Elon Musk’s ‘Cybertruck’ Will Thrill Tesla Fans But Its Pickup Market Potential Is A Puzzler

When Elon Musk shows the world his vision for an electric Tesla pickup truck tomorrow he’ll move ahead with a project that’s been brewing for more than five years–and step into a massive, lucrative vehicle segment that’s going to be tougher to crack than any he’s attempted before. 

Tesla’s billionaire CEO, who’ll unveil the vehicle he calls the “Cybertruck” next door to SpaceX late Thursday, started doling out details earlier this year about what his Silicon Valley EV company has in mind, telling fan podcast Ride the Lighting in June “its got to start at less than $50,000–it’s got to be, like, $49,000 starting price max. Ideally less.” 

Range and towing capacity, a key differentiator for full-size trucks, haven’t been shared yet, but they’ll have to match or exceed specs for the R1T, the electric pickup from Amazon-backed startup Rivian that was unveiled one year ago, also in Los Angeles. Its truck is to deliver up to 400 miles of driving range per charge, the ability to haul up to 11,000 pounds and clever new types of storage.

And it’s not just startup Rivian, which intends to begin production in 2020 at its Illinois plant, Musk has to contend with in the battery pickup market. Ford and General Motors, eager to protect their perennial dominance in pickup volume, have indicated they’ve got their own plans for electric heavy-duty models–and have the factories and supply base to build them. Tesla hasn’t yet said where its truck will be built, increasing the likelihood that actual production will be later than Musk says.

A teaser image of Musk’s pickup shown at the unveiling of the Tesla Semi in November 2017, a gargantuan, geometrically severe, sci-fi truck capable of carrying a conventional pickup in its bed, seemed mainly for the amusement of the brand enthusiasts crammed into a hangar at the small Hawthorne, California, airport next to SpaceX. Since then fantasy versions of the vehicle created by Tesla enthusiasts have proliferated across the internet, greeted mainly with silence by the Palo Alto, California-based company. 

“I really don’t anticipate the truck will be a high volume vehicle for Tesla, but it will generate enthusiasm in the core of its customers,” says Mike Ramsey, Senior Research Director for Gartner. 

U.S. sales of full-size pickups, the world’s primary market for such vehicles, surpasses 2 million units annually, and volume leaders Ford, GM and FiatChrysler’s Ram battle to retain buyer loyalty and bragging rights in a space where median prices approach $50,000. Rivian has positioned its vehicle as a premium, lifestyle brand with a $69,000 base price. So where will Tesla fit in?

“I really don’t have any idea what the electric pickup market will look like,” says Michelle Krebs, Detroit-based executive analyst for Autotrader (a unit of Cox Automotive which has invested in Rivian). “Who are the buyers? Is it really going to be buyers of F-150s, Rams and Silverados that use them for work trucks? It’s hard to imagine that audience shifting to electric. Or are they going to be bought by people who would like a truck but never would consider a gasoline or diesel truck, more of the fancy status symbol trucks?” 

Sanford C. Bernstein & Co equity analyst Toni Sacconaghi says that, unlike with past Tesla releases, the company has been circumspect with regard to its volume expectations for its pickup. 

“While Musk has stated that he expects the pickup to be Tesla’s `best product’ and that it will be a `better truck than the Ford F-150’ and `a better sports car than a Porsche 911,’ he did state on a recent earnings call that he envisions long term demand for the pickup will be lower than that of the S/X (i.e. <100K units per year),” Sacconaghi said in a research note. “Given that Musk has made bold proclamations about Model 3 and Y demand in the past, his comments about the pickup truck stand out as being atypical.”

The unveiling of Musk’s truck caps a week of big transportation and mobility news out of Los Angeles, that started with CoMotion LA 2019, an annual conference highlighting the developments in technology and services that improve urban mobility, Ford’s Nov. 17 unveiling of the Mustang Mach E electric crossover, a rival to Tesla’s Model Y, and AutoMobility LA and Los Angeles Auto Show, events that increasingly underscore how electrification and cutting-edge tech are remaking transportation.

Tesla’s pickup also debuts as the company juggles multiple big-ticket projects, including the opening and ramp-up of its Shanghai Gigafactory, the multi-year completion of its multibillion-dollar Nevada Gigafactory and optimization of its struggling Buffalo, New York, solar panel plant. The company also has to successfully start production of the Model Y electric crossover next year, that Musk claims will soon surpass volume for Model 3; start delivering its class-8 Tesla Semi truck (which is already delayed one year until late 2020); build its revamped and pricey Roadster sports car; and also start construction of a new Gigafactory in Germany that Musk announced this month. 

Delivering on all of those items requires billions of dollars of capital investment, for a company that has never posted an annual profit, and strain Tesla’s engineering resources for the foreseeable future.  Likewise, production of the Cybertruck also requires new assembly investment either at Tesla’s Fremont, California, plant or its Nevada facility.

Presumably, Musk will share those detail later this year if not on Thursday. 

“Trucks are a very stratified market, from little guys like an electrical contractor who needs one for work up to a very high-end buyer,” says Autotrader’s Krebs. “The Tesla buyer is a totally different animal. They buy the brand. … But can they get volume from the truck? I just don’t know.”