The car might be – but the business case for Musk’s Cybertruck isn’t bulletproof


When the COP28 climate summit opened in Dubai with the goal of averting a global warming catastrophe, Elon Musk, who recently claimed he’s “done more for the environment than any single human on earth,” was in Austin, Texas, boasting that his behemoth Cybertruck withstands machine gun fire and is “the finest in apocalypse technology.”

Elon Musk touted Cybertruck’s ability to withstand machine gun fire.

Tesla via YouTube

A small group of fans — and one of Musk’s crying children — gathered at the Austin Gigafactory, cheering as the billionaire CEO lauded the 7,000-pound electric pickup’s general indestructibility, defending its brutalist architectural design that resembles the marine carrier from Aliens. “It’s the most unique thing on the road. Finally, the future will look like the future.”

Musk crowed about its towing power and speed but didn’t mention how the vehicle furthers the environmental goals laid out in his 2006 manifesto for Tesla. Nor did he point out that its base price is $20,000 above what he promised in 2019 or that it doesn’t achieve the 500-mile range he’d claimed it would. He also failed to note that given its excessive weight and design, the Cybertruck probably can’t be sold outside of North America since it may not comply with pedestrian safety rules. And while Tesla is positioning it to compete in the lucrative, multimillion-unit U.S. market for pickups dominated by gas- and diesel-powered trucks from Ford and General Motors, industry experts don’t see it winning many of those sales — particularly since its starting price is about $100,000.

“It’s a novelty item and Tesla’s fans clamor for those,” Eric Noble, president of industry consultant The CarLab in Orange, California, told Forbes. “The wider truck market is governed more by duty-cycle demands than by ‘looking like the future.’ The business case … is certainly worse than it needed to be to meet the needs of real pickup truck users.”

“It’s a novelty item”

Eric Noble, The CarLab

Even Musk has acknowledged there are problems ahead.

“We dug our own grave with the Cybertruck,” he told investors in October. “Cybertruck’s one of those special products that comes along only once in a long while. And special products that come along once in a long while are just incredibly difficult to bring to market to reach volume, to be prosperous.”

Though the Cybertruck’s design might be off-putting for many traditional pickup buyers, equity analysts following Tesla were generally relieved the truck has finally made it to production after a two-year delay. While it won’t “significantly move the financial needle for Tesla” in 2024, said Wedbush’s Dan Ives, “it further shows the innovation and mindshare lead that Tesla has built with many OEM competitors around the world.” Ives remains bullish on the company’s shares but only expects a few thousand of the trucks to be produced this year and around 10,000 in 2024’s first quarter.

Others take a dimmer view. Jeffries analyst Philippe Houchois argues Tesla should cancel Cybertruck entirely. It’s “off-mission.” He said in a research note that it won’t boost sales significantly and will drag the company’s profit and cash. It has steep pricing, starting at $80,000 (before taxes, pricing options like Autopilot and FSD and a $7500 federal tax credit) until 2025, when a $61,000 version arrives. The initial “Foundation” version the company is delivering costs $120,000. That high price, when interest rates are much higher than they’ve been in years, is a “double negative on affordability,” he said.

Demand For Cheaper EVs

U.S. EV sales hit 1 million units for the first time this year and should account for about 8% of total new vehicle sales in 2023, a record high, according to Cox Automotive. Tesla’s Model Y and Model 3 are the top sellers in the U.S. Still, its sales in China, the world’s biggest auto market and the main source of Tesla profits, dipped about 18% in November, and industry experts are generally struggling to make a strong case for Cybertruck.

The large EV appears to be “decently engineered” but is “kneecapped by a ridiculous tophat,” said John Krafcik, Waymo’s former CEO who led Hyundai’s rapid North American expansion when he was the carmaker’s regional CEO. “Maybe one could squint their eyes and say it might make sense as a platform to demonstrate and launch new technologies?”

For example, Tesla’s new 4680 battery cell and fully electric steering system used on the truck could be used across its lineup, said Krafcik, a former Ford executive engineer and member of rival electric truckmaker Rivian’s board.


Likewise, “if Cybertruck helps them develop technologies and production practices that they then roll out on other future models, it may pay off,” said Olav Sorenson, professor of strategy and sociology at UCLA and faculty director of its Price Center for Entrepreneurship & Innovation.

But the truck’s ability to withstand machine gun fire probably isn’t going to drum up a lot of sales.

“There’s no widespread consumer demand for a bullet-resistant exterior,” said Ed Kim, president of industry researcher AutoPacific. “The demonstration did seem to speak to Cybertruck’s target audience, which is likely to be impressed by such theatrics.”

Making Back Its R&D

The longer it takes to expand Cybertruck production and sales, the longer it will take to amortize the steep investment costs to design and build it, which likely top $2 billion over the past four years. That’s why Jeffries’ Houchois and Musk himself see it as a drag on earnings.

“There’s no widespread consumer demand for a bullet-resistant exterior.”

