By Tim Higgins and Heather Somerville
Elon Musk embraced unorthodox designs for Tesla Inc.'s
all-electric pickup to wow truck buyers and help differentiate it
from popular gasoline-powered models that he knocked as boring
look-alikes.
But the features he is promising could dent the commercial
prospects of the vehicle Mr. Musk has dubbed Cybertruck.
Mr. Musk late Thursday unveiled the triangular, stainless-steel
truck that evoked a science-fiction future. The unveiling outside
Los Angeles focused on showing how robust the vehicle would be and
how it would stand out from big sellers such as Ford Motor Co.'s
F-150 or General Motors Co.'s Chevrolet Silverado and the GMC
Sierra pickup family. The Tesla pickup is even bulletproof, Mr.
Musk said.
But when it came to demonstrating the Cybertruck's toughness,
things went ominously off script. Mr. Musk asked his head of design
to throw a small metal ball at the vehicle's side window. The
resulting crack of the window surprised the audience, including Mr.
Musk.
"Oh my f-ing god," Tesla's chief said. "Maybe that was a little
too hard."
The truck's unique appearance also caused a stir. The pickup
looked like the love child of a DeLorean, the unconventional sports
car featured in the Back to the Future movies, and a Pontiac Aztek,
which was widely panned as ugly in the early 2000s and became an
embarrassment for GM. Early Friday, DeLorean was even trending on
Twitter and some users were digging out past photos of the
Aztek.
Tesla may have time for the Cybertruck's look to grow on
consumers. The model isn't due out for a while, plus the electric
pickup market is nascent. Research firm IHS Markit Ltd. projects
electric vehicles will account for about 9% of the U.S. auto market
in 2026, up from less than 2% today, and pickups would be a subset
of that figure.
"There is some time to start to acclimate to it," said Stephanie
Brinley, principal automotive analyst at IHS Markit.
Some fell for it immediately. Twitter was filled with new
Cybertruck buyers celebrating their purchase commitments. One user,
@WilliamsAinsley, said on Twitter he made his down payment Friday
morning. He was planning on buying a Model X, Tesla's sport-utility
vehicle, "but once I saw this new design and the new interface plus
the interior that was like, it's a must have!"
Mr. Musk has defied conventional automotive industry wisdom
during the past 16 years by demonstrating that hundreds of
thousands of people are willing to pay a premium for electric cars.
Sleek design was part of the formula, inspiring people to buy a
cool car, like the Model S, that just happened to be electric. The
pickup aims to follow in the tradition.
As Tesla prepared the pickup, some inside the company worried
Mr. Musk's personal taste was overly influencing the design and
questioned whether his preferences would be in line with
buyers.
In some ways, the Cybertruck's extreme, aggressive looks coupled
with the emphasis on ruggedness conform with trends in the segment.
Fiat Chrysler Automobiles NV's Ram, for example, has pushed the
envelope in recent years with its brutish look -- and it has been
rewarded with increased sales, threatening GM's Silverado
business.
But several analysts said Tesla has gone too far. The
Cybertruck, they said, could be relegated to be a niche product,
lacking in appeal for the commercial buyers who make up a big part
of the pickup population. Dan Levy, an analyst with Credit Suisse,
was blunt: "Ford and GM can now breathe easy again."
Shares in Tesla fell 6.1% on Friday.
Tesla has to cut a new path if it is win over truck buyers, who
tend toward strong brand loyalty. Toyota Motor Corp. and others
have tried to take market share from the Detroit auto makers for
years, with little luck. One area where Toyota has found success is
in midsize trucks, especially in California, where certain
consumers will choose a pickup to run errands and pursue weekend
hobbies.
"The market has changed," said Alan Amici, vice president and
chief technology officer of transportation solutions at TE
Connectivity, a supplier to the automotive industry. "You have very
affluent buyers who are probably not doing construction work but
are using it for lifestyle."
California is Tesla's home state and its best U.S. market.
Tesla's design may provide an alternative for people who don't
like the look or feel of a typical pickup. The top-end model would
have the acceleration of a sports car, going from zero to 60
miles-per-hour in 2.9 seconds, Mr. Musk said Thursday.
Ross Gerber, chief executive of Gerber Kawasaki Wealth &
Investment and a Tesla investor, took to Twitter on Friday to
praise the Cybertruck. "It's possible that Tesla just expanded the
market for trucks," he wrote.
Analysts said the Tesla truck could appeal to early adopters and
those looking to attract attention.
"With its unabashed looks, we believe the truck will initially
appeal to the influencer crowd (celebrities and pop culture) and
the `look at me' crowd," said Joseph Spak, an analyst with RBC
Capital Markets. "Call the Cybertruck a Hummer for the green
millennial generation, really the ultimate virtue and vice
signaling machine."
In the 2000s, GM's Hummer brand of large, military-inspired SUVs
attracted a following among buyers looking for a flashy ride, until
high-gas prices and concerns about the environment led to dwindling
sales and the brand's termination.
Toni Sacconaghi, an analyst for Sanford C. Bernstein & Co.,
estimated Cybertruck sales could reach 50,000 a year, in the range
of annual Hummer sales of between 30,000 and 80,000 vehicles during
its lifetime.
"Tesla's Cybertruck looks weird...like, really weird," he said
in a note to investors. "Which is too bad, because its on-paper
specs are insane and the price is very competitive & much
better than expected."
Tesla didn't skimp on the meat-and-potatoes for pickup buyers.
The Cybertruck can tow 14,000 pounds and has up to 16 inches of
clearance, Mr. Musk said.
Tesla often has had an early-mover advantage with its electric
vehicles, but not this time. Ford has announced plans for an
electric pickup and GM has said its version would be in the market
by the fall of 2021. Tesla was vague about when the Cybertruck
would be available, but said it would be nearing production around
then. Rivian Automotive, a startup based in suburban Detroit, has
been working for years on an electric truck it plans to put into
production in 2020.
Mr. Musk's decision to go for an unusual structural
configuration for the pickup truck could bring new headaches for a
company that has struggled to ramp up production of every vehicle
it has brought to market.
Pickup design generally entails a body-on-frame approach. Mr.
Musk likened the Cybertruck to having an exoskeleton that is
sturdier and allows for a roomier interior -- but that approach
could add cost and complexity in building the model.
Tesla said the entry-level rear-wheel drive Cybertruck would
sell for $39,90, with higher-end, more-capable all-wheel-drive
versions priced up to $69,900. Tasha Keeney, an analyst with ARK
Invest, a long-term Tesla shareholder, said the prices are
competitive and signal that auto makers are approaching price
parity between electric and combustion-engine vehicles.
But Mr. Musk in the past has struggled to achieve the starting
price that he initially touted. The Model 3 didn't first arrive in
stores with the long-promised $35,000 starting price, and it took
months and months of effort and extreme cost cutting to get down to
close that price. Most Model S models sell for much more, which
makes investors happy.
David Kudla, founder and chief executive of Mainstay Capital
Management and a short seller of Tesla stock, questioned Tesla's
ability to make a profit on a vehicle with a bulletproof steel
body, armored glass and such a low starting price.
"That's just reminiscent of a $35,000 Model 3 that they really
haven't gotten to in a very realistic way," Mr. Kudla said.
Write to Tim Higgins at Tim.Higgins@WSJ.com and Heather
Somerville at Heather.Somerville@wsj.com
(END) Dow Jones Newswires
November 22, 2019 17:02 ET (22:02 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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