Tesla’s highly anticipated Cybertruck launch failed to boost the company’s stock on Friday. Tesla (NASDAQ: TSLA) fell by more than 2% on Friday morning.
The truck’s price turned out to be 53% higher than expected. The base model starts at $60,990. This is 53% higher than the $39,900 price that Elon Musk promised back in 2019.
Meanwhile, the premium tri-motor trim costs $99,990. This figure is 43% higher than the 2019 promised price of $69,900. It’s even slightly higher than the rumored price in the weeks leading up to the Cybertruck’s launch.
The Cybertruck’s high cost is leading to growing questions about how much demand will exist for the vehicle. However, even if most Cybertruck preorders get canceled, the vehicle still has the potential to generate substantial revenue for Tesla.
RBC equity analyst Tom Narayan told Yahoo Finance that he expects around 20% of Cybertruck preorders to convert into sales. As of September, the vehicle had over 2 million preorders.
20% of 2 million is 400,000. Even if all 400,000 customers bought the base trim, Tesla would still generate $24.4 billion in sales.
If Cybertruck sales prove underwhelming, the Cybertruck could still serve a useful function for keeping fans excited about the Tesla brand. Bradley Brownell, an author for auto news website Jalopnik, considers Tesla a “promise company” that revolves around building excitement for potential technological innovations. This view is shared by many other industry analysts.
With that said, Tesla’s strategy of prioritizing excitement over execution can only work for so long. In November, investment bank Jefferies lowered its Tesla target price from $250 per share to $210 per share. Jefferies justified its forecast by arguing that Tesla’s focus on the Cybertruck will prevent it from making affordable EVs with even greater sales potential.
2023 has been a rollercoaster year for Tesla. The stock surged for much of the year due to excitement about Tesla’s AI technology.
However, Tesla has had a challenging autumn due to EV price cuts and weakening EV margins. Share prices declined about 4% between September 29 and November 30.
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