Ed Kim, AutoPacific

Tesla hasn’t said how much it’s invested to create Cybertruck since it was unveiled four years ago, though the company has increased its budget for capital expenditures twice this year. Tesla said in October its R&D budget is up by $610 million, or 27%, to about $2.9 billion so far this year, owing to costs for Cybertruck, AI and other new projects.


A Tesla Cybertruck series parked in front of a garage in Silicon Valley.

dpa/picture alliance via Getty Images

Krafcik assumes it was “a big chunk” of R&D spending this year, but “it’s going to be hard to tease out clues on Cybertruck (development) costs because it will be such a small percentage of overall volume for so long.”

Big Pickups

Musk has said 2 million people put down $100 deposits to reserve a Cybertruck, though most did so before its official pricing was announced last week, with the cheapest variant costing $61,000 when it arrives in 2025. That’s over $20,000 above the $39,900 base price Musk promised in 2019. That may be too pricey for many, so it’s impossible to know how many reservations will turn into sales.

That’s not going to be a problem for now since Tesla’s CEO has cautioned that Cybertruck production will be low until at least 2025. That’s the earliest point at which the company might be able to make as many as 250,000 annually at its Austin, Texas, plant. By comparison, Ford, the top pickup brand by volume — and which has its own electric Lightning F-150 — sells more than a million gasoline and diesel-powered trucks a year to U.S. customers.

Another reason it may be challenging for Tesla to reach volumes that would rival Ford’s F-Series: it doesn’t work very well as an actual pickup truck because of its unconventional design and how rapidly it will lose range if users actually try to tow the 11,000 pounds Musk says it can handle. That might be “a bit of a red herring for some pickup truck owners,” said Stephanie Brinley, S&P’s associate director of AutoIntelligence.

Full-size pickups like Ford’s F-150 and GM’s Chevy Silverado have limited global appeal and the U.S. is the only country that buys millions of them annually. Not surprisingly, Tesla is only taking reservations from North American customers. Cybertruck’s bulk and design have raised concerns it can’t be legally sold in markets including the European Union, Australia and the U.K. as it might not comply with pedestrian safety regulations.

“At its gross vehicle weight, people would not be able to drive it on a standard driving license anyway.”

Nick Molden, Emissions Analytics

“At its gross vehicle weight, people would not be able to drive it on a standard driving license anyway, even with some recent relaxing of the rules in the U.K. and other countries,” said Nick Molden, founder and CEO of Emissions Analytics, a U.K.-based automotive research lab.

Environmental Benefits?

Musk’s championing of EVs since the release of the Tesla Roadster in 2008 arguably gave rise to the modern EV industry and Tesla’s top-selling battery-powered cars to help mitigate environmental damage done by carbon-powered autos. But big electric pickups and SUVs, like GM’s electric Hummer and Cybertruck that are highly energy- and resource-intensive to produce and rely on a vast global supply chain of mined materials — sometimes involving child labor — are a different beast entirely and can be significantly less environmentally friendly.

Argonne National Laboratory, which developed the GREET model to assess the carbon intensity of building and operating vehicles, estimates that all EVs have higher production-related CO2 emissions than gasoline-powered autos. However, they have lower lifetime emissions from daily driving and refueling, particularly if they replace equivalent-sized gasoline models. If a consumer traded up to a larger, heavier electric vehicle, from a smaller, more efficient auto, however, attaining that CO2 benefit gets harder.

“The Cybertruck most of the time may just be transporting one person, and be idle (like most passenger vehicles). This makes the per-person-per-mile CO2 relatively high,” said Molden.

“The e-bike is going to turn out to be far more important than the Cybertruck — also, considerably better looking,” author and environmentalist Bill McKibben told Forbes. He also questioned whether Musk has done more to address climate concerns than people such as Rachel Carson or activists like Sweden’s Greta Thunberg or Kenya’s Wangari Maathai.

“The e-bike is going to turn out to be far more important than the Cybertruck — also, considerably better looking.”

Bill McKibben, author and environmentalist

So should Tesla have prioritized its long-touted low-cost EV, the so-called Model 2 that Musk promised 17 years ago, instead of Cybertruck? He reiterated in a YouTube interview this week that work is “quite far advanced” on an affordable model “that will be made at very high volume.” Still, the company hasn’t offered specifics about its price, driving range per charge or, crucially, when it might arrive on the market.

“Tesla has a history of moving from the luxury segment down market. That approach has allowed it to develop new technologies and learn manufacturing processes with lower-volume, higher-margin offerings before moving to the mass market where they need higher production efficiency,” said Sorenson, the UCLA professor. “If the Cybertruck helps them develop technologies and production practices that they then roll out on other future models, it may pay off.”

“On the flip side, the mass market segment keeps getting more and more competitive, with Hyundai, Kia, GM, Nissan, and others offering capable vehicles,” Sorenson said. “It may not make sense anymore for Tesla to try to introduce something with a lower price point than the Model 3.

This article was first published on and all figures are in USD.

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