Tesla Pickup Investor Thread

[EinSV]

Elon's pickup tweet storm yesterday reinforces how Tesla can use its battery and EV production advantage to disrupt the pickup market.

Unless something changes drastically in the next several years, Tesla will essentially have no meaningful EV competition for at least the first few years in this market, as it has enjoyed so far with the Model S, Model X and Model 3 and in all likelihood will with the Y and Semi.

The top 3 pickups sold worldwide are the F-Series, Silverado, and RAM, at 1.073M, 656K, and 614K units sold in 2017. Long-term Model 3 demand

Let's assume Tesla launches the pickup in 2021-2022 and has ramped up by 2023 to something on the order of 500K sold, which I believe is conservative. The average transaction price for large pickups is about $48K. Pickup Trucks Help Drive Average Transaction Price Strength for May 2018, According to Kelley Blue Book Because Tesla will target the high end of the market, offer AP/FSD and significant fuel savings over ICE, the ASP of the Tesla Truck will probably be higher, but let's use $48K as a conservative number.

$48K x 500K = $24B in revenue. Using a 3-4 P/S ratio as a back of the envelope valuation results in a very rough $72B-$96B valuation for the pickup business in 2023.

It could easily be higher depending on profitability assumptions or a higher P/S ratio to reflect Tesla's extraordinary growth rate, which the pickup (and SUVs based off it) will ensure continues after Model 3 and Y production have ramped up. There are also obvious opportunities to use the pickup platform to make truck-based SUVs to compete with the Escalade, Navigator, Suburban, Explorer, Cherokee, etc.

This also doesn't include any valuation for an FSD capable pickup/truck-based SUV fleet on the Tesla Network.

And perhaps most importantly, the pickup will be a big step forward for Tesla's mission of accelerating the transition to sustainable energy -- this segment of the ICE market is extremely energy inefficient with very high GHG emissions per mile.

Edit: updated with more recent ASP info.

 

[wdolson]

Elon's pickup tweet storm yesterday reinforces how Tesla can use its battery and EV production advantage to disrupt the pickup market.

Unless something changes drastically in the next several years, Tesla will essentially have no meaningful EV competition for at least the first few years in this market, as it has enjoyed so far with the Model S, Model X and Model 3 and in all likelihood will with the Y and Semi.

The top 3 pickups sold worldwide are the F-Series, Silverado, and RAM, at 1.073M, 656K, and 614K units sold in 2017. Long-term Model 3 demand

Let's assume Tesla launches the pickup in 2021-2022 and has ramped up by 2023 to something on the order of 500K sold, which I believe is conservative. The average transaction price for large pickups is about $48K. Pickup Trucks Help Drive Average Transaction Price Strength for May 2018, According to Kelley Blue Book Because Tesla will target the high end of the market, offer AP/FSD and significant fuel savings over ICE, the ASP of the Tesla Truck will probably be higher, but let's use $48K as a conservative number.

$48K x 500K = $24B in revenue. Using a 3-4 P/S ratio as a back of the envelope valuation results in a very rough $72B-$96B valuation for the pickup business in 2023.

It could easily be higher depending on profitability assumptions or a higher P/S ratio to reflect Tesla's extraordinary growth rate, which the pickup (and SUVs based off it) will ensure continues after Model 3 and Y production have ramped up. There are also obvious opportunities to use the pickup platform to make truck-based SUVs to compete with the Escalade, Navigator, Suburban, Explorer, Cherokee, etc.

This also doesn't include any valuation for an FSD capable pickup/truck-based SUV fleet on the Tesla Network.

And perhaps most importantly, the pickup will be a big step forward for Tesla's mission of accelerating the transition to sustainable energy -- this segment of the ICE market is extremely energy inefficient with very high GHG emissions per mile.

Edit: updated with more recent ASP info.

Private pickup buyers tend to be extremely brand loyal. More than car brands. Breaking into the private pickup market will probably be a bit tough, but commercial and government buyers are driven by the bottom line and that is a significant percentage of pickup sales. I think aiming for the commercial/government market first would work best, but Tesla has surprised me before.

 

[mongo]

Private pickup buyers tend to be extremely brand loyal. More than car brands. Breaking into the private pickup market will probably be a bit tough, but commercial and government buyers are driven by the bottom line and that is a significant percentage of pickup sales. I think aiming for the commercial/government market first would work best, but Tesla has surprised me before.

By 'aiming' are you referring to pre-release/ pre-production info sessions (similar to semi), or a reduced content fleet version?
My guess it the pickup will have a long reservation backlog regardless.

