Tesla (TSLA): Backing Up the Cybertruck
Luxury electric-vehicle maker Tesla (TSLA) held its Cybertruck event several weeks ago at the company’s headquarters in Austin, Texas, during which the futuristic-looking vehicle reached its first batch of customers four years after its debut. While celebrating the company’s new and unconventional Cybertruck pickup, CEO Elon Musk predicted the truck would usher in a new, more exciting future. But depending on who you ask, there will be a range of opinions as to the long-term potential of the Cybertruck and its ability to unlock value or provide Tesla a competitive advantage in the quarters and years ahead. For 2024, Wall Street analysts were forecasting Tesla to show more than $21 billion of revenue growth.
The Potential of the Cybertruck
The U.S. electric pickup truck market has not expanded the way EV sedans have, with leading players only moving 400 to 800 thousand units annually. However, Tesla's Cybertruck has the potential to unlock a substantial new market for the company in the broader automotive sector. With its unique and polarizing design and specialized stainless steel alloy body, the Cybertruck could drive annual sales of pickup trucks in the U.S. to reach 3 million units.
If the Cybertruck captures just 10% of this market, Tesla could add roughly $20 billion to $30 billion in annual revenue, surpassing current analyst estimates. Looking towards 2024, the Cybertruck is expected to generate considerable demand and exceed initial projections. However, the unconventional appeal of the Cybertruck also raises questions about mass production and expanding production, which have historically been challenging for Tesla.
Challenges for the Cybertruck
Tesla CEO Elon Musk has acknowledged the significant challenges in achieving volume with the Cybertruck. He stated that it would take roughly a year or more before Cybertruck revenue becomes a meaningful positive cash flow contributor to Tesla's quarterly results. The company initially listed the production capacity for Cybertrucks at 125,000, but plans to reach a peak production capacity of around 375,000 annually.
Musk has highlighted the constraints of the Cybertruck's design, emphasizing that all vehicle components must be designed and built to sub 10-micron accuracy. Despite these challenges, the Cybertruck is another gamble that Tesla is taking, similar to the bets it made on previous products like the original roadster, the Model S, and the Model 3. With two million pre-orders already received, the Cybertruck is expected to pay off handsomely for the company and contribute to its overall growth story in the coming years.
About the Author: Richard Saintvilus
Richard Saintvilus is a finance writer who focuses on providing actionable insights to investors. With a background in engineering and strong analytical skills, he bases his investment decisions on a company's management quality, growth prospects, and other metrics. Saintvilus employs conservative strategies to increase capital and actively monitors macro-economic events to mitigate risk. His work has been featured on CNBC, Yahoo! Finance, Forbes, and other outlets.
