Tesla's (NASDAQ:TSLA) latest electric vehicle, its futuristic stainless-steel Cybertruck, has left Wall Street and investors scratching their heads about its viability, but consumers appear to love it, with pre-orders already pouring in.
Late last week, in what some considered a bizarre display at Tesla's design studio outside Los Angeles, CEO Elon Musk unveiled the much-hyped pickup that he had been teasing for weeks. The Cybertruck gets 250 miles on a single charge and starts at just $39,900. Add any of the perks like dual engines and this new electric vehicle gets much pricier. The other two models, a dual-motor one and a tri-motor version, are priced at $49,900 and $69,900, respectively.
Musk took to Twitter since its launch to give an update on how pre-orders are faring in the days after the Cybertruck's debut. On Saturday (Nov. 22) Tesla sold 146,000 Cybertrucks with 42% of orders opting for the dual-engine model, 41% for the three-engine model, and 17% for the entry-level Cybertruck. That figure got updated by Musk on Sunday (Nov. 23) in a simple tweet: "187K."
It has since surpassed 250,000 orders. Analysts typically use pre-orders of Tesla vehicles to get a sense of how demand will shape up. With customers required to put $100 down, Tesla made more than $18 million. Those deposits are refundable and much lower than Tesla usually requires. Production for the Cybertruck is slated to kick-off at the end of 2021, with the tri-motor version going into production in 2022.
Investors aren't as impressed as superfans
While fans couldn't seem to get enough of the Cybertruck, industry watchers and investors were much more skeptical, causing the stock to end on the week the truck was announced on a down note. Vehicle reviewers and critics have been quick to call the Cybertruck a concept rather than a viable pickup truck. They question if it will ever be legal on U.S. streets and roadways, and predicted that the Cybertruck that hits the market will look different than the one Musk unveiled.
Critics point to everything from the missing mirrors and wipers to wheels and tires that don't look production viable. With a steering wheel better suited for a race car than a passenger vehicle, it's also not clear if the interior will get a bit of an overhaul as well.
Some Wall Street analysts also expressed concern about the impact the Cybertruck will have on the Model Y, Tesla's electric crossover that's expected to begin production in 2020. Production in China and Europe is slated for early 2021. When Tesla announced the Model Y, interest in that launch was overshadowed by worries that it would hurt sales of the Model 3 and that same concern was raised with the Model Y and the Cybertruck.
Competition looms large
Then there's competition from vehicle manufacturers that are working on their own electric trucks. Rivian, an electric-truck start-up out of Plymouth, Michigan, that counts Amazon.com and Ford (NYSE:F) as backers, is coming out with its own electric trucks next year that, while priced higher than the entry-level Cybertruck, have a much more familiar design to pickup truck owners. Ford, maker of the popular F-150 pickup truck, is expected to launch an electric version in 2021, while General Motors (NYSE:GM) is rumored to be working on its own electric pickup truck.
While there is a lot of hype surrounding the Cybertruck, it's not a reason for investors to increase their position in Tesla. After all, despite its ability to churn out new vehicles that get Twitter abuzz its stock hasn't been able to outperform. This year alone Tesla has had a surprise profit, completed its Shanghai plant ahead of schedule and came out with a futuristic-looking truck, yet its shares are trading lower. That compares to the S&P 500 which is 23% higher.
Investors clearly weren't impressed with the Cybertruck and Wall Street analysts are mixed about the impact it will have on Tesla's earnings, but fans of the electric-vehicle maker say critics are missing the bigger picture. They are hung up on design and are ignoring the big news, the $39,900 price tag. They say its a commendable feat given that EVs have long been priced higher, and a testament to Tesla's improving manufacturing. But whether or not that will be a reality is another question that should weigh on investors. Tesla had boasted about a $35,000 Model 3 but that has yet to happen, with the Model 3 priced at $39,000.
With the Cybertruck a production line nightmare in its current state, investors are right to be skeptical about Tesla's ability to deliver on the price and design. Ultimately the success of the Cybertruck will depend on what comes rolling off the production line when it is ready for its prime-time debut.