 

[EinSV]

Private pickup buyers tend to be extremely brand loyal. More than car brands. Breaking into the private pickup market will probably be a bit tough, but commercial and government buyers are driven by the bottom line and that is a significant percentage of pickup sales. I think aiming for the commercial/government market first would work best, but Tesla has surprised me before.

The pickup market is definitely very different from Tesla's current markets and I agree that commercial customers may be the lowest hanging fruit. Many of the capabilities Elon was talking about on Twitter would definitely appeal to people looking for a working truck. As far as the broader market, having the Semi out first should give Tesla some street cred with pickup buyers. I am sure a lot of people in the construction business and trades will buy them, and many of these folks will have friends who are pickup owners, which should also help. Also, the strong working truck capabilities, best-in-class performance and significant fuel savings should draw in customers. A friend who is a pipe-fitter can't wait to get his hands on one since he is spending so much in gas on his ICE pickup.

The other factor is that the Tesla Truck may pick up more international sales than the Big 3 US pickups (F-Series, Silverado, Ram), which seem to appeal mainly to U.S. buyers. The US is obviously critical for pickup sales but the Toyota Hilux does well internationally and sells more than 500,000/year worldwide. Hilux by the Numbers | Hilux 50th Anniversary Special Website | HISTORY | TOYOTA Global Newsroom The Tesla Truck's low cost of fueling compared to other pickups and clean EV drivetrain could be appealing in many markets outside the U.S., especially those that have higher gasoline/diesel costs and are ahead of the U.S. in terms of concern about global warming (which is just about everywhere).

But this is an entirely new market, and it could be a tougher nut to crack than Tesla's current markets. We'll see.

 

[mspohr]

Private pickup buyers tend to be extremely brand loyal. More than car brands. Breaking into the private pickup market will probably be a bit tough, but commercial and government buyers are driven by the bottom line and that is a significant percentage of pickup sales. I think aiming for the commercial/government market first would work best, but Tesla has surprised me before.

Ive observed my friends readily switch brands. Toyota, Ford, Dodge, Chevrolet. It doesn't seem to matter to them.

 

[AudubonB]

The use or uselessness of anecdotes and all, but...

I used to be a died-in-the-Blue acolyte of Ford pickups, and you know what happened to me....

...but my two closest friends in AK both have at least the same amount of devotion, yet both also have strongly let me know that if a Tesla pickup comes to market, they immediately would buy one. Even the coal-roller son of one of them loves driving our Models S & X.

 

[wdolson]

By 'aiming' are you referring to pre-release/ pre-production info sessions (similar to semi), or a reduced content fleet version?
My guess it the pickup will have a long reservation backlog regardless.

The people who currently own a Tesla car and/or are Tesla fans who want or need a pickup will jump onto a waiting list when its announced, but the bulk of private pickup owners are the opposite end of the car buying market from Tesla buyers. There is a craze among some pickup owners to flaunt their ICE by modifying their diesel pickup to emit huge clouds of black smoke. I've never heard of anyone doing that with a VW Golf diesel.

There are two areas of the automotive market where EVs are the least popular: sports car enthusiasts who like the exhaust note of a big ICE and pickup truck owners. The sports car enthusiasts have had their loyalty eroded by the P100D, but traditional automakers are doing things to play noise in the cabin to please these people. Both the BMW i8 and Jaguar iPace have noise generators in the cabin to make people familiar with ICE cars more comfortable.

The pickup market hasn't budged yet, but there hasn't been any serious competition to the ICE pickups yet.

Many moons ago I got certified to give the Myers Briggs Type Indicator, which is a test based on Psychologist Carl Jung's theory of personality. It measures four characteristics in a person's personality and one is the way we gather information, either Sensor or Intuitive. Sensors only trust information they have gathered through their senses and abstract information is kind of stored in a separate place where belief is withheld until they experience it. The map is separate from the territory.

Intuitives are more comfortable with the abstract and they can many times see where something is going before experiencing it. Sometimes they're wrong, but seeing the map and imagining the territory comes easily.

I had an experience in training where the Intuitives in class realized how deep the gulf was. On the first day, the instructors had each person put their name on a type chart on the wall in the box that best corresponded to their type. Every Intuitive looked at the chart and saw that the class was about 2/3 Intuitive. On the second day the instructors made a living type table where people separated physically by type. One of the Sensors exclaimed that Sensors were a minority and every Sensor made noises like it was a new revelation and every Intuitive looked at them like they were nuts. The Intuitives saw the chart and mapped it to the reality while the Sensors kept the information of the chart as separate information until they physically experienced the difference.

