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Tesla CEO Elon Musk unveiled the electric car maker’s first pickup on Thursday night and Wall Street analysts were highly critical of the truck’s dramatic styling.
“Tesla’s Cybertruck looks weird … like, really weird. Musk had warned investors that Tesla’s pickup would be ‘really futuristic, like cyberpunk Blade Runner,’ and he wasn’t kidding,” Bernstein analyst Toni Sacconaghi wrote in a note to investors titled “Mad Musk, Fury Road.”
Tesla shares fell 5% in Friday trading from its previous close of $354.83.
Some analysts think Cybertruck’s extraordinary looks will become its key selling point.
“While styling will always be subjective, we believe the unique and futuristic design will resonate with consumers, leading to solid demand,” Canaccord Genuity’s Jed Dorsheimer said.
Yet skeptical Tesla analysts don’t expect Cybertruck will be a serious competitor in the pickup market, with Credit Suisse saying that companies like Ford and General Motors “can breathe a sigh of relief.” Cowen analyst Jeffrey Osborne said that “Tesla appears to have rushed its launch of the Cybertruck.”
“Musk has been enthusiastic about his Blade Runner inspired design for months, but we were still surprised how futuristic he went with this one and believe it may shatter his dreams,” Osborne said.
Shares of Ford rose 1% in trading.
‘Not a good start’
During Thursday night’s unveiling, Tesla’s top designer twice threw a metal ball at the pickup truck’s armored windows to prove their toughness and smashed them by mistake.
“The shattering of the truck’s unbreakable glass windows during the live demonstration was not a good start,” Deutsche Bank said in a note.
Here’s what major Wall Street analysts were saying about the Cybertruck.
Bernstein’s Toni Sacconaghi – Market-perform, $325 price target
“Add a little bit of dirt, and you could even say it gives off a retro-future vibe a la Mad Max …But looks do matter, and we think Cybertruck is likely to be a niche offering – with sales of perhaps 50K units a year or less. We think the best potential comp for the Cybertruck is Hummer, which sold 30 – 80K units annually during its lifetime … We suspect Cybertruck will not materially impact Tesla’s financials, or investor sentiment, though its aggressive price raises the question of how healthy gross margins might be.”
Deutsche Bank’s Emmanuel Rosner – Hold, $290 price target
“We believe there are important unanswered questions to be able to assess potential buyer interest in the model, and whether this could attract commercial fleets or remain a consumer niche vehicle. First of all, is the exterior design too polarizing? Second, what are the real battery ranges under working conditions, with a payload or while towing? A greatly reduced range would require commercial customers to opt for the higher trims, which could be significantly more expensive than their equivalent traditional pickups. Third, will commercial buyers trust Tesla’s build quality? While the materials used appear robust, there could be questions about the truck’s durability when used under work conditions, especially in light of its seemingly unibody construction. And the shattering of the truck’s unbreakable glass windows during the live demonstration was not a good start.”
Cowen’s Jeffrey Osborne – Underperform, $190 price target
“In a night to be remembered for the Armored Glass fail, Tesla’s Cybertruck reveal will likely disappoint current pickup truck owners and we see the vehicle remaining a niche and not a mainstream product. The Blade Runner inspired design appears to be the most controversial feature. The base price of $39,900 is likely never to be seen, just as the $35k Model 3 has failed to materialize … Musk has been enthusiastic about his Blade Runner inspired design for months, but we were still surprised how futuristic he went with this one and believe it may shatter his dreams. Tesla appears to have rushed its launch of the Cybertruck in our view as it did not even have side mirrors or windshield wipers. While the vehicle is a concept, historically the company’s “reveals” have been very similar to what went in production. While we are pleased to see Tesla enter the most profitable segment of the North American passenger car market, we do not see this vehicle in its current form being a success.”
Canaccord Genuity’s Jed Dorsheimer – Buy rating, $375 price target
“The starting price point of $39,900 for the 250-mile-range, single-motor RWD design option was also a strong point as this positions the Cybertruck competitively in the middle of the lucrative truck market, with production expected in “late 2021.” While the futuristic design may be polarizing, we are encouraged by the Cybertruck release and believe that along with the coming Model Y crossover SUV, Tesla will be able to address two key categories of the automotive market that it previously could not.”
Credit Suisse’s Dan Levy – Underperform, $200 price target
“We saw multiple key takes post Tesla’s Cybertruck unveil tonight: 1. Models 3 and Y remain the ‘main event’ for Tesla; 2. We expect Cybertruck to be a lifestyle vehicle; but amid a highly radical design (unlike anything the industry has seen), it’s unclear to us who the core buyer will be; 3. Tesla tried to throw a lot of stones at the legacy pickups on the market, with Tesla highlighting advantages in durability, towing, payload, and 0-60. Yet we think the legacy OEMs can breathe a sigh of relief, as we don’t expect Cybertruck to encroach on large pickup share.”
– CNBC’s Michael Bloom contributed to this report.
