Markets Shrug Off Cybertruck Launch

Investors needed to see a lot more from Tesla 

BREAKING NEWS

Tesla stock continued to slide today after the wider market simply was not impressed by the Cybertruck launch. There's a lot to unpack here, so let's dive in: 

WHAT HAPPENED

Tesla fans had a lot to love regarding the Cybertruck launch. Tesla's wild new entrant into the EV space is exciting, powerful and crammed with features. However, investors are trying to determine if Tesla can ramp Cybertruck production fast enough to make the vehicle enough of a revenue driver to offset Tesla's declining margins. With the event not giving concrete delivery numbers, investors decided this  simply wasn't enough. 

PRICE CONFUSION

It looks like the main issue here is the pricing tiers for the Cybertruck. The cheapest model is coming in at $60,990 and potentially won't hit the market until 2025. Cybertruck's more robust models will be released at 2024 starting at prices of 79,990 and 99,990. This means that short term, Tesla will only really have access to buyers on the more luxury end of the spectrum, and no one really knows if folks are actually going to want to buy a vehicle this new and this unique at that price range. 

More importantly, the base model is also 50% more expensive than initial price estimates and way above analyst projections. This is basically the opposite of Tesla's wider pricing problem where they are killing their margins by reducing the prices of popular vehicles too much. Pricing like this leaves a lot of room for the Ford F-150 Lightning and Rivian pickup trucks to own a lot more market share while Cybertruck production ramps up. 

WHY IT MATTERS

Of course, this negative sentiment can reverse the moment Tesla releases accelerating production figures and proves there's enough demand for the Cybertruck. The Cybertruck isn't a flop yet, the markets are simply leaving Tesla because their R&D costs are so high relative to other big tech players and there are simply better margins in this market. Something new like this needs time to prove itself. For now, Cybertruck simply wasn't enough to get investors off the sidelines, so Tesla stock fell over 2% at open, adding onto yesterday's mild decline.