Is Elon Musk Taking a Page from Ferrari’s Playbook with Tesla’s Cybertruck?

The Most Divisive Vehicle Launch in a Decade

The Cybertruck from Tesla has undoubtedly sparked a heated debate since its launch. With its angular design, people either love it or hate it. This, combined with CEO Elon Musk's controversial comments and the challenges of scaling up manufacturing, may have alienated some potential buyers.

The Strategy of Limited Supply

Wall Street analysts predict that there will be limited supply of the Cybertruck in 2024 and possibly even in 2025. However, Tesla is expected to sell every single Cybertruck it produces during these years, albeit in small quantities. Elon Musk seems to be taking a page from Ferrari's playbook by initially limiting supply to create scarcity value and keep prices high. This strategy is not uncommon, as we've seen with big iPhone launches, where Apple gradually ramps up production, leaving fans fighting to get their hands on the latest technology.

Wall Street's Cybertruck Forecasts

According to recent forecasts from analysts at Goldman Sachs, Morgan Stanley, UBS, Bernstein, and Wedbush, Wall Street predicts that Tesla will sell around 48,500 Cybertrucks in 2024. However, UBS analyst Joseph Spak believes that these delivery forecasts need to be adjusted due to the expected challenges in initial production. He suggests that the Cybertrucks available in 2024 may be more like "statement vehicles."

Looking ahead to 2025, Goldman analysts estimate that Tesla will deliver 150,000 Cybertrucks, while Wedbush expects 230,000 to be sold in that year. On the other hand, Morgan Stanley's prediction is more conservative, with only 78,000 Cybertrucks sold in 2025. This would amount to a total of just 108,000 vehicles over the next two years. Despite this, there are over 1 million reservations for the Cybertruck, even if 80% of these are canceled, that still leaves around 200,000 potential buyers.

Following Ferrari's Playbook

If Tesla delivers only 108,000 Cybertrucks in 2024 and 2025, there will be significantly more demand than supply during this early period. Morgan Stanley analyst Adam Jonas suggests that Tesla may take a page out of Ferrari's playbook by limiting series production to maintain scarcity and focus on more profitable products. He cites examples from automotive history, such as Aston Martin producing 645 units of the Lagonda and Ferrari limiting Daytona SP3 output to 599 units. Furthermore, collectors can find limited edition bottles of "Teslaquila" and pseudo flamethrowers from the Boring Company, which demonstrates Elon Musk's willingness to create scarcity value.

A Machiavellian Marketing Play?

Limiting supply early on can be a way to manage uncertainty and create hype around a product. Apple employed this strategy when they launched the iPhone X, which had new features and a high price, similar to the Cybertruck. Initially, supply was scarce, leading to speculation about whether these shortages were part of a calculated marketing play or simply a result of the challenges of manufacturing and distributing complex electronic gadgets globally. The pre-order mechanism, where customers signal their intent to buy, provides valuable early data for predicting demand for such products.

Conclusion

The Cybertruck has undoubtedly captured the attention of the public, with its polarizing design and Elon Musk's unconventional approach. By limiting supply, Tesla aims to create scarcity value and maintain high prices. Whether this strategy pays off and the Cybertruck lives up to its potential remains to be seen. However, one thing is for sure – Tesla is not afraid to take risks and challenge the status quo in the automotive industry.

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By: insider@insider.com (Alistair Barr)
Title: Is Elon Musk Taking a Page from Ferrari’s Playbook with Tesla’s Cybertruck?
Sourced From: www.businessinsider.com/elon-musk-taking-page-from-ferrari-playbook-with-cybertruck-2023-12
Published Date: Mon, 18 Dec 2023 10:00:01 +0000