Tesla: The Cybertruck Changes Everything

Summary:

• Tesla, Inc.’s Cybertruck has the potential to generate significant revenue and profits for the company.
• The Cybertruck’s unconventional design and advanced features make it a standout in the pickup truck market.
• With its competitive pricing and superior performance, the Cybertruck could capture a significant portion of the pickup truck market, contributing $20-30 billion in annual sales.

The Tesla, Inc. (NASDAQ:TSLA) Cybertruck (“CT”) may be one of the most incredible things ever to launch into the auto market. In fact, the CT could be the best thing since sliced bread. You may think it’s not too pleasant on the eyes, but it is a matter of personal preference, and the massive aftermarket could make the CT personalization process epic. Also, there are reportedly 2 million CTs on preorder. So, there should be plenty of demand. While its exterior appears unconventional, the CT looks like a great deal of revenue and eventual profits for Tesla.

Finally, Something Unconventional In The Auto Industry

Tesla has pioneered the EV revolution. When it comes to record-breaking, industry standard-setting, and the best possible overall driving experience, many people look at Tesla. Yes, the Cybertruck is a gamble, but it should pay off. I’ve learned not to doubt Tesla about its big decisions after being long its stock for the better part of ten years, and the Cybertruck is no exception. On the contrary, it looks like another Tesla gold standard.

The futuristic vehicle’s exoskeleton is bulletproof, making it nearly impenetrable. The CT’s body is comprised of the same ultra-hard cold-rolled steel alloy that SpaceX uses in its rockets, which is an excellent base for a future marketing campaign (if Tesla needs it).

The CT will do a zero to sixty in 2.6 seconds, which we’d expect from a new Porsha 911 but not a Cybertruck. Additionally, the truck will have a top range of about 340 miles (440 miles with range extension battery) and should be excellent for off-roading, as CEO Elon Musk says.

Consumers will get the supercar-like performance on a tri-motor “Cyberbeast” model that starts at just $99,990. The base rear-wheel ride will be just $60,990. A mid-tier two-motor model starts at $79,990, making it an excellent option to compete well in the enormous pickup truck market in the U.S. and eventually globally.

Cybertruck’s Immense Market Potential

Ford (F) sold over 726,000 F-150s in 2021 alone. The Chevy Silverado sold about 530,000 trucks in the U.S. in 2021 and approximately 523,000 last year. Ram delivered more than 468,000 pickups in 2022. In total, there were about 2.7 million pickup truck sales in the U.S. in 2022 vs. about 2.8 million in the previous year.

Forget about the base prices. The average transaction price for a pickup truck in the U.S. is now over $60,000. If we see similar sales as in 2021, the pickup truck market will be worth about $168 billion in the U.S. alone this year. Moreover, as economic growth improves and interest rates moderate, sales should increase to over $170 billion annually. Tesla’s CT could get a significant portion of the pie in the coming years.

Tesla offers three base CT models ranging from around $61,000 to $99,990. However, the most popular may be the mid-tier model, which starts at $79,990 and could compete well with Ford’s F-150 and other popular truck models. The CT’s price tag should climb once FSD and other options are added, and we may see the average selling price (“ASP”) around $80K once all three models are widely available. However, Tesla should introduce costlier models to initial customers. Thus, the CT’s ASP in 2024 and 2025 may be closer to $90-85K.

Will Consumers Pay More for The Cybertruck?

There is much debate about whether the CT will sell like hotcakes or if consumers will have sticker shock due to the higher-than-anticipated pricing. Well, two million pre-orders say something. Also, let’s not forget that the CT is 100% EV, meaning consumers will save compared to owning an internal combustion engine (“ICE”) vehicle in the long term. While the average “upfront” cost may be about 20% more than a traditional truck vehicle, consumers will save on fuel, costly maintenance, and repairs. The CT has no oil changes, transmission checks, or other maintenance expenses typically associated with an ICE truck.

Also, considering the Cybertruck vs. other 100% EV trucks in the space, we see that Tesla’s CT is a clear winner. For instance, the all-electric 2024 Chevy Silverado ranges from about $75-107K, substantially more than the CT’s $61-100K price range. Also, while Chevy’s new top model boasts an impressive 4.5 seconds 0-60 time, it’s nothing relative to the Cyberbeast’s 2.6-second acceleration. While the Silverado can tow up to 10,000 pounds, it’s less than the CT’s 11,000 towing capacity range.

We see a similar dynamic with other 100% EV trucks. GMC’s Hummer EV SUV starts at a whopping $87K, with higher-end models starting at more than $110K. The highest spec model crushes the 0-60 in just 3.3 seconds but is still short of the Beast’s 2.6 second time.

While the F-150 Lightening truck starts at only around $52K, the mid and higher-end models start at $70-100K. Also, the top-end F-150’s best 0-60 time is around 4 seconds with a towing capacity of 10,000 pounds, still well short of the Cybertruck.

