Investor Gary Black believes that a smaller Tesla pickup truck could significantly boost the company’s total addressable market and earnings potential. According to Black, a smaller pickup would be a compelling new form factor that could expand Tesla’s market and earnings.
A Smaller Pickup Truck: The Key to Increased Sales
Black estimates that a smaller pickup truck could add 420,000 incremental units per year to Tesla’s deliveries, with little to no cannibalization of the company’s existing models. This is in contrast to the Tesla Cybertruck, which Black labels a “disaster” due to its poor sales and unprofitability.
The Cybertruck: A Missed Opportunity
The Cybertruck has been a disappointment for Tesla, with sales of only 5,000 units per quarter, compared to a capacity of 31,250 units per quarter. Black believes that the Cybertruck is too big, too expensive, and impractical for most customers who want pickups.
The Path Forward
Black suggests that a smaller, $50,000 pickup truck could capitalize on Tesla’s brand and earn the company 15-20% margins on a global scale. However, he notes that the company needs to listen to consumers instead of letting engineers decide what’s best for them.
Criticism of Tesla’s Decision-Making
Black’s comments come after Tesla’s co-founder, Martin Eberhard, criticized the company’s decision to scrap plans for an affordable $25,000 model in favor of the Cybertruck. Black has also criticized Elon Musk and Tesla for the affordable variant in the Tesla lineup being a scaled-down version of the Model Y, which he believes will lead to cannibalization.
Looking Ahead
Despite the criticism, Musk remains optimistic about Tesla’s future, hinting that a $20 trillion valuation could be possible with extreme execution. However, Black’s comments highlight the need for Tesla to reassess its strategy and focus on creating vehicles that meet the needs of consumers.
Key Takeaways
- A smaller Tesla pickup truck could add 420,000 incremental units per year to the company’s deliveries
- The Cybertruck has been a disappointment for Tesla, with poor sales and unprofitability
- Tesla needs to listen to consumers and create vehicles that meet their needs
- The company’s decision-making has been criticized by investors and co-founders alike
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