In a recent analysis, Jefferies analyst Phillipe Houchois has proposed that the much-anticipated Tesla Cybertruck may not bring immediate benefits to the electric vehicle (EV) manufacturer and suggests that canceling the project could positively impact the company’s shares. Houchois has revised the price target for Tesla stock to $210 per share, citing reduced earnings and free cash flow estimates.
While acknowledging the bold nature of suggesting the cancellation of Tesla’s first-ever electric pickup, the analyst’s concerns about the company’s short-term financial outlook are not without merit. Houchois notes that Tesla appears to face challenges in the coming 12-18 months, potentially missing opportunities as European legacy original equipment manufacturers (OEMs) prepare to launch affordable EVs, and Chinese automakers set a new pace for shorter product cycles.
Jefferies: "Tesla cancelling the Cybertruck would probably be positive for shares; With 2024 already a lost year for growth, it would help Tesla refocus on an edge that was built on simplicity, scale and speed."
— Sawyer Merritt (@SawyerMerritt) November 20, 2023
This perspective aligns with statements made by Elon Musk during Tesla’s third-quarter earnings call, where he cautioned that the Cybertruck might take 12 to 18 months before becoming a significant positive cash flow contributor. Houchois recommends that Tesla reevaluates its resource allocation, suggesting a focus on “high volume global segments and supply of 4680 for Model Y” instead of investing heavily in the Cybertruck production ramp.
As the Cybertruck’s much-anticipated delivery event on November 30 approaches, the analyst’s remarks come amid speculation about the initial rollout. Reports from sources like the Mexican newspaper Milenio suggest that Tesla may deliver only a limited number of Cybertrucks by the end of the month, potentially to employees rather than regular customers.
While the slow initial rollout may recall memories of the Model 3’s early days, where initial deliveries went to company employees, it remains to be seen how this approach will impact the Cybertruck’s long-term success. Tesla’s CEO Elon Musk has previously acknowledged that the financial impact of the Cybertruck might take time to materialize, despite its potential as a groundbreaking product.
