The launch of Tesla’s (TSLA) long-awaited Cybertruck on Friday wasn’t enough to boost shares of the electric vehicle maker.
The price of the truck was much higher than many expected, with the lowest grade model starting at $60,990 before any electric-vehicle related tax benefits. In 2019, Tesla said it expected the truck to be priced at $39,900.
For investors, questions remain about demand for the Cybertruck, the top model of which could cost around $100,000.
“There were a lot of people in 2019 who wanted this product,” Tom Narayan, lead equity analyst for global auto at RBC Capital Markets, told Yahoo Finance Live on Thursday. “I would expect the conversion rate to be [from reservations] To be around 20%.”
The stock fell more than 2% in morning trading on Friday.
Narayan said the truck, which has some physical similarities to classic pickup trucks, has always been targeted at a “fairly specific niche customer.” And in some ways, even Tesla CEO Elon Musk acknowledged this.
“Finally, the future is going to look like the future,” he said of the truck’s design, which has been a draw for some customers.
Musk spoke in a dimly lit room at the event, just days after bashing advertisers who left X in an interview with The New York Times.
The launch of the truck caps a tumultuous year for Tesla, which has seen its share price surge on the prospects of its artificial intelligence targets, while also coming under pressure amid multiple price cuts and weak margins.
“It’s actually being used to sell [Model] 3 more [Model] Y”, Narayan said. “We should look at the Cybertruck that way. It’s really a halo car designed to drive demand for the 3S and Y, which is where most of the volume is going to come from next year.”
Narayan, who has a 12-month price target of $301 and an Outperform rating on the stock, doesn’t believe Cybertruck sales will be a major driver for the stock going forward. He said the truck was never intended to be a high-volume product.
He said his long-term estimate for Tesla stock is about 10% of upcoming car and truck sales, while 90% is based on “autonomy.”
“None of this will really matter. It will all be about autonomy and software and robotaxi and so on.” [full-self driving],” Narayan said.
FILE – In this Nov. 21, 2019 file photo, Tesla CEO Elon Musk introduces the Cybertruck at Tesla’s design studio in Hawthorne, Calif. The much-hyped unveiling of Tesla’s electric pickup truck came to a screeching halt Thursday night when the supposedly unbreakable window glass broke twice. When hit by a large metal ball. The failed stunt, which ranks high on the list of embarrassing auto industry rollouts, came just after Musk bragged about the strength of “Tesla Armor Glass” on his wedge-shaped “Cybertruck.” (AP Photo/Ringo HW Chiu, File) (Associated Press)
Josh Schafer is a reporter for Yahoo Finance.
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