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Tesla's Cybertruck: Is it a win or a miss?

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Tesla’s (TSLA) Cybertruck certainly turned heads when it was unveiled in 2019. With its futuristic design and bold promises, it immediately captured the attention of both Tesla fans and the general public - in both a good and bad way. With Cybertrucks now coming off Tesla’s assembly line, it remains divisive: Some call it innovative; others say it's just plain ugly.

Regardless, there are currently 11,688 Cybertrucks and counting now on roads. But with numerous production delays, recalls, and questions about its real-world utility, some investors are concerned the Cybertruck is quickly losing its appeal.

“There's a lot of unmet demand still there for the Cybertruck,” Yahoo Finance Senior Autos Reporter Pras Subramanian said. If Tesla wants to hit their “$50,000 price tag, they're going to have to keep driving down their industrialization costs.”

It’s costs, among other things, that have concerned investors of late. Despite recent gains, Tesla remains under pressure as investors reassess the kind of growth and stability the company can achieve, particularly as EV sales across its lineup decline. Cox Automotive's latest EV sales report found that Tesla’s share of US EV sales fell below 50% for the first time as Ford (F), Kia, and BMW saw growth.

00:00 Speaker A

Here's why the Cybertruck is the perfect mom and family car. First of all, huge back truck.

00:06 Speaker B

Here are five things that I hate about my cybertruck. Number one, there are fingerprints absolutely everywhere.

00:13 Speaker A

Tesla Cybertruck is an EV tank with ultra hard stainless steel metal meant to withstand just about anything.

00:20 Speaker A

But the near $100,000 cyber beast is divisive.

00:26 Speaker A

Under a year out from the trucks release, Tesla's issued four recalls for issues with the windshield wiper, truck bed trim, and accelerator pedal. Still, Tesla is producing 1300 cyber trucks a week with the goal of reaching 2500 weekly vehicles by the end of 2024. So, is the Cybertruck a win or a miss? Here's what investors should consider when evaluating Tesla's latest EV.

00:45 Speaker A

Number one, features. This is one source of appeal for consumers. For example, the Cybertruck is the first vehicle in the US to go fully steer by wire.

00:53 Speaker B

So most cars have a steering rack that connects the wheel to the actual drive driven wheels, right? So the cyber truck has actually motors and sensors that are not connected to one another. So basically you turn the steering wheel, the wheels turn. But what makes it special is that actually all four wheels can turn simultaneously based on just the input of the wheel.

01:09 Speaker A

Another factor, it's durability. The Cybertruck's stainless steel skin is designed to prevent dents and long-term corrosion while also being bulletproof.

01:20 Speaker A

Still, some features are a point of contention, especially when it comes to our next big focus. Number two, the look.

01:28 Speaker B

When it came out in 2019, people sort of their jaws sort of dropped. They expected Elon Musk and Tesla to come out with a Rivian looking pickup, right? Maybe a bit more normal, futuristic. But the Cybertruck is way out there, kind of hearkening to this sort of blade runner esque dystopian sort of future looking kind of hard edges, stainless steel. I think that sort of uh drew people off because it's it kind of reminded them of the DeLorean. That kind of design. It's sort of industrial, not necessarily consumer looking.

01:52 Speaker A

That look is part of what's impacting number three, demand. While the Cybertruck is unlike any other car on the road, the hype has cooled down.

01:59 Speaker B

When the cyber truck first came out, there was a lot of demand for that, for those initial trucks. And we started seeing them pop up on auction sites for with huge premiums. You wanted it now, you got to pay up for it. Now, six months later, we're seeing a lot of these cyber trucks hit auction sites and regular used car sites in in mass quantity. And it's bringing down that price, almost to the point that it's equalizing the price to pay that you that you pay to buy one straight from Tesla, which is not a good sign for any kind of vehicle from a demand point of view.

02:23 Speaker A

And that demand will play into our final focus. Number four, costs. While Tesla hasn't revealed how much it really costs to build the Cybertruck, the vehicle was built at the company's new Texas Gigafactory, which must called a $10 billion investment. The process to build it isn't easy. The unique exoskeleton is formed using a technique called air bending where high air pressure is used to shape the stainless steel.

02:44 Speaker A

Due to those production challenges, the cost of the most basic Cybertruck coming in at $60,990 was more than what investors were hoping, which was closer to $50,000.

02:53 Speaker B

If you want to hit that $39,000 or even $50,000 price tag, they're going to have to keep driving down their industrialization costs, meaning how what it costs to make that vehicle. Can they make it cheaper as they scale up? They have more sort of expertise on building it. Can they get materials in there cheaper? Can they start simplifying systems? And I think the biggest issue with EVs these days in general is the fact they're too expensive. And if can you make them cheaper for everyday people, that could help a lot to get that cyber truck sales number higher.

03:12 Speaker A

Despite mixed reviews, loyal fans of Tesla may continue to support Musk's product visions. And the Cybertruck's unique polygon design might just be here to stay.

03:20 Speaker B

Is the Cybertruck design here to stay? I think if Musk had his way, yes. Uh we've heard reports that when Walter Isaacson wrote the book on Musk that he saw some initial sketches of the robo taxi and said it looked like a two-person cyber truck. So that industrial design, hard edges steel might be a look that we'll see in future Tesla products including the robo taxi and possibly cheaper EVs down the line.

Yahoo Finance takes a closer look at why the Cybertruck is as polarizing as it is and whether it has the potential to be a strong player in the EV market.