Tesla bulls have adopted the soon-to-launch Cybertruck as the all-encompassing panacea for the EV giant's demand-related woes, hoping that the so-called halo effect from the launch of the electric pickup truck translates into greater brand visibility and volume growth for other Tesla models. However, this bullish thesis appears to be enmeshed with lofty expectations that are only tenuously connected to ground realities.
What $TSLA IR was telling EU investors about Cybertruck 9/6:
-Only 250K/year in "target" capacity
-Will mainly sell in the US
-Difficulty with 4680 cells & stainless steel$TSLA has horrible yields on their in-house 4680s (see 10-Qs) & can only produce enough for 3K CTs/month. pic.twitter.com/ENt4A30gLf— Motorhead (@BradMunchen) September 27, 2023
Tesla briefed some of its key European investors on the Cybertruck's prospects in early September. Volume production of the new electric pickup truck is expected in 2024, with Tesla targeting an annual capacity of 250,000 units. However, there are a few major bottlenecks that hamper this lofty target. First, with the Cybertrucks wholly relying on Tesla's in-house 4680 battery cells, the EV giant can only cater to a production level of around 3,000 units per month, given the current less-than-stellar yields on these cells. In other Cybertruck-specific changes, Tesla will use a 48-volt architecture for the internal electronics as well as a 1000-volt architecture for the powertrain. All of these changes complicate the production ramp-up of the electric pickup truck.
Even if Tesla manages to hit its peak production target of 250,000 units per year, it is as yet unclear whether sufficient demand would materialize for these somewhat quixotically-shaped vehicles. Consider a recent survey where just 27 percent of respondents conveyed their preference for the Cybertruck.
DB with a pretty neg note on $TSLA despite their Buy rating: Q3 deliveries will 440k down from previous estimate 455k (street at 453k). Worse, they "see a larger risk to expectations for 2024 on both growth and earnings as TSLA indicated recently at our DB IAA meetings that it is…
— heartbreakout (@heartbreakout) September 26, 2023
It is hardly a surprise, therefore, that Deutsche Bank has now cut its 2024 delivery estimate for Tesla to 2.1 million vehicles versus the consensus estimate of 2.3 million units. The bank's 2024 delivery outlook only includes a "minor contribution" from the Cybertruck. In the near term, the bank now sees Tesla delivering 440,000 units in Q3 2023, down from its previous estimate of 455,000 units. Accordingly, the bank now estimates that Tesla will report $23.3 billion in revenue for the third quarter of 2023.
We noted yesterday that Wall Street is scrambling to reduce its elevated delivery estimates for Tesla just ahead of the official reporting at the turn of the month. With the halo effect from Cybertrucks likely failing to materialize in the near term, the risks to the EV giant's elevated stock price remain quite significant.
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