Tesla, Inc. (TSLA.US) Cybertruck demand is questionable! Nearly one-fifth of sales are supported by "insiders".

In recent years, purchases of the Tesla, Inc. Cybertruck electric pickup truck by other companies under Elon Musk's umbrella have to some extent supported the sales of this model. This unusual arrangement further indicates that this highly controversial electric pickup truck has failed to attract ordinary consumers. According to registration data provided by S&P Global, Inc. Automotive, of the 7,071 Cybertrucks registered in the United States in the fourth quarter of last year, 1,279 were purchased by Musk-led rocket and satellite manufacturer SpaceX, accounting for over 18%. Other companies owned by the billionaire purchased an additional 60 trucks during the same period. This means that almost every five Cybertrucks registered during that period were delivered internally within Musk's vast business empire. The value of these purchase transactions could exceed $100 million, and this purchasing behavior is still ongoing this year. Photos and videos circulating online show rows of unused Cybertrucks parked at SpaceX's facility in Texas. The chief engineer of the truck project stated on social media last October that SpaceX was using these vehicles to replace fuel-support vehicles, with at least some being used for security purposes. Electric vehicle news site Electrek reported in December of last year that SpaceX may ultimately purchase around 2,000 Cybertrucks. According to S&P Global, Inc. Automotive data, SpaceX first registered a Cybertruck in October of last year. Sales targeting Musk's companies will continue until 2026, with 158 trucks registered in January of this year and 67 in February. Although the specific financial terms of these transactions between the companies have not been disclosed, the current starting price of the Cybertruck at around $70,000 means that SpaceX, xAI, Boring, and Neuralink have collectively paid Tesla, Inc. over $100 million for the purchase of these vehicles. It is not entirely clear how Musk's other companies are using these Cybertrucks, and it is also unclear why an artificial intelligence and social media company would purchase 50 Cybertrucks. These data highlight that consumer demand for the Cybertruck has significantly weakened just two years after Tesla, Inc. started delivering this electric pickup truck. Without these orders from Musk's other companiesbesides SpaceX, also including xAI, Boring Co., and Neuralinkthe registration volume of the Cybertruck in the fourth quarter of last year would have decreased by 51%. Sam Fiorani, vice president of global automotive forecasts at consulting firm AutoForecast Solutions, bluntly stated, "Tesla, Inc.'s Cybertruck is losing buyers." SpaceX has contributed to the bulk of the recent registrations of the Cybertruck. Tesla, Inc. may face the prospect of a third consecutive year of declining annual sales. The company is under increasing pressure to reverse the overall decline in sales of its product line. Once an undisputed leader in the electric vehicle industry, Tesla, Inc. was overtaken by China's BYD Company Limited last year, losing its position as the global leader in electric vehicle sales. Against the backdrop of intensified competition in the electric vehicle market and changing policy environments, Tesla, Inc.'s performance in the first quarter fell below expectations, marking one of the poorer sales quarters in recent years. Data shows that Tesla, Inc. delivered 358,000 vehicles globally in the first quarter of 2023, lower than the market's expected 372,000 vehicles, making it the second consecutive quarter where Tesla, Inc. fell short of Wall Street's expectations. Although this is still a 6.3% year-over-year growth, when excluding the low base effect from the halt in production of the Model Y last year, this quarter's delivery volume is the lowest since mid-2022. Investors have largely ignored Tesla, Inc.'s declining car sales, as Musk is shifting the company's strategic focus towards future technology areas such as autonomous driving robo-taxis and humanoid Siasun Robot & Automation. However, Tesla, Inc.'s traditional automotive business remains the main source of cash flow, and the company's efforts in the fields of artificial intelligence, autonomous driving, and Siasun Robot & Automation are still a considerable distance from becoming truly scalable commercial ventures. Investor patience seems to be wearing thin. Since hitting a historical high in mid-December of last year, Tesla, Inc.'s stock price has dropped by about one-fifth. The Cybertruck was unveiled with great fanfare at the end of 2023, adding a model with a strong emphasis on power to Tesla, Inc.'s product lineup, differentiating it from the streamlined Model Y SUV and Tesla Model 3 sedan that contribute the majority of the company's sales. Musk predicted that Tesla, Inc. would produce 250,000 Cybertrucks per year by 2025. He also called this truck the best product in Tesla, Inc.'s history. Tesla, Inc. hopes that the Cybertruck will enter the profitable American pickup truck market, which has long been dominated by Ford Motor Company, General Motors Company, and Stellantis. However, there were warning signs from the beginning. The angular design of the Cybertruck sparked controversy. At a time when anti-Musk sentiment was rising due to his excessive involvement in politics last year, this highly scrutinized model occasionally became the target of ridicule and sabotage. In addition, the price of the model was higher than expected, with the initial version selling for over $100,000, far exceeding the initially advertised starting price of under $40,000 in 2019. Although Tesla, Inc. has not indicated that it will stop producing the Cybertruck, the company is gradually phasing out the slow-selling Model X SUV and Tesla Model S sedanits two oldest models. In response to the uncertain outlook for the Cybertruck, Musk hinted that the company may increase fleet sales to commercial customers. He stated in Tesla, Inc.'s earnings call in January of this year, "Obviously, there's demand in the freight and transportation market. There's a lot of local deliveries that need to happen in cities, and an autonomous Cybertruck could be really useful for that." It is worth noting that the sales difficulties are not unique to the Cybertruck. In the overall stagnant U.S. electric vehicle market, electric pickup trucks have performed poorly. Ford Motor Company recently decided to convert its electric pickup truck, the F-150 Lightning, into a range-extended hybrid model. According to Cox Automotive data, despite a 45% decline in sales, the Cybertruck remained the best-selling all-electric pickup truck in the U.S. in the first quarter. For a long time, Musk's companies have been interconnected through financial investments, business collaborations, and even personnel sharing. For example, xAI uses Tesla, Inc.'s Megapack batteries and has integrated its Grok chatbot into Tesla, Inc.'s vehicles. In Las Vegas, attendees can travel in Tesla, Inc. vehicles through tunnels built by Boring. Tesla, Inc. and SpaceX are also collaborating on advancing chip production projects. However, it is rare for an automaker to "digest" a large portion of sales of a particular model to related enterprises controlled by the same CEO. When a model is not selling well, automakers typically promote sales by offering new incentives, lowering prices, or leasing vehicles to employees. Tom Libby, automotive analyst at S&P Global, Inc., stated, "When retail demand does not match production, this is one way to keep the factory running." In addition, some analysts point out that sustained purchases of the Cybertruck by SpaceX amid low retail demand are important marginal support for Tesla, Inc.'s expectations/inventory and sentiment surrounding Cybertruck deliveries. If SpaceX successfully launches the largest IPO in history and continues to use the funds raised to purchase expensive Cybertrucks, this could provide significant support to Tesla, Inc.'s expected price-to-earnings ratio and medium-term performance outlook. In particular, if SpaceX demonstrates that the Cybertrucks it purchases will be crucial for future large-scale space projects, such as updated and iterated Cybertrucks used in major lunar transportation missions jointly with Tesla, Inc., the Cybertruck could become a "super bullish narrative" for Tesla, Inc. comparable to the Model 3/Y.