The general population is about 60-70% Sensor and better educated people tend to be more often Intuitive (Intuitives tend to have an easier time with the abstractions of education). Early adopters are probably overwhelmingly Intuitives who see the potential benefit in the new thing before Sensors who want to get their hands on it first. An all new type of car is kind of a scary thing to many Sensors who don't trust things they haven't experienced, but once they do experience it, they will probably appreciate it as much as the Intuitives if not more (Sensors can enjoy sensory pleasures more than Intuitives).

With anything dealing with people, there are always exceptions to any group. I am 100% sure there are Sensors reading this now, but I strongly suspect the majority of current Tesla owners are Intuitives.

Back to pickups. In most car segments the majority of owners are Sensors because they are a majority of the population. The truck market hasn't had any EV competition, so not as many have experienced the benefits of EVs yet. Once they do, quite a few will be won over too.

The pickup market is definitely very different from Tesla's current markets and I agree that commercial customers may be the lowest hanging fruit. Many of the capabilities Elon was talking about on Twitter would definitely appeal to people looking for a working truck. As far as the broader market, having the Semi out first should give Tesla some street cred with pickup buyers. I am sure a lot of people in the construction business and trades will buy them, and many of these folks will have friends who are pickup owners, which should also help. Also, the strong working truck capabilities, best-in-class performance and significant fuel savings should draw in customers. A friend who is a pipe-fitter can't wait to get his hands on one since he is spending so much in gas on his ICE pickup.

The other factor is that the Tesla Truck may pick up more international sales than the Big 3 US pickups (F-Series, Silverado, Ram), which seem to appeal mainly to U.S. buyers. The US is obviously critical for pickup sales but the Toyota Hilux does well internationally and sells more than 500,000/year worldwide. Hilux by the Numbers | Hilux 50th Anniversary Special Website | HISTORY | TOYOTA Global Newsroom The Tesla Truck's low cost of fueling compared to other pickups and clean EV drivetrain could be appealing in many markets outside the U.S., especially those that have higher gasoline/diesel costs and are ahead of the U.S. in terms of concern about global warming (which is just about everywhere).

But this is an entirely new market, and it could be a tougher nut to crack than Tesla's current markets. We'll see.

Pickups aren't as popular in a lot of countries. They are mostly a suburban or rural vehicle in the US and Canada. I see a lot more trucks out here in the burbs than I do in Portland. But work trucks are needed all over the world. Many European cities are banning ICE from city centers and there is always a need for delivery trucks. A Tesla pickup with a box in place of the bed would make an excellent delivery vehicle. It's a little smaller than most delivery trucks, but with all the power and torque available to an electric, it will punch way above its weight (as Elon pointed out in his Tweet storm).

Once skeptical truck owners have to drive an EV truck for work, they will want one for themselves too.

Ive observed my friends readily switch brands. Toyota, Ford, Dodge, Chevrolet. It doesn't seem to matter to them.

I've noticed better educated people are often less brand loyal than blue collar people. Most people I know have car brands they prefer and will look at first, but if something better is available from the competition they are more willing to consider than the blue collar people I know. One friend's husband worked 40 years as a machinist at Boeing and a shipyard. He is fiercely loyal to Chrysler products and gets very angry with my friend if she makes any mention of considering another vehicle. Over the years I've known her she's had at least three Chrysler vehicles pretty much disintegrate on her, but he won't consider anything else. Her current minivan is on its last legs and he insists on getting a Pacifica.

She would love a Tesla, but even a Model 3 is out of her price range right now and she needs something more vertical because she has trouble getting in and out of low cars. At my SO's urging she's considering a Subaru, but her husband would blow a gasket at the idea.

I've known a number of people who might like Tesla as a car, but when it came to their trucks, they were fiercely loyal to one brand. Those people would probably at least look at a Tesla truck, but most ICE truck owners are going to be resistant until Tesla can prove their brand X truck is vastly inferior to Tesla trucks.

 

[EinSV]

After Elon's tweetstorm this week, it seems time to start an investor thread on the Tesla pickup truck aka Tesla Truck.

Highlights from Elon's tweets:

• Range up to 400-500 miles, maybe higher
• Standard dual motor AWD w/"crazy torque"
• 300,000 lb towing capacity
• Suspension that dynamically adjusts for load
• Adjustable suspension height
• Rear and front lockers
• Will parallel park and have 360 degree cameras and sonar
• Outlets allowing 240V heavy duty charging all day
• Utility port heavy duty air compressor to run air tools
• Will "look like a truck" -- Elon says "Bronco rocks"
• Driver's seat "will fit Andre the giant"

Lots to talk about ....

 

[jhm]

The use or uselessness of anecdotes and all, but...

