertruck today. The launch was badly handled for such a highly anticipated event, with Musk having to stand on the bed of the Cybertruck without any spotlights on him as the stage was too low. Musk’s presentation of the Cybertruck lasted a mere 16 minutes, with the roll-out of the first 10 Cybertrucks to their customers making up the rest of the 25-minute launch event.

Here’s what Musk pumped about the Cybertruck during his 16-minute presentation today:

• Tesla is using their own “super alloy” for the Cybertruck (sounds expensive).

• More torsional stiffness than a McLaren (something few pickup truck drivers care about).

• Tesla adopted steer-by-wire technology for the Cybertruck, which gives it a smaller turning radius than a Model S, according to Musk.

• Cybertruck doors are bulletproof, so if Al Capone emptied an entire magazine from his Tommy Gun into your car door, as Musk said, you’d only be safe with a Cybertruck (how many US pickup truck drivers have such concerns?).

• Cybertruck can pull a Porsche 911 on a trailer and still beat a 911 in a quarter-mile drag race.

• Cybertruck can tow a truck over a longer range than a Ford F-350 Diesel.

Cybertruck Pricing & Specs Disappoint

What disappointed the Tesla fanbase deeply was the lack of any discussion regarding pricing and specs, some of which were released on Tesla’s website during the event but not commented on by Musk (probably because pricing and specs were worse than originally presented by Musk in 2019). Figure 1 below shows how range, payload capacity, tow rating, and pricing mostly came up short versus the original announcement in 2019.

Figure 1: Cybertruck Pricing & Specs Were Overpromised and Underdelivered

The average price of all three trims when the Cybertruck was announced in 2019 came to $53,233. Today’s announced prices average $80,293, which is 50.8% higher than what was originally announced. Even after adjusting for inflation, the Cybertruck’s average price should be only $66,184 today—which happens to be the average price of a full-size pickup in the US right now—but is 21% higher than that. This is most likely due to the high cost of raw materials (especially stainless steel) and increased labor cost per unit (stainless steel is less malleable so needs more labor).

While the cheapest Cybertruck variant is the rear-wheel drive model priced at $60,990, Tesla’s website says it won’t be available until 2025. This smacks of the promise Musk made about selling a $30,000 Model 3 variant one day—something that never happened.

Compared to rivals like Rivian, Ford, and GM, the Cybertruck’s specs hold up well, albeit at a higher price than its rivals. Figure 2 shows key specs for the entry-level Cybertruck (which is currently the All-Wheel Drive variant, as the cheaper Rear-Wheel Drive model won’t be out until 2025) versus those at rivals. Some points that stand out:

• Rivian’s R1T is $4,990 (6.3%) cheaper than the Cybertruck but has quicker acceleration and stronger towing capacity.

• The Cybertruck’s payload capacity appears much higher than rival models at Rivian and Ford (GM’s Hummer is not really in the same category).

• Ford’s lowest-price F-150 E has higher battery efficiency than the Cybertruck.

• The Cybertruck has the smallest frunk compared to its rivals.

Figure 2: Cybertruck vs Rivals

Cybertruck Will Undoubtedly Be Unprofitable

When Musk said on the Q3 earnings call that the Cybertruck would require 12 to 18 months to break even on a cash flow basis, he may once again have been over-optimistic. Aside from the use of stainless steel, which leads to higher raw material costs and labor costs, one only needs to look at the price of the All-Wheel Drive version: at $79,990, it costs the same as the Model X Long Range yet has much more technology under the hood (steer-by-wire, 48v battery system, bipolar charging, etc.).

Given that the Model X has only sold around 6,500 units per quarter so far in 2023 (26,000 on an annualized basis), it’s highly doubtful that Tesla makes money from the Model X. And if the Cybertruck does indeed have higher production costs, losses might likely be deeper than Musk led onto on the Q3 conference call.

It also would not be surprising to see the Cybertruck cannibalize Model X sales next year, given that both cost the same and have roughly the same acceleration and range. In 2024, the Model X will be 8 years old.

While Tesla has to rely on its internal 4680 battery cell production to supply the Cybertruck (Panasonic won’t be mass-producing their 4680 cells until summer 2024) volumes should be small at first. Tesla recently tweeted that they produced their one millionth 4680 battery cell last month. My back-of-the-envelope maths point to internal cell capacity for roughly 3,000 Cybertrucks per month at the current pace.

While Musk said that the Cybertruck could sell around 250,000 units annually from 2025, it’s hard to see Tesla selling that many Cybertrucks unless the cheaper Rear-Wheel Drive variant emerges and this is still up in the air. It should also be noted that Tesla has yet to confirm final pricing for the Cybertruck on their website (see Figure 3). As far as I can tell, there are no high-end EVs in the US priced at $80,000 or more that sell over 100,000 units per year.

Figure 3: Cybertruck Prices Are Still Only Estimates

The much anticipated “halo effect” that the new Cybertruck might bring to Tesla’s other (old) models is doubtful. The Models 3/Y are long in the tooth and have saturated their respective markets, which is why Tesla was forced to lower the 3’s price by 17% with 5 price cuts this year, while the Y saw its price slashed by nearly 30% with 5 price cuts as well. If anything, losses from the Cybertruck’s high production costs could be more like Tesla pouring salt on its wounds next year.