© Reuters. FILE PHOTO: The logo of a Tesla electric vehicle is placed on a car outside a dealership in Drogenbos, Belgium November 25, 2023. REUTERS/Yves Herman/File Photo
By Abhirup Roy, Hyunjoo Jin and Chavi Mehta
SAN FRANCISCO (Reuters) -Tesla’s pricier-than-expected Cybertruck pickup, which offers driving ranges that fell well short of what CEO Elon Musk had promised, has deeply disappointed some but fascinated others with its futuristic, SUV-like feel.
The Cybertruck, two years behind schedule, enters a hot pickup truck market to compete with the likes of Ford (NYSE:)’s F150 Lightning, Rivian (NASDAQ:) Automotive’s R1T and General Motors (NYSE:)’ Hummer EV.
Reddit co-founder Alexis Ohanian, who was among the first dozen customers to pick up the vehicle on Thursday, said the Cybertruck drives and feels like Tesla (NASDAQ:)’s Model X sport utility vehicle.
“Initial feeling about this vehicle – smooth, drives a lot like my Model X. It is big but not unwieldy,” Ohanian said as he live-streamed his first drive of the Cybertruck on social media platform X. He said he’d be the “coolest dad” picking up his kid at school.
Starting at $60,990, the Cybertruck is over 50% more expensive than what CEO Elon Musk had touted in 2019. That may narrow the appeal of the vehicle. Tesla’s stock is down over 2% since before the launch.
Among those disappointed is Texas-based financial services executive Christian Cook, who had booked a Cybertruck in 2019 after Musk promised a cheaper pickup that travels farther on a single charge.
“The truck pricing and range is a huge let down,” Cook, who drives a Model 3 and told Reuters he had made certain financial decisions based on his plans to buy a Cybertruck. “My respect for Musk has taken a huge hit. My loyalty to Tesla has taken a huge hit.”
CFRA analyst Garrett Nelson said the steep price tag will lead to customers cancelling reservations and expects Tesla to adjust the pricing based on demand going ahead.
The Cybertruck, made of shiny, bullet-proof stainless steel and inspired from a car-turned-submarine from a James Bond movie, is likely to uplift Tesla’s brand that has been dented from steep price cuts to boost demand, according to analysts and branding experts.
“The Cybertruck gets a lot of attention. It brings Tesla back top of mind,” said Spencer Imel, a partner at consumer insights firm Langston.
“But we don’t see it helping Tesla gain ground in terms of becoming a mass market brand and competing with brands like Ford that are serving the everyday car buyer,” he said.
Indeed, the electric pickup’s price and longer wait time for significant financial payoff left analysts concerned.
Musk’s personal ability to build the Tesla brand has also been questioned this week after a live interview in which he cursed out advertisers who left his X social media platform, formerly known as Twitter, over antisemitic material.
That was creating nervousness among investors and some consumers and could be drag on Tesla’s appeal, said Allen Adamson, co-founder of brand and marketing consultancy Metaforce.
“Many of Tesla’s early adopters who bought into the dream of a sustainable future are being kind of rudely woken up,” by some of the “strange things” he has done, turning him from a “rebel” into a “misguided person” for some people, said JP Kuehlwein, an adjunct professor of marketing at Columbia University Business School.
Cybertruck will not do much for Tesla’s financials next year, analysts said. Bernstein forecast 250 deliveries this year and 75,000 for next year, saying both “may be ambitious”.
Musk has said Tesla was likely to reach a production rate of roughly 250,000 Cybertrucks a year in 2025.
The company has repeatedly warned that it would face significant challenges in ramping the product and becoming free cash flow positive – likely not until mid-2025 – which could negatively impact profitability.
A brand refresh will be critical for Tesla, especially at a time when the company is battling softening electric-vehicle demand as well as rising competition.
“Tesla has a product problem – i.e., an older line-up that does not address enough of the market, and has no new mass market offerings until likely late 2025,” Bernstein analysts added.
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