I used to be a died-in-the-Blue acolyte of Ford pickups, and you know what happened to me....

...but my two closest friends in AK both have at least the same amount of devotion, yet both also have strongly let me know that if a Tesla pickup comes to market, they immediately would buy one. Even the coal-roller son of one of them loves driving our Models S & X.

FWIW, I tweeted to Elon that he should call the Tesla pickup the Audubon.

 

[wdolson]

Looks like the moderators created a thread for this.

From the renderings going around with the claim Tesla commissioned them, my first thought was the cab is too narrow. For a work truck, that isn't that important, but for the recreational truck market people want the ability to haul a family of five Andre the Giants in comfort.

 

[JRP3]

Remember the rendering is based on the semi and was shown with a standard pickup in the bed.

 

[wdolson]

I looked at the rendering again. It's unclear whether the regular pickup is in the background or in the bed of the Tesla pickup. If it's in the bed, then that's not going to be a general purpose pickup. It's more like the chassis for a small commercial box truck.

 

[RobStark]

When looking at the size of the full size truck market we should add GMC Sierra's ~250k annual sales to Chevy Silverado's ~650k unit sales for a total of ~900k full size trucks sold by General Motors on an annual basis.

 

[JRP3]

For reference

 

[ValueAnalyst]

@EinSV Thank you for starting this thread, and I agree with your points. One question for you, if I may: were surprised by the low level of reservations for Semi thus far, as I was? IIRC Elon noted there were about a couple of thousand Semi reservations as of May. How would that observation translate to pickup reservations?

 

[EinSV]

@EinSV Thank you for starting this thread, and I agree with your points. One question for you, if I may: were surprised by the low level of reservations for Semi thus far, as I was? IIRC Elon noted there were about a couple of thousand Semi reservations as of May. How would that observation translate to pickup reservations?

I think the markets are very different. The public Semi reservation list reads like a who’s who of the industry, with many companies placing substantial initial orders. But it seems as though they want to try them out first before going “all in,” which makes sense especially given the uncertainties around the production and ramp timeline, lack of details on the Megacharger network and hefty deposit required ($20K).

It wouldn’t surprise me to see the Semi reservation list grow significantly by the time production is ready, especially if Tesla has started to build out the Megacharger network and gives customers access to prototypes to get comfortable they will perform as advertised. But I also think Semi demand probably won’t really take off until about year 2 of the program after some of the big players have had a chance to get comfortable with actual performance, reliability, etc.

Pickups might fall somewhere in the middle where fewer customers than the Model 3 and Y are comfortable ordering sight unseen but then demand grows quickly once they are out in the field and word of mouth, rides in friends’ trucks, etc. can play a role.

I think the final design is critical. Franz is a genius so I am comfortable he and Elon will come up with something great that fits this market.

With the right design, I don’t see any reason Tesla Truck sales couldn’t eventually exceed current F-Series sales. No less plausible than the Model S or Model 3’s success, although it may take longer.

 

[AudubonB]

FWIW, I tweeted to Elon that he should call the Tesla pickup the Audubon.

Heh heh.

I’ve written this in times past, but it’s as apposite here as it likely ever will be:

On occasion, I tell our German-Austrian-Swiss guests that

Mein Name ist nicht Autobahn - das ist eine Strasse, sondern Audubon.
Und ich heisse nicht Audi - das ist ein Auto, sondern Audie.

Absolutely correct German oder nicht , they figure it out.

 

[RobStark]

On occasion, I tell our German-Austrian-Swiss guests that

Ignore the Luxembourgers and Liechtensteiners ?

 

[cpa]

Around here anyway, many owners of pickup trucks use them for towing fifth wheels, trailers, and boats--some boats quite large.

The thread for Model X trailer-friendly Supercharger sites lists very few Supercharger locations that could accommodate those who are towing a trailer without detaching the trailer or parking in such a way that blocks a couple of the adjacent sites. This requires the owner to stay with the vehicle during the charge. This is even more problematic if the battery SOC is low and the driver wants to charge to 80-90%.

I would doubt that those folks would want to drive a Tesla pick-em-up truck--even if it had a 250kWh battery and could go 350+ miles towing a 6,000 pound trailer or boat. Eventually the vehicle will need a charge on the way to the Colorado River or Shasta Lake or wherever.

I fully support an electric pick up. But Tesla is going to have to design suitable Level 3 charging locations and substantially increase destination charging at popular lakes and rivers and unimproved campgrounds before vacationers and retirees embrace driving electric with their towing needs.

 

[JRP3]

Most pickups are not used for towing anything. Tesla can sell many pickups for quite a while without worrying about long distance towing and charging.