The highly anticipated Tesla Cybertruck is on the verge of its release, leaving early orderers eagerly waiting. However, due to low supply and overwhelming demand, the number of deliveries in 2023 will be quite limited. This unique situation presents an incredible opportunity for those who are considering flipping the Cybertruck for profit. Nevertheless, Tesla is taking measures to ensure that those who actually receive the truck do not sell it immediately.
According to Motor Vehicle Order Agreement terms and conditions, Tesla (ticker: TSLA) appears to be introducing an anti-flipping provision in the Cybertruck contracts. Part of the agreement states, “You understand and acknowledge that the Cybertruck will first be released in limited quantity. You agree that you will not sell or otherwise attempt to sell the Vehicle within the first year following your Vehicle’s delivery date.”
For those who need to sell their Cybertruck, there is an option to sell it back to Tesla. However, if Tesla declines the offer, owners are free to sell their trucks to whomever they choose. Unfortunately, Tesla did not respond to inquiries seeking further clarification on this provision.
At first glance, this restriction may seem stringent. However, it is a logical step considering the typical dynamics of the automotive market. Desirable cars often sell for prices higher than the manufacturer’s suggested retail price (MSRP) at dealerships, and early owners sometimes flip them in the used car market.
It would have been fascinating to witness how high the prices of the Cybertruck could have soared. With hundreds of thousands of preorders for this peculiar stainless steel-skinned pickup truck, Tesla plans to deliver only a few in 2023. A delivery event is scheduled for the end of November, marking the initial distribution of the truck to customers.
Tesla Faces Challenges in Producing Cybertruck
Not that many Cybertrucks will be delivered in 2024, perhaps tens of thousands. Despite the excitement surrounding the highly anticipated electric truck, CEO Elon Musk acknowledges the enormous challenges in reaching volume production for the Cybertruck. Musk anticipates achieving a “run-rate” production of 250,000 units annually by 2025, nearly six years after its introduction in November 2019.
What is “Run-Rate” Production?
It’s important to understand that “run-rate” doesn’t mean reaching 250,000 units in 2025. Instead, it refers to producing approximately 21,000 units per month, which would amount to an annualized total of about 250,000.
Fluctuations in Tesla’s Stock
Tesla’s stock experienced a 1.7% increase in premarket trading on Tuesday, following a strong showing the previous day when shares rose 4.2%. On the other hand, the S&P 500 futures remained flat, while Nasdaq Composite futures saw a slight increase of about 0.1%.
Tesla’s stock price was at $227 per share during early trading on Tuesday. In September, it closed at around $250 per share. However, by the end of October, it had dropped to approximately $200 per share, representing a decline of about 20%, following disappointing third-quarter deliveries and earnings. Currently, investors are eagerly awaiting Tesla’s next moves.
The Future of Tesla: Smaller Sedan and Cybertruck
One of the key developments on the horizon for Tesla is the release of the Cybertruck. However, what investors might want even more than the Cybertruck is a smaller Tesla model. This smaller sedan is expected to debut sometime between 2024 and 2025. Notably, Tesla has not launched a small sedan since the release of the Model 3 in 2017. This product gap has allowed Chinese manufacturer BYD to become a dominant producer of battery-electric vehicles, with approximately 25% market share in China. In comparison, Tesla currently holds about 13% market share. Two years ago, these figures stood at approximately 13% and 18% for BYD and Tesla, respectively.