Tesla shifts Cybertruck strategy: halts orders for the cheapest model

Tesla has ceased taking orders for the most affordable version of its highly anticipated Cybertruck, priced at USD 61,000. Simultaneously, the electric vehicle manufacturer has made the USD 100,000 version available for immediate order, with deliveries possible as early as this month, according to the company's website.

This move has captured the attention of Tesla investors and enthusiasts alike, as the Cybertruck's demand and supply dynamics are considered crucial indicators of the company's future performance. CEO Elon Musk has invested substantial resources into the truck's development, with ambitious plans to produce 200,000 units annually.

The decision to halt orders for the entry-level model comes despite Musk's October 2023 announcement of one million reservations for the Cybertruck. However, industry analysts suggest this figure may not accurately reflect current demand, especially given the higher-than-expected prices and lower driving ranges compared to initial projections.

Sam Abuelsamid, an analyst at Guidehouse Insights, commented on the situation, stating, "It shows that demand is a lot less than a million trucks." This assessment underscores the challenges Tesla faces in meeting both production goals and market expectations for its bold new offering.

Despite these concerns, Cybertruck has shown promising sales figures in its higher-end models. According to Cox Automotive, the vehicle sold nearly 4,800 units in July 2024, marking its best month to date and establishing itself as the top-selling vehicle in the United States priced over USD 100,000. A Cox spokesperson noted, "They have sold more than 16,000 so far, but sustained high volume at that price point will be a challenge."

The Cybertruck, known for its unconventional trapezoidal exterior design inspired by the film "Blade Runner" and its stainless-steel body, began deliveries in November 2023 after experiencing years of delays and production difficulties. This launch came four years after Musk's initial 2019 estimate that the truck would cost USD 40,000 and boast a range of 500 miles or more on a single charge – targets that have since proven overly optimistic.

Tesla's website now reflects the company's revised strategy. The option to reserve the USD 61,000 version of the Cybertruck, which was previously advertised with a 250-mile range and targeted 2025 delivery, is no longer available. Instead, Tesla is promoting two higher-end models: the USD 99,990 dual-motor Foundation limited series with a 318-mile range, estimated for delivery as early as this month, and the USD 119,990 tri-motor Foundation Cyberbeast, offering a 301-mile range and available from October.

This shift in focus towards more expensive models has led Abuelsamid to speculate that Tesla may be grappling with excess inventory of two-motor and three-motor trucks. The company's decision to prioritise these higher-margin vehicles could be seen as a strategic move to maximise profitability in the face of production challenges and potentially softer-than-expected demand for the entry-level model.