Tesla Cybertruck Will Disrupt the Pickup Market, Could Bank $50B+ Annual Revenue Plus FSD Income

Tesla Cybertruck Will Disrupt the Pickup Market, Could Bank $50B+ Annual Revenue Plus FSD Income

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Tesla Cybertruck was unveiled in Los Angeles on November 21, 2019 by Tesla CEO Elon Musk. The unique design surprised most everyone, including myself, who attended the event. But what impacted me most was the price versus range of the Tesla Cybertruck. And I am pretty sure this same impact wasn't too welcome amongst the Detroit's Big 3 automakers: GM, Ford, and Fiat Chrysler.

In general, the auto industry is not an easy field to enter—let alone survive or even thrive. Most of the models (etc sedans & coupes) from those "Big 3" are basically selling at a very low margin, with profit usually coming from maintenance and repair parts, all after the warranty expires, as well as from the service side. Pickup trucks, though, are one of the last few models remaining (in addition to SUVs & CUVs) able to generate a substantial margin. 

Quick look at the 2019 Pickup Truck Market:

In 2019, statistics show that pickup trucks still occupy a dominant position in the US auto market. For decades, the Ford F series has been the undisputed champion in this field, and the Dodge Ram is also a significant player on the sales list. In 2019, 633,694 Rams were sold—an increase of 18% over the previous year, despite the fact that there is still a big gap between the Ram and F series. Still, Ram is the only full-size pickup that achieved double-digit sales growth in 2019. The top three best selling pickup trucks were Ford F series with 896,526 units, Dodge Ram with 633,694 units, and Chevy Silverado with 575,569 units.

For 2019, total pickup trucks sold in the US were 3,113,943 units, with an average price of $51,700 (by JD Power). This equals a $160 billion annual market in the US. 

Tesla Cybertruck in 2022 and Beyond:

The base model Single Motor RWD Cybertruck's starting price is $39,900,  with a 250-mile+ range. The Dual Motor AWD Cybertruck comes with 300+ mile range and a starting price of $49,900. The Tri Motor AWD Cybertruck gives you an industry leading 500+ mile range, with a $69,900 starting price. Compared to the 2019 data above, the Dual Motor Cybertruck pricing slides in right below the average US pickup truck selling price. This will directly impact the ICE (Internal Combustion Engine) pickup truck market, not to mention the EV's cost of ownership is way cheaper than that of gas-powered trucks.

During the Q3 2020 Tesla earnings call, CEO Elon Musk dropped some hints on Cybertruck production and its delivery timeline:

"If all goes well, we'll be able to do some Cybertruck deliveries toward the end of next year, yes. So it's difficult to predict. I would say there's probably a lot of deliveries in '22 and some deliveries toward the end of next year if things go well."

And most interestingly, it just so seems that the Cybertruck’s delivery timeline syncs up quite well with the timeline on Tesla's pilot Roadrunner line for the new 4680 battery cell development—which Musk also mentioned during the Tesla Battery Day event. As Tesmanian reported on September 27thTesla continues to test production for its new, state-of-the art batteries that are slated to roll out at large scale by 2022. By this time, the company plans to reach approximately 200GWh. If we consider the scenario for the production of vehicles with batteries of an average capacity of 80kWh, 200GWh would be enough to produce 2.5 million vehicles per year.

This leads me to believe Tesla could quite possibly be preparing for the next big tsunami wave—this time not just aimed at sedans and crossover SUVs—but squarely aimed at the ICE pickup truck market. And as usual, when Tesla enters a segment or product area, it usually takes 1/3 of the total market share, if not more (ie, Model 3 in the premium sedan market). With a total of $160 billion annual pickup truck sales in the US (2019 data), I can confidently predict a $50B+ annual revenue from Cybertruck alone. And this could happen in 2025, if not earlier. 

Full Self Driving Revenue Will Soon Be Major:

Last is the software revenue from Tesla Full Self Driving (FSD), a $10,000 one-of-a-kind advanced technology software. As a Tesla FSD Beta tester myself, I can fully see and understand the massive potential, and also foresee great demand for FSD in the long run.

And now we also know, directly from Musk, that there will also be a FSD subscription option—which will allow for even greater market penetration.  Software revenue will remain an enormous profit margin generator. The reality is, the vast majority of these huge software sales will head directly to Tesla’s bottom line—an achievement which is only the stuff of dreams for the Detroit's Big 3 automakers. 

Thoughts from the Editor:

The pickup market is already huge, particularly in the US. Cybertruck will likely both disrupt and grow this market substantially, to put it conservatively. Cybertruck will totally revolutionize buyers’ expectations for what a truck can do—ie, range, towing capability, utility, performance, and all-the-while fully electric, and available with the Holy Grail: FSD. I am also eager to hear more on what potential battery storage/vehicle-to-grid (V2G) potential Cybertruck could offer, especially in light of the new 4680 cells. 

We can already see the wide, diverse array of people placing Cybertruck orders—many of whom are first-time pickup buyers. And as Cybertruck production reaches scale, I suspect it will also begin to grow the global pickup market, like never before. Tesla has a passionate and loyal group of customers around the world—many of whom won’t be able to wait to get their hands on the steel beast.

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Article edited by @SmokeyShorts, you can follow him on Twitter

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Vincent Y

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