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Why the Tesla Cybertruck has 'missed the moment'

Tesla's Cybertruck (TSLA) is set to launch Thursday afternoon at its Gigafactory in Austin, Texas. While some investors are hyped for the release, there are those who feel that this isn't the big moment the company and investors were hoping for. Andrew Hawkins, The Verge Transportation Editor and Tom Narayan, Lead Equity Analyst, Global Autos for RBC Capital Markets, join Yahoo Finance to discuss their thoughts on the launch and what it means for the company and investors alike.

Narayan describes the vehicle as a "halo car," designed to lure shoppers that Tesla can sell its other vehicles to.

Hawkins explains his feelings: "When it [the Cybertuck] was first announced in 2019, there were no electric trucks on the market at that time. So if Tesla had actually released the truck and started delivering it to customers soon after that event, they really could've captured this market but now we've seen there's the F150 Lightning (F), Rivian R1T (RIVN), there's a Hummer truck (GM), and there's more coming out... So I think there is an argument to be made that Tesla kind of missed the moment here."

Click here to watch the full interview on the Yahoo Finance YouTube page or you can watch this full episode of Yahoo Finance Live here.

Video transcript

AKIKO FUJITA: While some investors are seeing this Cybertruck event as a potential halo truck for the company, there are still doubts about how large of an impact it can have, and if it can boost Tesla's top line. Let's bring in RBC Capital Markets lead equity analyst global autos, Tom Narayan, and the verge transportation editor, Andrew Hawkins, to get their insights.

Good to have both of you here. Tom, let's kick things off with you. Who is the audience? Who's going to buy the Cybertruck?

TOM NARAYAN: Yeah. This is a pretty specific niche customer base for sure. But this was never going to be a big volume product. So there were a lot of folks in 2019 that wanted this product. I suspect the conversion rate will probably be more like 20% or so. But still, if they can get something like 200,000 to 250,000 of these at maturity per year off of a base-- the US are is what, 15, 16 million.

So I think that's actually very doable, even If it's a niche customer base, a segment, a cool factor, so to speak. But even more than that, I think this is going to be a halo car really for differentiating the brand. Folks are even talking about how they went into showrooms yesterday. And they saw ads for a Model 3 for only $29,000. So it's really being used to sell 3's and Y's. That's really how we should look at the Cybertruck, not as its own thing. It's really a halo car designed to incite demand for 3's and Y's. That's where most of the volumes are going to come from next year.

RACHELLE AKUFFO: So then, Andrew, I want to bring you in here. Because if the idea is perhaps to get some of these future Tesla customers in at a lower price point by looking at the 3 and having the Cybertruck as more of an aspirational look at the brand situation here. But we still don't know the price yet.

So as we look at the demographics of the people who've put these $100 deposits down, do we know much about how they're going to this-- whether or not they can afford the Cybertruck, we still don't actually know how much it costs.

ANDREW HAWKINS: Yeah. That's a great question. I haven't seen any demographic data on the people who are reservation holders at this time. But I think you can probably draw a lot of conclusions just based on assumptions that it's probably going to be a lot of early adopters, people who are turned on as opposed to turned off by the polarizing design of the Cybertruck. And I really agree with what everyone's been saying so far about how this is more of a halo car.

I think Tesla's own employees have been describing it as like a Lamborghini Countach more so than an F-150 or a Silverado. And I think that highlights a lot of interesting elements about the Cybertruck, which is that, perhaps, it's missed its moment. When it was first announced in 2019, there were no electric trucks on the market at that time. And so if Tesla had actually released the truck and started delivering it to customers soon after that event, they really could have captured this market.

But now, we've seen there's the F-150 Lightning. There's the Rivian R1T's. There's a Hummer truck. And there's more coming out. And by the time they actually get production running up at scale, we're going to see even more trucks on the market. So I think there's an argument to be made that Tesla missed the moment here. And it's a weird thing to have done because trucks are just a huge business in the United States.

They're huge volume, huge margin. This could have been a really an opportunity for Tesla to dominate the EV truck market in the same way that it's dominated the EV passenger car market. And instead, we got this very polarizing niche car that's really going to only appeal, I think, to a small segment of really motivated Elon Musk fans, and not really much else beyond that.