Summary
- Demand for Cybertruck shows signs of weakness
- High price, unusual design deter buyers, analyst says
- Tesla U.S. registrations down 7% through Oct, S&P Global Mobility data shows
- Used Cybertrucks are taking longer to sell – industry exec
SAN FRANCISCO, (Reuters) – Tesla is aiming to post slight growth in 2024 deliveries over last year with generous incentives across its EVs – but a lot depends on the success of the new Cybertruck pickup, which is showing signs of weakness, analysts said.
After years of rapid growth, Tesla delivered a record 1.81 million vehicles in 2023. But rising competition and an aging lineup have hit the electric-vehicle market leader hard as consumers, faced with high borrowing costs, choose less expensive hybrids over battery-powered vehicles.
CEO Elon Musk is betting on plans for a robotaxi business to turn Tesla’s fortunes as his ally, President-elect Donald Trump, is expected to clear regulatory hurdles. But analysts say the technology is still years away, and Musk’s target of 20-30% sales growth next year hinges on his promise of a cheaper version of current cars and success of the Cybertruck.
The truck’s higher-than-expected price tag and a design that has been called polarizing – a trapezoidal, stainless-steel exterior meant to stand out in a fiercely competitive market – are keeping buyers at bay, said Sam Fiorani, vice president at research firm AutoForecast Solutions.
“Unfortunately, buyers of full-size trucks are a rather conservative crowd,” he said. “They’re just not hitting as strong as early expectations.”
Tesla slashed prices of its vehicles last year to stimulate demand, sparking a price war across the industry.
This year, the company has focused on offering lucrative incentives, including low-cost financing deals on its Model 3 sedans and Model Y SUVs as well as lower lease prices.
Tesla also offered three months of free fast-charging and Full Self-Driving, its advanced driver assistance software, for all new orders that deliver by Dec. 31.
Still, data from S&P Global Mobility showed Tesla’s U.S. registrations as of end-October fell to about 500,000 vehicles, down about 7% from the year-earlier period. The decline was partly due to a fall of 32% in Model 3 registrations, and to a 24% drop in Model S luxury sedans.
Tesla does not break out sales of Cybertruck – but the S&P data showed U.S. registrations of the pickup falling to 4,335 in September and 4,039 in October, from 5,428 in August. Through October, the total was 31,451. Analysts at Bernstein expect 50,000 of them by the end of the year.
“The Cybertruck is not doing enough to bring the brand up,” said Tom Libby, S&P Global Mobility’s associate director of industry analysis.
Tesla is expected to report in early January that it delivered 1.81 million vehicles in 2024, which would be flat with 2023’s figure, according to analysts polled by LSEG.
INDICATIONS OF SOFTENING DEMAND
In 2019, Musk said the Cybertruck would come with a $40,000 price tag. It drew 1 million reservations, he said in 2023. But late last year, following several delays, the launch edition Foundation Series truck rolled out as high as $120,000 apiece.
Two versions currently available for sale are the Cyberbeast at close to $100,000 and an all-wheel-drive at about $75,000.
Tesla has also stopped taking reservations, instead allowing buyers to place orders directly. Some Cybertrucks are even available in its inventory for immediate delivery – moves that according to analysts suggest a problem with demand.
The company also started offering the Cybertruck on lease starting at $999 a month in November, before reducing the price to $899 a month.
“When you see those types of deals, they are basically an indication of softening demand,” S&P’s Libby said. But he said it was too early to conclude there was a long-term demand challenge.
Tesla did not respond to a request for comment.
Demand and supply for the Cybertruck are closely monitored by Tesla investors and fans, as Musk has poured in resources to its development but said the company could face “enormous challenges” in ramping up production and making it cash-flow positive.
The Cybertruck is also piling up on used car lots – a red flag, according to industry executives.
Used Cybertrucks are now taking about 75 days on average to sell after being listed on CarGurus, an online marketplace for buyers and sellers of new and used cars, up from an average of about 27 days in May.
“The number of days they’re sitting is getting longer and the price is coming down, and I can tell you the sales volume has come down,” said Kevin Roberts, director of economic and market intelligence at CarGurus.
Reporting by Abhirup Roy in San Francisco; Additional reporting by Aditya Soni in Bengaluru; Editing by Matthew Lewis
