(Bloomberg Opinion) -- Who really needs bullet-proof glass, anyway? The president, yes, but him aside, it’s a niche market. Come to think of it, who even needs trebuchet-proof glass? Granted, the “transparent metal” windows on Tesla’s “Cybertruck” didn’t stand up to the literal slings at its unveiling in Los Angeles on Thursday night. But as long as you aren’t planning on off-roading into the middle of a medieval siege, you’re probably good.
The more pertinent question, perhaps, is who really needs this truck?
One way to answer that is to think of the Cybertruck as an actual truck. Its, er, radically angular design represents a departure in more ways than one (you can take in its planar splendor here). No other truck, or pretty much any other vehicle, looks like it. The specs, particularly at the high end, sound formidable, with Tesla boasting 500+ miles of range and a towing capacity that beats Ford Motor Co.’s F-150. It can also, according to Tesla’s video, outrace a Porsche. And it runs on electricity, of course.
It also represents a departure from Tesla’s approach to date. The thing about the Models S and 3, and the X up to a point, is that they emulated the shape of the cars you know. Without an engine, there’s no compelling reason for the S to have that regular hood other than it getting you comfortable with the idea of driving an electric vehicle. Even the Tesla Semi, unveiled in similar fashion almost exactly two years ago, looked like a semi with some attitude. But with this pickup, CEO Elon Musk actually kicked off Thursday’s festivities by scrolling through pictures of old truck models and mocking how boring and uniform they are.
There is a well-established school of thought which holds that many truck drivers prefer boring. Sure, anyone splashing out on, say, the rolling palace that is an F-150 King Ranch probably isn’t doing so purely for its drywall-carrying capabilities. But just as the boasts about the Tesla Semi’s acceleration were a bit odd — do you really want your driver gunning it with a payload of forklifts? — so the Cybertruck’s polyhedral aesthetic and features such as adjustable air suspension appear more suited to the smaller crowd not planning on hauling around a lot of drywall. Analysts at Evercore ISI estimate it would be tough for Tesla to hit 50,000 units in two years, when it is supposed to go on sale. Even at that level, at $50,000 a pop the theoretical revenue of $2.5 billion compares with an existing consensus revenue estimate for Tesla in 2022 of almost $42 billion.
Strikingly, you only have to put up $100 to reserve your place in line for the Cybertruck. That’s way lower than $1,000 for the Model 3 or the $2,500 required for the forthcoming Model Y. On that point, I also couldn’t help noticing how the Cybertruck was unveiled in the full glare of the spotlight, as opposed to the chiaroscuro debut of the far more critical, from a business perspective, but relatively humdrum Model Y back in March.
It all suggests the Cybertruck might better be understood at this moment as more than just a truck.
The thing is, that snafu with the smashed windows will likely be laughed off by Tesla bulls. They have, after all, already laughed off multiple missed deadlines, almost laughable governance, the SolarCity debacle (which is ongoing in the form of mind-boggling court depositions from Musk and others), “funding secured,” bewildering executive turnover and multiple transfusions of capital.
That last point is linked to why, as I wrote here, Tesla’s stock price appears to drive strategy and operations, rather than the other way around. The Cybertruck’s futuristic look and vaunted specs and pricing — which aren’t due to prove out for a couple of years at least — come just as Tesla’s sales growth has stalled. Meanwhile, consistent underspending on capex, even as bigger rivals are launching competing electric models, ought to raise concerns about the company’s ability to stay at the cutting edge.
The stock has jumped recently nonetheless, in response to a surprise profit in the third quarter. But, as I wrote here and here, it was a mouse-sized swing on which to balance Tesla’s elephantine valuation. While Tesla expects the Model Y and Chinese Model 3 sales to help re-accelerate things soon, that’s already priced in (and then some) when your stock trades at 208 times GAAP earnings for next year. In that context, the Cybertruck is perhaps best understood as Tesla’s latest effort to bulletproof its own multiple(1).
(1) Judging by Friday morning's sell-off, that effortcould probably use some "fixing in post", as they say.
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Liam Denning is a Bloomberg Opinion columnist covering energy, mining and commodities. He previously was editor of the Wall Street Journal's Heard on the Street column and wrote for the Financial Times' Lex column. He was also an investment banker.
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