Jonas Tells Us Why Cybertruck May Not Be Runaway Success

By Kevin Armstrong
Will the Cybertruck's appeal dwindle after release?
Will the Cybertruck's appeal dwindle after release?
MatthewDR/Twitter

Cybertruck hype reached feverish levels after Investor Day. The futuristic vehicle was on display and even took some lucky people for a test drive. However, wherever there is a parade, there will surely be rain. So, Morgan Stanley's managing director advises staff to manage expectations for clients excited about investing in Tesla.

Adam Jonas, who attended Investor Day, listed five reasons why Cybertruck may not be the vehicle Elon Musk and the Tesla team dream it will be. Instead, he thinks it will be a financial "side-show," a "cultural/zeitgeist," and an "enthusiast/cult car." Let's hear him out. He is considered a Tesla Bull, despite a quick Google search showing he's been writing a bear case for Tesla for years.

Things Have Changed for Tesla

His first point is that Tesla was a different company in 2019 when Cybertruck was unveiled. When you adjust for the multiple stock splits, Tesla is worth ten times more today. He believes the company's values and goals have changed since 2019.

Tesla has changed significantly in the past four years, and the company is focused on launching a more affordable vehicle. Musk laid out his plan for a more sustainable energy future that included getting more people into electric cars, a goal that can only be achieved if those cars are affordable for more people. Unfortunately, Cybertruck is unlikely to be under the title: affordable.

How Far Can Unique Go?

The investor's next point is calling the Cybertruck the "ultimate avant-garde vehicle." He believes that the unique aspects of Cybertruck will lose some appeal when there are several on the road.

Okay, fair point. However, how many white Teslas do you see on the road today? No one seems to mind driving the same color Model 3 and Model Y. Besides, if someone is concerned about losing that "indescribable something," as Jonas puts it, they can get a wrap. Also, with rumors that the next platform may use Cybertruck's stainless steel exterior, the company doesn't seem concerned about too many stainless steel vehicles.

Restrict Cybertruck Production

To that point, the Morgan Stanley employee wonders if Tesla should restrict the production of Cybertruck. He forecasts that the production volume could ramp up to 100,000 units per year, which means it will be 2030 by the time 500,000 are on the street. He ponders if the company should limit production to 420,699 Cybertrucks.

This makes sense if his production figures are close to reality. It could take decades to fill the millions of Cybertruck orders. Look at how much things have changed in the four years since it was announced; imagine the changes that could happen before filling all those orders. These orders may fall under the same category as the long-awaited Roadster 2.0.

Price Point Concerns

In his next point, Jonas says the employee who gave him a Cybertruck ride said the vehicle weighed 7,000 pounds, equivalent to a Chevy Silverado 3500HD. That has Jonas thinking the price will be significantly higher than the first announced $39,900.

At this point, anyone who thinks they will get a Cybertruck for forty grand better forfeit their reservation now. But Jonas's point is relevant: if the price comes in too high, the waitlist will be drastically reduced by the many who put in a reservation for a $39,900 truck.

Not a Competitor for Traditional Trucks

Based on that point, Jonas doesn't think the Cybertruck he saw and rode in "poses a significant threat to the established pickup truck market."

He could be right. It will be a difficult sell if it's big, heavy, and considerably expensive. We should also note that just days before this letter to Morgan Stanley staff, Jonas dropped Tesla as his preferred U.S.-listed automaker and now backs Ferrari NV. Yes, that Ferrari, the builder of supercars.

If you are on the waiting list for a Cybertruck, it's worth considering the points Jonas has raised. However, while Cybertruck has generated significant hype and excitement, it is essential to account for the potential challenges and limitations it may face in the market. With Tesla's changing values and goals, the Cybertruck's unique design, uncertain price point, and limited production, it remains to be seen whether it will be the ultimate game-changer in the pickup truck market. But you'll have plenty of time to decide if you want to take delivery of your Cybertruck as limited production starts this summer, with a ramp-up beginning next year.

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Breaking Tradition: Tesla Hits the Social Media Advertising Road

By Kevin Armstrong
Model Y Advertising
Model Y Advertising
Tesla

Tesla has prepared us for a slower sales year, but just how slow may be showing up on social media. No, I’m not talking about X, which is where 99% of Tesla news comes from, but social platforms owned by a guy that Elon Musk once wanted to fight.

