Tesla bulls are pitching the upcoming Cybertruck as a panacea to the electric car giant's demand-related woes, hoping that the so-called halo effect of the electric pickup truck's launch will translate into greater brand awareness and increased sales of Tesla's other models. However, this bullish narrative appears to be hamstrung by high expectations that are only tenuously tied to actual conditions.
In early September, Tesla briefed some key European investors on the prospect of Cybertruck. This new electric pickup truck is expected to be mass-produced in 2024, and Tesla's goal is to produce 250,000 vehicles annually. However, there are several major bottlenecks that hinder the achievement of this ambitious goal. First of all, Cybertrucks relies entirely on Tesla's own 4680 batteries. Given that the current production of these batteries is not ideal, the electric vehicle giant can only meet the production level of about 3,000 vehicles per month. Among other changes for the Cybertruck, Tesla will use a 48-volt architecture for internal electronics and a 1,000-volt architecture for the powertrain. All of these changes make mass production of electric pickups more complex.
Even if Tesla succeeds in achieving its peak annual production target of 250,000 vehicles, it's unclear whether there will be enough demand for these somewhat "mediocre" vehicles. A recent survey showed that only 27% of respondents liked Cybertruck.
So it's no surprise that DeutscheBank lowered Tesla's 2024 delivery forecast to 2.1 million vehicles, compared with the consensus estimate of 2.3 million vehicles. The bank's 2024 delivery outlook includes only a "minor contribution" from Cybertruck. In the near term, the bank believes Tesla will deliver 440,000 vehicles in the third quarter of 2023, lower than the previous estimate of 455,000 vehicles. As a result, the bank currently expects Tesla's revenue to reach $23.3 billion in the third quarter of 2023.
We noted yesterday that Wall Street was scrambling to lower Tesla's high delivery expectations just ahead of its official earnings release at the end of this month. Since the halo effect brought by Cybertrucks is likely not to be realized in the short term, the risks to the electric vehicle giant's high stock price remain considerable.