Moreover, the CT is a Tesla, inherently coming with top-notch software and other intuitive technologies you may only find in a Tesla. Despite being more expensive than Chevy’s Bolt, Volt, and other competitors, Tesla had the top two selling EVs in the U.S. last year. In total, Tesla sold about 355K vehicles just in the U.S. (1.3M globally) last year, and it could replicate its success with the CT in the ultra-lucrative pickup truck world.

The top three vehicles sold in the U.S. were all pickups last year. The F Series, Silverado, and the Ram accounted for about 1.635 million unit sales last year. Therefore, CT’s potential is vast, and Tesla could eventually sell 300-400K cybertrucks annually in the U.S. alone. Also, even with 300-400K annual CT sales, the CT would remain behind last year’s top three pickup truck manufacturers in unit sales.

Cybertruck Production Capacity

Tesla plans to eventually produce around 375,000 CTs annually at peak production capacity. However, Elon Musk mentioned reaching an annual run rate of about 250,000 sometime in 2025. While estimates vary, some analysts predict Tesla could deliver 70-80K CTs in 2024 and 150-200K units in 2025. These figures seem plausible, and my estimate (revised) is for 75K CT deliveries in 2024 and 170K in 2025.

The base CT model that starts around $ 61K won’t be out until sometime in 2025. Therefore, most CTs sold in the next two years will be more expensive premium models, starting around $80K and $100K. Also, once we include FSD, wheels, and other options, the price can climb by another $10K or more. Therefore, we may see an ASP of around $90K in 2024, declining to $85K in 2025. Further, we could see the ASP level off at about $80K as the cheaper rear-wheel drive variant comes online in future years.

Cybertruck To Contribute Significant Sales

2024 Cybertruck sales estimate:

• 75,000 units times $90,000 ASP equates to $6.75B in sales.
• 2024 Tesla sales estimate – approximately $120 billion.
• 2024 Cybertruck percentage of sales estimate – approximately 5.6%.

2025 Cybertruck sales estimate:

• 170,000 units times $85,000 ASP equates to $14.45B in sales.
• 2025 Tesla sales estimate – approximately $150 billion.
• 2025 Cybertruck percentage of sales estimate – approximately 9.6%.

2026 (250,000 production capacity sales estimate):

• 250,000 units times $80,000 ASP equates to $20B in sales.
• 2026 Tesla sales estimate – approximately $180 billion.
• 2026 Cybertruck percentage of sales estimate – approximately 11%.

2027 (max capacity sales estimate):

• 375,000 units times $80,000 ASP equates to $30B in sales.
• 2027 Tesla sales estimate – approximately $215 billion.
• 2027 Cybertruck percentage of sales estimate – approximately 14%.

Bottom Line: Don’t Underestimate The CT’s Potential

The Cybertruck is a game changer because it opens up another massive market for Tesla to acquire more market share in the general auto industry. The U.S. pickup market is enormous, with top players selling 400-800K units annually. Moreover, the number of pickup trucks sold in the U.S. could soon hit an annual milestone of 3 million. Tesla’s Cybertruck only needs to reach around a 10% market share to contribute $20-30B in annual sales for Tesla.

The Cybertruck is a unique product that comes along once in a great while and should garner significant demand, potentially more than many current estimates project. While the CT’s style is iconic and extraordinary, the Cybertruck’s exceptional performance should help drive sales. Additionally, the CT should experience increased demand as it goes global. Therefore, we could see sales increasing beyond my projections as Tesla advances in future years.

Threats to The Cybertruck and Tesla

Despite my bullish projections for the Cybertruck, threats exist. The CT is entering a mature market with many established top players producing quality trucks, including 100% EVs. Moreover, Tesla could experience production delays and other difficulties associated with a complicated product like the CT. Also, critics have expressed concerns regarding the CT’s unconventional design and other elements that could prevent the CT from going mainstream. The economic slowdown and relatively high interest rates could also impact demand and sales negatively if they persist. This dynamic could lead to slower-than-expected revenue growth. Investors should consider these and other risks before investing in Tesla’s stock.

---

Analyst’s Disclosure: I/we have a beneficial long position in the shares of TSLA either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

I manage a diversified long fund with hedges.

Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

---

Are You Getting The Returns You Want?

• Invest alongside the Financial Prophet’s All-Weather Portfolio (2022 17% return), and achieve optimal results in any market.
• The Daily Prophet Report provides crucial information before the opening bell rings each morning.
• Implement my Covered Call Dividend Plan and earn 50% on some of your investments.

All-Weather Portfolio vs. The S&P 500

Don’t Wait! Unlock Your Financial Prophet!

Take advantage of the 2-week free trial and receive this limited-time 20% discount with your subscription. Sign up now and start beating the market for less than $1 a day!