Tesla advertising has been shown on Mark Zuckerberg's Facebook and Instagram accounts. While Musk has talked about utilizing more conventional advertising for more than a year, Tesla has only sporadically shown up on a few digital avenues; now, it appears to be a full campaign.

The Return to Meta and Zuck

The year 2018 marked a significant moment in Tesla's history when Elon Musk, in a move reflective of his disdain for Facebook amid the Cambridge Analytica scandal, deleted Tesla and SpaceX's Facebook pages, both of which boasted millions of followers. Fast forward six years, Tesla has reinstated its presence on Facebook and launched advertising campaigns across Meta-owned platforms.

Musk is now paying Tesla money to a guy he challenged to a cage match and once joked/threatened to drive by his house and fight him. There are two takeaways here: Meta is a dominant force in online advertising, and Musk is willing to do whatever it takes to advance Tesla’s mission to a sustainable future.

Embracing Traditional Advertising Amidst EV Market Changes

Tesla's advertisements, including ads on Cars.com, which highlight the Model Y, demonstrate the company's adeptness in utilizing Meta's sophisticated targeting capabilities to reach potential customers. Tesla's avoidance of traditional advertising was once heralded as a visionary move, saving the company billions and contributing to its mystique.

However, the electric vehicle landscape has evolved, with early adopters now equipped with their chosen EVs, making it imperative for Tesla and its competitors to reach a broader audience. Tesla's advertising initiatives on Facebook, Instagram, and YouTube reflect this strategic adjustment, aiming to capture the attention of potential buyers beyond its core fanbase.

Despite Elon Musk's historically critical view of advertising and his complex relationship with the social media advertising sphere, Tesla's foray into paid advertisements represents a significant evolution in the company's marketing strategy. This shift acknowledges the necessity of diversified marketing approaches in sustaining growth and expanding market reach in the contemporary automotive landscape.

Tesla Advances with 5G: A Future of Enhanced Connectivity for Cars and Robotics

By Kevin Armstrong
Tesla building 5G private network
Tesla building 5G private network

Tesla appears to be planning an ambitious project to build a private 5G network. This initiative would revolutionize connectivity for its vehicles and the robot, Optimus, as well as any other plans the company is likely to develop in the future.

Innovative Job Posting Reveals Big Plans

Although now removed, a recently spotted job posting for a Cellular Systems Integration Engineer on Tesla's career page shed light on the company's intentions. The role demands expertise to elevate Tesla's vehicle and Optimus robot connectivity, promising to push the boundaries of low latency and high data rates.

Tesla's journey from 3G to the anticipated 5G upgrade will bring about ultra-reliable communication and high-speed data transfer, crucial for over-the-air software updates, autonomous driving features, and real-time data analytics. These communications could be product to product, such as vehicles communicating with each other or with other products such as Optimus. However, the job posting also talks about products being able to communicate with Tesla’s internal 5G network. It’s not clear whether the private network would be internal such as at a Gigafactory, or a broader network out in the world.

Tesla is pursuing an internal 5G network for product communication
Tesla is pursuing an internal 5G network for product communication

The Strategic Role of Private 5G Networks

Deploying its private 5G network, Tesla aims to create a seamlessly connected environment in its manufacturing facilities, research labs, and outdoor spaces. This infrastructure is not just about enhancing vehicle connectivity; it's also pivotal for the operational efficiency of the Optimus robot in various scenarios, including warehouse operations.

Tesla's foray into private 5G networking places it in an advantageous position in the automotive and tech industries. This strategic move aligns with the global trend towards adopting private 5G networks, which promise to revolutionize industries with their reliability and speed. Tesla's efforts to develop a private 5G protocol stack that integrates with any cellular infrastructure globally will set new industry standards.

With 5G, Tesla vehicles and Optimus robots will benefit from significantly reduced latency, offering under 5 milliseconds compared to the 60-98 milliseconds of 4G networks. This technological advancement is expected to enhance the functionality and responsiveness of Tesla's products, paving the way for advanced autonomous driving capabilities and efficient robot operations.

Tesla's interest in developing a private 5G network is a logical step. By building an infrastructure that supports the fastest connectivity standards, Tesla is preparing for its vehicles and laying the groundwork for sophisticated robotics applications. This endeavor reflects Tesla's ongoing commitment to innovation and its role in shaping the future of transportation and automation.

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