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By Tim Higgins
LOS ANGELES -- Elon Musk is readying to reveal the next piece of Tesla Inc.'s electric-vehicle vision: a pickup truck, but the road won't be easy.
His history of struggling to bring out new products comes as the company tries to vie with U.S. auto makers that rely on trucks to fuel their profit engines in one of the country's most competitive segments. The latest gamble could help him expand further from a niche player into a mainstream all-electric car player.
The billionaire entrepreneur plans to reveal the newest vehicle in the Silicon Valley auto maker's lineup, a truck the chief executive on Twitter has dubbed "Cybertruck," Thursday night outside Los Angeles.
In recent months he has teased details suggesting the truck will have capabilities similar to those of Ford Motor Co.'s popular F-150 and a design inspired by the science fiction movie "Blade Runner." "It's closer to an armored personnel carrier from the future," Mr. Musk said Oct. 13 on Twitter.
A splashy event filled with customers and fans is part of the playbook long adopted by Tesla to generate interest in vehicles that are often months, if not years, away. Mr. Musk, known for his penchant for promotion, last month told analysts he views the Cybertruck as "our best product ever."
But customers may have to wait some time before they can get their hands on the vehicle. Tesla hasn't said when the pickup is supposed to roll off its production line, and Mr. Musk has a record of missing self-imposed deadlines.
Mr. Musk, about two years ago, revealed an electric semitrailer truck and new Roadster sports car. The semitrailer was supposed to begin production this year, but that has slipped to next year. The Roadster also remains in development. Earlier this year, Tesla also revealed the Model Y compact sport-utility vehicle, but that won't begin production until next year.
The busy product pipeline presents a challenge for Tesla. The company traditionally spent years largely focused on developing one vehicle at a time. Now it is working on multiple designs.
The Cybertruck also revives a question Tesla has faced before: Are consumers ready for an all-electric vehicle future?
Mr. Musk has defied conventional automotive industry wisdom during the past 16 years by demonstrating that hundreds of thousands of people were willing to pay a premium for electric cars. When Tesla first revealed the Model S large sedan in 2009, there was uncertainty over how large of a market there would be for an electric car. Mr. Musk proved customers could be won over.
But the jury is out on whether pickup buyers will be lured by environmental credentials and drawn away from models offered by incumbents in one of the most fiercely guarded segments in the U.S.
The pickup market has long been a tempting segment for auto makers eyeing the success it has brought for Ford and General Motors Co. but which has proven challenging for others to replicate.
Customers of GM, Ford and Fiat Chrysler Automobiles NV's Ram pickups have shown more brand loyalty than the typical sedan buyer. Almost 70% of Ford truck buyers, for example, returned to the Blue Oval again with their next truck purchases in the most recent survey of vehicle buyers conducted by market researcher Strategic Vision. That compares to 51% of Ford car buyers doing the same. By comparison, 34% of Nissan Motor Co. buyers bought another truck from the Japanese brand.
Tesla could be "at a major disadvantage because they would end up competing with themselves for those that are buying on prestige, while those who want a truck-truck -- rather than a sport-truck -- would look to others to provide that type of vehicle," said Alexander Edwards, president of Strategic Vision.
Tesla isn't alone in betting the time for an electric pickup is right. Rivian, a startup based in suburban Detroit, has been working for years on an electric truck. It plans to begin production in 2020 of a version with a price starting at $69,000. The company says the truck will have a range of 400 miles on a single charge. It revealed the vehicle at the Los Angeles Auto Show last year and has since received investments from Amazon.com and Ford, which is also working on its own electric truck.
Tesla is designing the Cybertruck with a starting price below $50,000, Mr. Musk said during an interview earlier this year with a podcast called Ride the Lightning. The pickup, he said, should be more capable than a Ford F-150 while performing like a Porsche 911 sports car.
"It's not going to be for everyone," Mr. Musk said in the June podcast. "If somebody just wants to have a truck that looks like what trucks have looked like for the last 20 years, 30 years, 40 years, then this probably isn't for them."
Ford shrugged off Mr. Musk's boisterous claims of outperforming its pickup. "We've heard that before a few times in our 42 years as America's undisputed truck leader with Ford F-series," Michael Levine, a Ford spokesman, said.
Paying for Mr. Musk's vision has been a challenge for Tesla amid repeated concerns about the company's small reserve of cash. Mr. Musk bought himself some breathing room earlier this year when Tesla raised more than $2 billion in new equity and debt and returned the company to being cash flow positive in the third quarter. Still, investors will be looking for details on how Mr. Musk plans to pay for another product and where he expects to build the vehicle.
Cracking the pickup segment comes with large financial appeal for Tesla. Large trucks accounted for 36% of Ford's North America unit sales last year, while those trucks generated 70% of the region's profit, Barclays PLC said.
That is, in part, because auto makers are able to charge so much more for these vehicles, with customers paying for performance features and creature comforts. The average new vehicle sold in the U.S. in October for $37,886. That month full-size pickups had average transaction prices of $50,496, greater than entry-level luxury sedans and SUVs, according to Edmunds, a website that tracks car sales.
Write to Tim Higgins at Tim.Higgins@WSJ.com
(END) Dow Jones Newswires
November 21, 2019 08:14 ET (13:14 GMT)
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