If Tesla’s Cybertruck is delayed too much more, its futuristic design may not seem so ahead of its time when finally it rolls off the production line.
Shares in Tesla crashed back to earth Thursday, dropping 7% after fresh reports that buyers will have to again push back their expected delivery date for the hotly anticipated Cybertruck. The stock fell another 3% in premarket trading Friday, amid worries that customers might cancel reservations and that the company is facing delays in developing the vehicle’s new 4680 battery cells.
Fears of a Cybertruck delay started Thursday morning with numerous reports noting that Tesla had removed all references on its website to a 2022 production start, even though Tesla influencer Sawyer Merritt first broke the news that the company had surreptitiously done so over a month before. Reuters followed up later Thursday, citing a source warning assembly may not begin until March of next year.
This comes only weeks after Tesla began hawking Cybertruck-themed merchandise, a move that at the time prompted some Tesla hopefuls to believe CEO Elon Musk might surprise Cybertruck deposit holders with news of an imminent launch date on Dec. 9, a day of curious cosmic significance in the Tesla universe.
The vehicle isn’t just your usual new model line that adds sales and revenue to a carmaker’s income statement. Whereas other vehicles in Tesla’s lineup are clean, modern interpretations of a fastback or crossover, the Cybertruck involves considerable risk given its radical departure from the conventional pickup truck mold.
Musk has swung from fears in the summer of the vehicle flopping to predicting last month that it would likely be his best product ever. The world’s richest man harbors a deep interest in space exploration and is known to be a huge fan of the Cybertruck’s polarizing design, which, in his view, suggests it was “made by aliens.”
Initially mocked when the Cybertruck was first revealed in November 2019, demand has been estimated at over 1 million units worth potentially more than $80 billion to date. This figure is, however, based on third-party websites aiming to track the number of $100 reservations that have been placed and should be taken with caution as the deposit is fully refundable.
Supply-chain delays
Should shareholders now be worried? Yes and no.
Musk had been steadily walking back his promise for a 2021 launch, telling investors in July that ramping up production in the new Texas plant would be difficult. This is due to “a lot of fundamentally new design ideas,” including a new structural battery pack that reduces weight and improves range, an innovation rival Volkswagen is now looking to copy.
At the company’s annual general meeting in October, he then cited multiple supply-chain shortages as cause for delaying the launch to the end of 2022 with “volume production” slated for the following year. This was a clear signal that only a relatively minor number would be built in the coming months—if at all, given Musk’s known penchant for picking overly optimistic timetables.
The greater concern is what this may mean for its next-generation lithium ion battery cells, which utilize a simpler design, a larger shape sporting a new 46×80 mm form factor, and quicker production methods. These alone were expected to give Tesla a material advantage in cost and performance over other comparable cells.
Thus far, Tesla has only its Kato pilot facility for manufacturing 4680 cells in California. This has prompted Musk to talk up its purported 10 gigawatt hour annual capacity, which if true could produce cells for over 100,000 cars easily and rivals in scale many existing EV battery cell plants.
Canceled deposits
A second worry is that Tesla appears to have surrendered the first-mover advantage it has traditionally enjoyed. With some 900 Rivian R1T electric trucks and one GMC Hummer EV pickup delivered to customers by the end of December, two key competitors have beaten Tesla to the punch, even if their production rollouts remain slow.
With the R1T winning MotorTrend’s 2022 Truck of the Year and the Hummer EV coming in as a finalist, the duo also earned critical praise as serious entries into the utility segment.
Ford meanwhile will launch the F-150 Lightning later this year and has pledged to nearly double annual output to 150,000 vehicles to meet surging demand. Chevrolet also began taking deposits on its well-received Chevrolet Silverado EV that debuted last week at the Consumer Electronics Show.
With four competitor models likely competing in the market alongside the Cybertruck, there is a risk that a large number of Tesla reservation holders might opt for a rival and demand their $100 be refunded, especially if Musk materially hikes the price of the pickup.
The good news is investors and customers alike should finally get some clarity later this month. Musk has promised to provide an update to the product road map when the company reports fourth-quarter earnings on Jan. 26.
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