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3 Months : From Oct 2019 to Jan 2020
By Tim Higgins and Heather Somerville
LOS ANGELES-- Elon Musk unveiled the next piece of Tesla Inc.'s electric-vehicle vision: a pickup truck with a starting price of $39,900. But the road won't be easy.
Mr. Musk's gamble on the lucrative truck market could help him expand the Silicon Valley car company further from a niche player into a mainstream all-electric manufacturer. Yet as Tesla tries to vie with U.S. auto makers that rely on pickups to fuel their profit engines, it must contend with a history of struggling to bring out new products.
The billionaire entrepreneur revealed the newest vehicle in the Silicon Valley auto maker's lineup--a pickup the chief executive has dubbed "Cybertruck"--on Thursday night outside Los Angeles.
Mr. Musk took the stage and immediately took aim at U.S. auto makers, joking that all pickups look alike. He proceeded to show his truck: A large, triangle-like vehicle that will look unlike anything else on the road.
The truck, he said, was made of superstrong steel that could take blows from a sledgehammer without denting and had armor glass that was hard to break--though an on stage demonstration failed when a metal ball twice thrown at side windows left them badly damaged.
The performance specs of the three versions of the vehicle would rival the popular Ford F-150 and in the top-end version, beat the Blue Oval's best towing ability.
The entry-level, $39,900 rear-wheel drive model would have a range of more than 250 miles. A version with dual motors and all-wheel drive priced at $49,900 would have a range of more than 300 miles. The top-end model with so-called tri-motor and all-wheel drive would be able to drive more than 500 miles on a single charge and cost $69,900, according to the company. It would also have the acceleration of a sports car, going from zero to 60 in 2.9 seconds, Mr. Musk said.
The company began taking orders on its website with fully refundable deposits of $100. The company was vague about when production would begin. It said customers could complete their vehicle configurations as the start of production nears in late 2021. Production of the tri-motor version is expected to begin in late 2022, Tesla said.
Ahead of the event, Mr. Musk 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."
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 truck 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 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 pickup truck 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 the market 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 competitive 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 the success has proved challenging 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 for their next truck purchases, in the most recent survey of vehicle buyers conducted by market researcher Strategic Vision. That compares with 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 that 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 Inc. and Ford, which is also working on its own electric truck.
Rival trucks had doors that "might as well be made of tissue paper," he said. "When you say something's 'built tough' that's what we mean," he said in a swipe at Ford's slogan "Built Ford Tough."
The high-end Tesla pickup would be able to tow 14,000 pounds, Mr. Musk said. Ford offers an F-150 with a maximum tow rating of 13,200 pounds. In July, Ford showed off a prototype version of its electric truck, currently under development, towing a train weighing more than 1 million pounds. On Thursday night, Mr. Musk showed a video of his truck winning a tug of war with a Ford truck.
Earlier this week, Ford shrugged off Mr. Musk's previous claims about the new vehicle outperforming a Ford pickup. "We've heard that before a few times in our 42 years as America's undisputed truck leader with Ford F-series," said Michael Levine, a Ford spokesman.
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 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 and Heather Somerville at Heather.Somerville@wsj.com
(END) Dow Jones Newswires
November 22, 2019 01:38 ET (06:38 GMT)
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