Will Tesla’s Delayed Cybertruck Be A Big Money Maker?

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Tesla (NASDAQ: TSLA) recently said that production of its Cybertruck electric pickup would be delayed by almost a year to the end of 2022,  due to the ongoing supply chain issues plaguing the automotive industry. So will the new truck be a big money maker for Tesla when it potentially ramps up deliveries starting 2023? We don’t think so. We estimate that Tesla’s Cybertruck revenues will stand at just about $400 million in 2023, potentially rising to about $5 billion by 2026. For perspective, that’s likely to be less than 2.5% of projected Tesla Revenue in 2026. See our dashboard analysis Cybertruck revenue potential for a look at our methodology.

Although the U.S. pickup truck market is quite large with volumes for the top five players standing at close to 3 million units per year, the Cybertruck, which features a radical design, appears to be a relatively niche product for Tesla. For instance, Tesla has indicated previously that Cybertruck sales could come in below its premium Model X and S vehicles, which have historically sold under ~100k units a year. Competition is also strong. EV upstart Rivian’s R1T pickup truck is receiving rave reviews, while publication MotorTrend awarding it its 2022 Truck of the Year, and calling it “the most remarkable truck” it has driven. Investors are also buying into the story, giving Rivian a $100 billion-plus valuation. Similarly, mainstream pickup manufacturers are also seeing traction with their electrification plans, with Ford’s electric version of its iconic F-150 seeing robust demand. Customer loyalty in the truck market is also very high, meaning that Tesla could have a tough time going after existing owners.

[11/27/2021] Cybertruck Could Bring In Over $4.5 Billion In Revenue For Tesla By 2025

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Tesla (NASDAQ: TSLA) unveiled its first electric pickup truck last dubbed “Cybertruck,” featuring a radical design and prices ranging from around $40k going up to $70k. Tesla’s interest in the market is understandable, given that pickup trucks have been a big moneymaker for auto majors, with GM previously indicating that it garners as much as $17k in pretax profits from larger pickups, which typically sell for $50k.  While the Cybertruck appears to have impressive technology and performance, it remains unclear if traditional truck owners, who are typically very brand loyal, will be lured by the vehicle. Based on our estimates, the vehicle could add over $4.5 billion to the company’s revenues by 2025. For perspective, this would be under 20% of the company’s 2019 revenues and roughly 55% of estimated Model X and S revenues for this year. Below, we provide a brief overview of the U.S. truck market and size up the potential of Tesla’s Cybertruck.

View our interactive dashboard analysis on Cybertruck Revenue Potential

A brief overview of the U.S. pickup truck market: 

  • Ford leads the pickup truck market with ~$25 billion in revenues over 2018, followed by GM’s Chevrolet with $19 billion, Chrysler’s Ram with $16 billion, and Toyota with $12.4 billion.
  • Ford sold about 910k trucks over 2018, compared to 720k for GM’s Chevrolet, 537k for Chrysler’s Ram, and 364k for Toyota.
  • Toyota has the highest average selling prices, followed by Chrysler’s Ram and Ford.

For more details on the Pickup truck market, view our interactive dashboard analysis.

Sizing Up The Potential Of The Cybertruck

Interest in the Cybertruck is likely to be lower than Tesla’s other products.

  • It apparently took 3 days for the Cybertruck to reach 200k bookings compared to 1 day for Model 3, despite the dollar deposit being a tenth of Model 3’s deposit.
  • Brand loyalty in the truck market is very high, meaning that Tesla could have a tough time going after existing owners. For instance, Ford trucks see a rate of return purchases standing at about 70% versus 51% for Ford cars.
  • Tesla has been somewhat circumspect about the prospects of the truck, indicating that its long-term sales could be below the Model S/X (which sell ~100k units a year).

Cybertruck could add ~$4.5 billion to Tesla’s revenue by 2025

While Tesla has not provided a concrete launch date for the vehicle, it indicated that production startup could begin in late 2021 and we assume that the truck could hit the market by 2023. We assume that Tesla will garner 1% of the total volumes of the top 5 players combined, with the number growing to 3% by 2025. We assume that the average selling price for the vehicle will be $55k. This would translate into revenues of about $1.5 billion in 2023, growing to about $4.6 billion by 2025.

For a detailed breakdown of the Cybertrucks revenue potential, view our interactive dashboard analysis.

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 Returns Dec 2021
MTD [1]
2021
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