Tesla is starting delivery of the CyberTruck. The CyberTruck competes with some of the most profitable and popular USA made vehicles. Ford, GM, and RAM (Dodge/Stellantis) profit margins are dependent on their vehicles in this class. The market target of this strategy is clear, and so are larger targets.
EkaLore has looked at the transformation of Ford, service offerings from GM, and the pricing tactics by Tesla. In this release EkaLore looks at possible larger targets for the CyberTruck product lines. We continue looking at Tesla's tactics and their effects on competition.
Marketing and sales costs for competitors are higher per vehicle than Tesla’s promotional costs. The absence of a traditional dealer and distribution network creates a cost advantage for Tesla estimated at the USD$2-3000 range. In November 2023 a large coalition of 3700 dealers in all 50 USA states went public with their concerns. Larger volumes of traditional manufacturers EV/NEV product lines were arriving at dealer sales lots without pre-booked buyers. Early adopters and enthusiasts had taken many earlier vehicles (especially during the end of the Covid-19 shortages). Current accumulation of inventory was taken by dealers to mean that buyers were not enthusiastic to buy because of: high prices (even with incentives) and lack of home charging/charging locations. Other concerns include potential problems for the electrical distribution grid and the need for more raw materials to sustain higher levels of production. Lack of buyer enthusiasm meant higher carrying costs (and lower margins) for dealers who have been able to sell everything they could get during the Covid-19 shortages.
The overall pressures on competitors brought by Tesla’s bringing the CyberTruck to market in 2023 are strategic as well as tactics in the marketplace:
Competitors have fewer choices to counter Tesla due to ongoing pricing pressures, dealer/marketing costs, and high manufacturing costs.
Investment demands to move from internal combustion engines to EV/NEV product lines will continue to increase. Cash for investment is reduced as increased sales reduce margins, manufacturing startup costs peak, and overall margins are reduced with more EV/NEV sales.
Traditional manufacturers signaled new product line concepts, leaked market launch timing, and migrated product lines in an orderly process. Major competitors had good intelligence on pricing, market timing and positioning, and saw gradual product launch/ramps. Tesla doesn’t provide this multi-year certainty. This has created a scramble for technologies (batteries, electrical inverters, charging infrastructures, software defined products) unfamiliar to traditional manufacturers. The changes in required product and manufacturing competencies did not fit with existing staff and traditional facilities. Ford has indicated Tesla might be 25% more labor efficient during product development. Manufacturing cost reductions have VW and Toyota scrambling to use some of the same techniques.
The effects of Tesla’s CyberTruck strategies see:
Cashflow, margins, and prior product line plans are disrupted.
Manufacturing, supply chains, embedded technologies, and product technologies are now a Tesla strength – not those of the traditional competitor.
Tesla sees advantages and lower costs from business models (online direct sales versus dealer models), sales and marketing promotional costs, and larger public product preferences.
The literal “bottom line” has a profitable Tesla able to use a new product line (CyberTruck) to attack traditional manufacturers profits, cash flows, manufacturing and product strengths, and strength in a larger distribution network. The effect of these attacks is to lower choices for sales and marketing tactics, reduce free cashflow for investment, increase short-term spend for new products and manufacturing, and turn a traditional advantage into a costly liability.
Tesla is continuing to be an Alien Invader in a traditional global market. Tesla is using new technologies in the product and product manufacturing, a more cost-efficient business model, and technology enabling even more leverage in current and future products (Full Service Driving (autonomous driving), charging infrastructure and services, and software defined products).
For more analysis and notes on Tesla as an Alien Invader see
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