Tesla shares dipped 0.6% to $357.35 apiece Wednesday while all three major U.S. indexes fell.
The "Cybertruck," Tesla's base electric pick-up truck version, which Elon Musk and company will showcase in Los Angeles, is expected to price at roughly $50,000. That's lower than Rivian's $69,000 starting price for its R1T. Rivian, an electric pick-up truck start-up, has caused Tesla investors some concern as Tesla had made clear in prior months it wishes to enter the pick-up truck market. In February 2019, Rivian received $700 million in financing in a round led by Amazon (AMZN) - Get Amazon.com, Inc. Report .
But the competition isn't limited to just Rivian. General Motors (GM) - Get General Motors Company Report has made it clear it intends to makean electric Chevrolet pick-up, andFord (F) - Get Ford Motor Company Report has confirmed it's building an electric pick-up called the F1-150. "We believe this next generation pickup truck could help Tesla expand its market opportunity outside its core customer base over time, although gaining market share with stalwarts such as Ford and GM entrenched in this landscape will be a difficult task for Fremont," wrote Wedbush Securities analyst Dan Ives in a note Wednesday.
One competitive differentiator analysts have their eyes on is the design of the new trucks. Deutsche Bank analyst Emmanuel Rosner wrote in a Monday note that Musk has indicated the new vehicle "looks like an armored personnel carrier from the future," and is "unrecognizable from the trucks from the past 20-40 years." Rosner indicated that there was a risk that the futuristic design "could carry the risk of not attracting traditional pickup buyers, leaving it a lower-volume niche product."
The other two pressing questions are cost and the production schedule. Different vehicles vary on cost structures and therefore gross margins, noted Ives. And gross margins are a closely-watched metric for Tesla, which recently showed the ability to rein in production costs, although it sold fewer of its high priced cars than expected in the third quarter.
As for production, Rosner said he expects that "production could start after Model Y volumes normalize, and the ramp up could be a slower process as this pickup will almost certainly not share any material commonality with the Model 3/Y, suggesting a timeline in mid-late 2021." He added that increased capital expenditures are expected.
For the near-term, the trucks aren't expected to drive revenue and earnings materially, leading Rosner to argue that Tesla should focus on introducing a compelling product that can generate demand.
Tesla shares are up 40% since posting a surprise profit for the third quarter in late October.