Tesla to deliver Cybertrucks after Musk tempers expectations

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Written By Pinang Driod

© Reuters. FILE PHOTO: Tesla’s new Cybertruck is shown on display at a Tesla store in San Diego, California, U.S., November 20, 2023. REUTERS/Mike Blake/File Photo

By Akash Sriram and Hyunjoo Jin

(Reuters) – Tesla (NASDAQ:) is set to start deliveries of its long-delayed Cybertruck electric pickup on Thursday, after CEO Elon Musk tempered investor expectations citing problems in ramping production of what he called a “radical” product.

Cybertruck, Tesla’s first new model in nearly four years, is critical to its reputation as a maker of innovative vehicles. At a time when the company is battling softening electric vehicle (EV) demand and rising competition, Cybertruck is also key for generating sales, though not to the extent of the company’s high-volume Models 3 and Y.

“We dug our own grave with Cybertruck,” Musk said last month, warning that it would take a year to 18 months to make the vehicle a significant cash flow contributor.

Pricing for the vehicle is expected to be revealed at an event scheduled to begin at 3 p.m. ET (2000 GMT). After saying in 2019 the truck would be priced at $40,000, Musk has not offered an updated price despite rising raw material costs.

Ahead of the launch, Musk captured media attention on a different subject, giving a profanity-laced interview to the New York Times on Wednesday. He cursed advertisers who had left his social media platform X, formerly known as Twitter, because of antisemitic comment. He also said that customers who didn’t like him should judge his products by their quality, including Tesla EVs.

The billionaire has said Tesla was likely to reach a production rate of roughly 250,000 Cybertrucks a year in 2025. Tesla has faced “enormous challenges in reaching volume production” with the Cybertruck because of its new technology and design, Musk said.

Cybertruck’s new body material and unconventional, futuristic styling add complexity and costs to production, and threatens to alienate traditional pickup truck buyers who focus on utility, experts say.

During its 2019 reveal, Tesla’s chief designer Franz von Holzhausen took a metal ball to demonstrate the truck’s unbreakable “armor glass” window, only to shatter it.

A few years ago, Musk had floated the idea that if people did not like the futuristic Cybertruck design, Tesla could “build a normal looking truck.” On recent calls and interviews he has emphasized the model’s innovation.

“The larger problem for the Cybertruck is the Cybertruck wasn’t really designed for pickup truck users,” Eric Noble, president of automotive consulting firm, The CARLAB, said.

“It will have a much narrower appeal than a Ram or an F series,” he said of the popular Dodge and Ford (NYSE:) pickups.

Cybertruck, which is two years behind schedule, enters a hot and highly profitable pickup truck market to compete with the likes of Ford’s F150 Lightning, Rivian (NASDAQ:) Automotive’s R1T and General Motors (NYSE:)’ Hummer EV.

Rivian’s R1T has a starting price of $73,000, while Ford’s F-150 Lightning starts at about $50,000.

Seth Goldstein, equity strategist at Morningstar, said he expects the Cybertruck to be priced between $50,000 to the low-$70,000 range.

Cybertruck has drawn more than a million reservation holders who have put down $100 as deposits.

“Tesla’s products have largely appealed to more affluent early adopter types. And this is going to be no different,” said Paul Waatti, an analyst at consultatncy AutoPacific.

“It’s going to have a smaller audience than the SUVs will have, but I think it’s gonna do surprisingly well.”

(This story has been corrected to say Tesla’s chief designer used a metal ball to demonstrate Cybertruck’s glass, not Elon Musk with a sledgehammer, in paragraph 8)

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