Tesla Cybertruck Arrives, but Investors Have Concerns

by Warren Seah

Tesla has delivered the initial batch of its innovative Cybertruck to customers in a highly-anticipated event streamed live from Austin, Texas.

With its arrival, investors, analysts, and potential buyers now have the opportunity to compare specifications of battery-powered trucks available in the U.S. market. However, this unveiling has affected Tesla’s stock performance, as it has seen a 2.5% dip to $234.10 at 10:56 a.m. Meanwhile, the S&P 500 and Nasdaq Composite experienced more modest declines of 0.1% and 0.3% respectively.

One major concern for investors is the cost of the Cybertruck. Starting at over $60,000, this pricing has raised eyebrows among some, including Tesla shareholder Gary Black, co-founder of Future Fund Active ETF, who found it to be a bit extravagant. He had hoped the truck would be priced closer to $50,000, similar to Ford’s F-150 Lightning.

However, not everyone was surprised by the pricing. Analyst Dan Ives from Wedbush commented that the prices were in line with his expectations.

Regardless of expectations, the Cybertruck remains an expensive option, with different trims ranging from approximately $60,000 to $100,000. Rivian Automotive’s R1T is a high-end alternative topping out at around $90,000, while Ford’s F-150 Lightning offers a broader range starting at about $50,000 and going beyond $90,000. General Motors’ all-electric Silverado is being delivered to fleet customers initially.

The “Cyberbeast” trim of the Cybertruck begins at an eye-watering $100,000, placing it firmly within the realm of luxury performance trucks according to Battle Road Research’s Ben Rose. Additionally, the lower-priced version of the Cybertruck won’t be available until 2025. Despite this, Tesla has already accumulated over 1 million preorders for the truck, as confirmed by CEO Elon Musk, and the company will initially focus on producing the more expensive versions. The all-wheel-drive variant, with a starting price of $80,000, is set to become available in 2024.

The Impressive Cybertruck: Range and Features

The Cybertruck, with its unique design, has garnered mixed opinions. Tesla claims a maximum range of 350 miles for all versions, while competitors like Rivian and GM offer truck models that exceed 400 miles per charge.

In the world of trucks, range holds significant importance due to the energy drain while towing. This explains why electric trucks boast a higher range per charge compared to sedans or crossover vehicles by around 100 to 200 miles.

Managing range poses challenges for automakers. Continuously increasing the battery pack size yields diminishing returns. The added weight of a larger battery pack consumes energy that goes into dragging it around. Moreover, batteries are the most expensive component of an electric vehicle, so expanding range can cut into profits.

Aside from range, there are plenty of other appealing features in the Cybertruck. It has the capability to power a home, similar to the F-150, and boasts impressive speed. The Cyberbeast can go from zero to 60 miles per hour in under three seconds.

Following a major event like the Cybertruck delivery event, it is not surprising to see a drop in Tesla’s stock. Investors often adhere to the adage of “buy the rumor and sell the news”, resulting in fluctuating stock prices.

Interestingly, Tesla’s stock saw an upward trend throughout the week leading up to Thursday’s trading. By Friday, shares settled at approximately $235, roughly where they began at the start of the week. This seems reasonable, considering investors were aware of the Cybertruck’s imminent arrival and its capabilities.

Ultimately, the sales performance of the Cybertruck will be a determining factor for Tesla’s stock. Wall Street forecasts deliveries of about 1,500 by 2023, followed by approximately 78,000 in 2024. To put this into perspective, total deliveries for all Tesla models are projected to reach approximately 1.8 million units in 2023 and 2.2 million in 2024.

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