How the Cybertruck Became a $10B Failure

The Business Circle

439,103 views • 28 days ago

Video Summary

The Cybertruck, initially unveiled with ambitious promises of revolutionizing the pickup market, has encountered a series of significant setbacks and failures. Launched with a base price of $39,900 and extraordinary claims of being bulletproof and offering over 500 miles of range, the vehicle's development and production have been plagued by delays and engineering challenges, particularly with its unique stainless steel construction. Competitors like Ford and Rivian entered the electric pickup market with functional vehicles, leaving Tesla behind. The final production version saw drastically increased prices, a mere handful of initial deliveries, and numerous quality issues, including stuck accelerator pedals caused by the use of soap as lubricant, leading to a recall of nearly 4,000 units. Real-world performance, including range and durability, has also fallen short of initial expectations. One surprising fact is that Tesla invested over $10 billion in the Cybertruck and its Gigafactory before generating any revenue from the product.

These issues have resulted in a massive drop in consumer interest, with only 2.5% of the over 2 million reservation holders ultimately purchasing the truck. Consequently, Tesla faces substantial inventory of unsold Cybertrucks, estimated at over 10,000 units, accumulating significant financial losses and a decline in its overall electric vehicle market share. The Cybertruck, intended to be a revolutionary success, is now widely considered a $10 billion failure in the automotive industry.

Short Highlights

Over $10 billion invested in the Cybertruck and Gigafactory before revenue generation.
Initial promises included a base price of $39,900 and over 500 miles of range.
Competitors like Ford F-150 Lightning and Rivian R1T launched functional vehicles while Cybertruck production was delayed.
Final prices significantly increased, with the base model costing $60,990.
A recall of 3,878 units occurred due to accelerator pedals getting stuck, attributed to using soap as lubricant.
Only 2.5% of over 2 million reservations converted to sales.
Over 10,000 unsold Cybertrucks accumulated in storage lots, representing $800 million in inventory.

Key Details

Tesla's Ambitious Cybertruck Unveiling [00:58]

The Cybertruck was unveiled on November 21st, 2019, with promises of revolutionizing the pickup truck industry.
Key promises included a base price of $39,900, a tri-motor version at $69,900 with over 500 miles of range, 0-60 mph in under 3 seconds, and being "literally bulletproof."
Musk claimed it could outperform a Ford F-150 with zero emissions.
During the unveiling, the supposedly armored glass shattered live on stage.
Despite the glass incident, Tesla reported over 180,000 pre-orders within days, reaching 250,000 reservations with a $100 deposit.
Media coverage was largely positive, with CNN calling it the "future of pickups" and Fortune likening it to the "iPhone moment of electric vehicles."
At the time, Tesla controlled 34% of the US EV market, and Elon Musk was viewed as a visionary.

"This is a story of Tesla's Cybertruck. The truck that was supposed to revolutionize the pickup market and ended up becoming one of the biggest failures in the history of the automotive industry."

Production Delays and Manufacturing Hurdles [03:40]

The COVID-19 pandemic provided a reason for production delays, but internal issues were more significant.
The stainless steel used in the Cybertruck proved extremely difficult to manufacture, requiring micron-level precision.
Musk admitted that "too much new technology" was involved.
Competitors like Ford launched the F-150 Lightning in 2022, delivering to customers while Tesla continued to promise production start dates.
Rivian's R1T began deliveries in 2021, and GM announced the Silverado EV with nearly 500 miles of range.
A Cox Automotive survey showed the Ford Lightning had 67% consideration among electric pickup buyers, surpassing Tesla.
Tesla acknowledged that the start of production is always "very slow."

"But behind the scenes, Tesla's engineers already knew the truth. The stainless steel that Musk had promised was an absolute nightmare to manufacture."

Drastic Price Increases and Limited Deliveries [07:59]

After four years of development, the first Cybertruck deliveries began with 10 to 30 vehicles, mostly to Tesla employees.
The promised base price of $39,900 was replaced by a final price of $60,990.
The dual-motor version increased from $69,900 to $79,990.
A "premium Foundation series" exceeded $100,000, a 53% increase from original promises.
This led to widespread reservation cancellations, with an estimated 2 million reservations translating to only 50,000 sales.
Tesla transitioned from an invitation-only model to making the Cybertruck immediately available.
Over $10 billion was invested in the Texas Gigafactory and Cybertruck development without generating revenue from the product.

"Four years of development, $10 billion invested to deliver 10 trucks."

Widespread Quality Issues and Performance Shortfalls [09:31]

In April 2024, a TikTok video went viral showing an accelerator pedal stuck at maximum, unable to be stopped.
This led to a recall of all 3,878 units produced due to workers using soap as lubricant during pedal assembly.
Other reported issues included windows breaking unexpectedly, steering system failures, a malfunctioning windshield wiper, and metal panels falling off.
Real-world range tests fell short of promises; one test yielded 254 miles instead of the advertised 318 miles (a 20% deficit).
A comparison test by Motor Trend placed the Cybertruck second, behind the Rivian R1T and ahead of the Ford Lightning.
By 2025, sales fell 50% in the second quarter, with only 5,000 units sold in three months.
Over 10,000 unsold Cybertrucks accumulated, creating an inventory of $800 million.
Tesla's EV market share dropped from 75% to 46%.

"And as you can see, based on the design of the floorboard, this sliding up, and the way this was still hooked onto the pedal, um, it held the accelerator down 100%."