Tesla’s Cybertruck: Great Business Strategy, or Complete Blunder?
By: Thomas Mills
For those of you not familiar with Tesla, the electric car manufacturing giant, you’re at least likely to be familiar with its CEO, Elon Musk, and his controversial reputation. The latest development includes his unveiling of Tesla’s newest project last Thursday – a ‘Cybertruck’ that looks unlike any car ever seen before. Tesla is most commonly known for making luxury electric cars, with sleek designs and high top speeds. However, the Cybertruck, starting at $39,900, highlights Tesla’s most recent attempt at opening their product to a wider audience with more accessible – and for many, more practical – trucks. Social media was quick to dig into the truck’s shocking design, and questioning why anyone might buy it, but is this new direction from Tesla actually what they need to expand their audience?
Tesla has always had a strong social presence, with its ubiquitous CEO and cars that plan to change the future, so it’s clear why some critics of Tesla think their investors are unrealistic and impractical in their expectations for the company. This also explains why the company has one of the most shorted stocks in the world, as there are a great many people who are certain it cannot succeed under its business model. Part of the reason that it is hard to invest in Tesla in good faith is because it never ceases to stay out of controversy, which almost inevitably damages the company and its shareholders. For example, Elon Musk just recently this year got fined $20 million over a tweet and has repeatedly been asked to step down from his position.
Being controversial is almost always a bad thing for Tesla and its shareholders. Looking at Tesla’s stock (TSLA) over the past week following the unveiling of the Cybertruck, their 30-point drop is indicative of what investors think about the new direction Tesla is going. Between a mishap that broke the revealed Cybertruck’s window, coupled with the radical design, it seemed that few could see why Tesla was going forward in this new direction. Despite this, there seems to be a good amount of demand for the new car, as Tesla is already reporting 146,000 orders for the Cybertruck.
A big problem for the emerging electric car industry is how inaccessible it is for the average buyer. Not only is it hard to find charging stations in many places, but they’ve long been seen as strictly luxury cars. Tesla was founded with luxury car manufacturing in mind, but it is a perception of the company that they are now desperately trying to leave behind. It is for this reason that expanding on the types of cars they manufacture is so important, and why the Cybertruck is a step towards making that a reality; by making trucks – and maybe one day SUVs, motorcycles, vans – they can establish themselves as the defining electric car company for all types of cars, and not just the luxury vehicle producer of the past. This shift in consumer perception will be critical in dispelling some of the concerns raised most recently by investors, creditors, and critics.
Tesla as a company has always tried to appear as ‘the company of the future’, and the futuristic Cybertruck with its sci-fi fonted unveiling was no different. But, behind the controversy and failed reveal, the Cybertruck may really prove to be a great move towards securing Tesla’s role as an electric car manufacturing giant for more than just luxury vehicles. No stranger to controversy, Tesla has shown time and time again that no matter their negative image in the media, there will always be hundreds of thousands of people backing their vision, so they may not find it all too difficult to recover from this recent debacle.