Tesla fans are eagerly awaiting the arrival of the iconoclastic Cybertruck this year, but the party may not be for the automaker’s shareholders.
Elon Musk turned heads—and some stomachs—when he first revealed the concept in November 2019, then defended the avant-garde style as something that looked like it was “made by aliens from the future”.
But skepticism has now been replaced by anticipation amid reports that enthusiastic customers have put down deposits on more than 1.5 million units before test driving the vehicle.
It will be Tesla’s new passenger car since the best-selling Model Y crossover debuts in 2020.
In a provocative research note asking whether Tesla has begun to “outgrown” the model, Morgan Stanley presents the thesis that the financial pick-up may end up as a “side-show” to the story of the core equity-product halo that shapes perceptions and builds the brand but nothing relevant about the overall volume.
“We feel that the Cybertruck has more value in terms of culture/zeitgeist than in a direct economic sense,” he said Thursday, estimating that the volume will be closer to 50,000 vehicles per year and will mainly capture customers who buy high-end trucks like the Ford F.-150 Raptor.
The argument is controversial in and of itself, because the investment bank admits its own client thinks the truck will sell hundreds of thousands a year.
But the more surprising analyst Adam Jonas is a card-carrying Tesla bull, who if there is a possibility will discuss the potential of the vehicle to the stock price instead of pouring cold water on it all.
Jonas talked about Tesla’s opportunity with the Cybertruck$TSLA pic.twitter.com/aUgRoft2F5
— JC Oviedo (@JCOviedo6) March 9, 2023
Morgan Stanley aims to manage overly exuberant volume expectations
While the design has evolved over time, the Cybertruck doesn’t have one disadvantage that could prove problematic after the first wave of vehicles is delivered: they all come out of the Texas factory looking the same.
Teslas, in general, are not known for their ex-factory customization options: the Model Y comes in only five exterior colors—white, blue, black, red and silver.
Since the Cybertruck has a stainless steel body, it cannot be painted. Best customers should use vinyl wraps to customize their vehicles.
“We encourage readers to ask themselves: how many Cybertrucks can roll to a parent-teacher conference or a youth football match at the same time before losing some inexplicable … expectations” among institutional investors.
Tesla says it plans to begin series production this year.
Pricing and trim levels have not been revealed since the company removed the original specifications from its site more than a year ago.
In particular, Musk himself did not reject the idea that the model could be disappointing.
“Honestly, there’s always a chance that Cybertruck will fail, because it’s not like anything else,” he wrote July 2021. “I don’t care. I love it so much even if other people don’t.
fortuneThe CFO Daily newsletter is a must-read analysis for every finance professional who needs to get ahead. Sign up today.