Tesla's Future Riding On The Cybertruck

This has boosted unit sales, but Tesla is now a distant second behind Shenzhen-based BYD, in terms of hybrids and full EVs combined. Its EV share dropped from 15% in 2020 to 10% in 2022 and is still declining .

Tesla revenues by region (2022)

In Europe, Tesla has also been cutting prices in 2023, while broadly sustaining its volume-premium balance. This is the big challenge for any rising producer: producing in higher volumes reduces costs, but erodes exclusivity and therefore the ability to retain premium pricing.

By early 2023 Tesla had captured about 20% of the EV market, substantially outperforming both volume and premium rivals and increasing share by around 2 percentage points year on year.

The Cybertruck probably won't unlock more growth in Europe, however. US pickups are a marginal product there, seen as unsuited to many European cities. Indeed, Paris is considering higher parking charges for EVs weighing over 2 tonnes, which would include the reputedly 3.3-ton Cybertruck.

Tesla vehicle sales by region (2022)

It is in the US that this vehicle really matters. Again, Tesla cut prices significantly there in early 2023. The company's ability to put pressure on rivals this way reflects its production experience and famous ownership of its supply chain. Tesla's unit sales in the US are up 26% year on year, but like in China, it is losing share to competitors: down to 57% from 67% a year ago.

The US pick-up segment is important to Tesla's efforts to retain its premium brand positioning by expanding its product portfolio. But pick-ups are also a vital source for the US“big three” manufacturers' profitability. Non-EVs are dominated by Ford (F-series), GM (Chevrolet Silverado) and Stellantis (Dodge Ram).

Those incumbents have not wasted time since the Cybertruck was announced. Ford launched the F-150 Lightning in May 2021, and by 2024 expects output to be 150,000 units per year . The niche GMC Hummer EV pick-up was launched by GM in 2022. GM's Silverado EV will also be on the market by mid-2024, as will the Dodge Ram in pure EV and range-extender formats.

Other disruptive new entrants have also been busy, although companies such as Lordstown Motors and Canoo have struggled. Most prominent, though still not profitable, is California-based Rivian with its R1T electric pick-up and R1S SUV variant. Rivian is expected to produce about 50,000 vehicles in 2023 overall.

Tesla has the luxury of a reported 2 million reservations for the Cybertruck, with a five-year waiting list. Nonetheless, the vehicle will test whether the company can continue combining volume with premium pricing.

There will now be two models, since the lowest-spec single-motor variant seems no more . The premium tri-motor Cybertruck will likely be priced at US$80,000. Some innovations in the two models, such as stainless-steel body panels, appear to be more marketing hype than engineering logic.

The styling is polarising, and may not appeal to a traditionally conservative segment. The performance claims are impressive but possibly unnecessary – the ability to tow 6.4 tonnes will rarely be useful.

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The Cybertruck will have a battery-technology edge for now, and access to the widespread and reliable Tesla supercharger network . Tesla aims to produce 200,000 units in 2024 and potentially 250,000 the year after. If that can be sustained, then the company will again have achieved premium positioning on a volume product.

At this stage, however, there are concerns. Early pre-production models were reported with multiple quality issues around the fit and finish, including large, variable panel gaps, and bubbles or other defects in the plastic film applied to the exterior panels.

Those in the industry may recall the Ford Edsel . Unusual styling along with multiple initial production problems resulted in one of the classic industry disasters for this supposedly state-of-the-art car in the late 1950s.

The 1958 Pacer model of the disastrous Ford Edsel range. Photo: Wikimedia , CC BY-SA

A lot is riding on the Cybertruck. It will be increasingly difficult to achieve powerful growth on the back of the Model 3/Ys and Model S/Xs. Tesla has talked about introducing an entry-level EV at circa $22,745, but has not always delivered on past promises.

If this hasn't appeared by 2025, Tesla will have an aging product line and a need to inject more excitement into the brand. It will be protecting its market share against a host of new rivals and resurgent legacy brands. Without a big Cybertruck success, the company will find it ever harder to straddle the volume-premium divide.

Peter Wells is Professor of Business and Sustainability, Cardiff University

This article is republished from The Conversation under a Creative Commons license. Read the original article .

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