Why Is The Tesla Cybertruck Underperforming?

Tesla (NASDAQ:TSLA) Cybertruck was launched with considerable fanfare. However, a little over a year since the futuristic pickup started rolling out to customers in November 2023, sales appear to be struggling.

Tesla initially reported that it had well over 1 million reservations for the Cybertruck and early trends were pretty strong. Cybertruck emerged as the bestselling electric pickup in the U.S. over Q2 2024  as production ramped up and the company focused on fulfilling the backlog of orders. However, the momentum has waned considerably since then. Although Tesla doesn’t break out delivery numbers for the Cybertruck, we do have some context. Over Q4 2024, Tesla delivered 471,930 units of its mass-market vehicles the Model 3 and Y, while sales of the Model X, S, and Cybertruck combined stood at just about 23,640. Now Tesla sold about 17,147 units of the Model X and S in Q4 FY’22, a year before the Cybertruck launch. Assuming that Model S and X sales have remained flat, it means that sales of the Cybertruck were likely just about 6,000 units for the Q4 2024 accounting for less than 1.5% of Tesla’s total volumes. So what’s holding the electric pickup truck back and what does it mean for Tesla stock? Separately, if you want upside with a smoother ride than an individual stock, consider the High Quality portfolio, which has outperformed the S&P, and clocked >91% returns since inception.

What Has Impacted Demand?

Several factors have dampened demand for the Cybertruck. The final product launched by Tesla deviated from the initial specifications the company talked up at its unveil event back in 2019. While Tesla originally advertised a starting price of $40,000 in 2019, the base rear-wheel-drive variant is now priced at about $61,000 – over 50% higher than initially promised and this model hasn’t been launched yet.  Tesla currently only sells the dual-motor all-wheel-drive variant which currently starts at $80,000, while the top-tier “Cyberbeast” model is priced at $100,000. Besides the pricing, the pickup also launched with a lower-than-promised driving range and a reduced payload capacity.  For comparison, Rivian’s highly acclaimed (and slightly smaller) R1T has a starting price of $70,000, while Ford’s more conventionally styled F-150 Lightning is priced at about $55,000 and upward. The higher price tag and lower-than-promised specs likely meant that a good chunk of the initial pre-orders, which required a $100 refundable payment, did not move forward with their orders. See how Trump can drive Tesla Stock To $1,000.

It’s also pretty certain now that production is not an issue. Tesla has increased its discounts as well as incentives for the truck over the last quarter and Cybertrucks were available in less than a week post order, as of late 2024.  There were reports that Cybertruck line workers were apparently asked not to come to work for three days in December – another sign that demand is cooling. Moreover, some of the Cybertruck production staff at Tesla’s Austin factory have been shifted to assembly of the model Y.

Although the U.S. pickup truck market is quite large, with volumes for the top five players standing at roughly 3 million units per year, this will likely remain a niche product for Tesla. The Cybertruck, which features a radical design and comes with range-anxiety issues, may not be that appealing to traditional pickup customers who prioritize practicality and durability.  Customer loyalty in the truck market is very high, meaning that Tesla could be having a tough time going after existing owners. Competition is also strong. EV upstart Rivian’s R1T pickup truck received rave reviews. Similarly, mainstream pickup manufacturers are also seeing traction with their electrification plans, with Ford’s electric version of its iconic F-150 seeing reasonably strong demand in early 2024, although sales have cooled off recently.

Can Sales Pick Up? 

Tesla previously indicated that it could eventually manufacture about 250,000 Cybertruck pickups per year post-2025. However, this level of demand appears to be very unlikely in the near term. There are some strategies Tesla could use to boost sales. The company might introduce lower-priced variants or reduce entry prices, as it has done with the Model Y and Model 3 over the past year. Moreover, Tesla could expand the truck’s availability to overseas markets, though this may not significantly drive sales given that the U.S. is the principal market for pickup trucks globally, with U.S. pickup truck sales estimated to be more than twice the size of the rest of the world combined.  The 2025 Tesla Cybertruck is now eligible for a $7,500 federal tax credit, which makes it more affordable for customers. However, reports suggest the incoming Trump administration may seek to eliminate this program, potentially affecting sales in the coming months.

The increase in TSLA stock over the last 4-year period has been far from consistent, with annual returns being considerably more volatile than the S&P 500. Returns for the stock were 50% in 2021, -65% in 2022, 102% in 2023, and 63% in 2024. The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, is considerably less volatile. And it has comfortably outperformed the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride as evident in HQ Portfolio performance metrics. Given the current uncertain macroeconomic environment around rate cuts and multiple wars, could TSLA face a similar situation as it did in 2022 and underperform the S&P over the next 12 months – or will it see a strong jump?

We value Tesla stock at about $240 per share, which is well below the market price. We remain bearish on the stock for a couple of reasons. Over 2024, Tesla’s deliveries declined year-over-year for the first time in over a decade. Competition in the EV market is heating up with Chinese EV players gaining ground in international markets, while the early adopter market for EVs in the U.S. appears to be saturating, reducing the pool of first-time buyers. Tesla’s aggressive price cuts over the past year, aimed at spurring demand, also appear to have lost their initial impact, as price competition grows fiercer. Tesla’s valuation post the recent rally is hardly cheap. The stock trades at a lofty 120x consensus 2025 earnings – and it might take quite a bit of time for the company to grow into this rich valuation. There’s very little room for error if growth does not accelerate in the coming years. See our analysis on Tesla Valuation: Is TSLA Stock Expensive Or Cheap? for more details on Tesla’s valuation and how it compares with peers. For more information on Tesla’s business model and revenue trends, check out our dashboard on Tesla Revenue: How Does TSLA Make Money?

[1] Returns as of 1/13/2025
[2] Cumulative total returns since the end of 2016

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