What Will Demand Be For The Cybertruck?

Analysts, forecasting agencies, and auto manufacturers once thought electric vehicles (EVs) would become little more than a niche product. Will they be wrong about the Cybertruck as well?

In ARK’s view, the low expectations[1] for Tesla’s Cybertruck are based on a blind spot. Today, most automakers fund the development and sales of unprofitable EVs with profits from their gas-powered truck sales. If the Cybertruck were to disrupt that profit center, traditional automakers could end up in trouble.

In ARK’s first year, 2014, the US Energy Information Administration (EIA) forecasted that long range electric vehicles would have little to no US market share in 2040. Last year, the market share of US EVs topped 5%[2] so, now, having increased its forecast each year, the EIA expects US EV market share to plateau at ~14% in 2040, as shown below. According to our research, global EV market share is likely to scale to 70%+ by 2027,[3] and the US will not be far behind.

Source: ARK Investment Management LLC, 2023, Based on data from EIA Annual Energy Outlook (2022); Irle 2022.

For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Forecasts may not be realized.

The EIA expects trucks to constitute 69% of all vehicles in the US by 2050, even though electric trucks will not gain traction beyond 10% share of the total, as shown below.

Source: ARK Investment Management LLC, 2023, based on data from EIA Annual Energy outlook 2022.

For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Forecasts may not be realized.

We disagree. In addition to 1.5 million existing Cybertruck reservations,[4] early Google Trends data suggest that the Cybertruck could be as mainstream as the Tesla Model Y. On April 2, 2023, just as Elon Musk tweeted that he was walking the Cybertruck production line,[5] the number of searches for the Cybertruck on Google exceeded those for the Model Y, as shown below. Notably, Cybertruck search volume originated in truck-loving geographies, potentially suggesting desire to buy.

Source: Google Trends 2023.

For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Forecasts may not be realized.

While sell-side analysts may be uncomfortable forecasting exponential EV growth, we believe it would be a mistake for them not to consider the implications Cybertruck success could have for traditional automakers.

Works Cited

EIA 2022. “EIA Annual Energy Outlook 2014-2022.” https://www.eia.gov

Google Trends 2023. https://trends.google.com/home
Hetzner, C. 2023. “Tesla’s Cybertruck could end up just being a ‘sideshow’ for the carmaker, warns Morgan Stanley.” Fortune.
https://fortune.com/2023/03/09/tesla-cybertruck-may-end-up-being-a-side-show-morgan-stanley-warns/

Irle, R. 2022. Global EV Sales For 2022. EVvolumes.com
Korus 2023. “This is the demand curve for vehicles according to ARK’s research.” Twitter. https://twitter.com/skorusARK/status/1644398459489796097
Lambert, F. 2022. “Exclusive: Tesla Cybertruck reaches 1.5 million pre-orders – Can it live up to the hype?” Electrek. https://electrek.co/2022/11/22/tesla-cybertruck-million-pre-orders-live-up-to-hype/#:~:text=By%202021%2C%20a%20crowdsourced%20Cybertruck,at%20over%201.5%20million%20units

Musk, E. 2023. “Walked whole Cybertruck production line at Giga Texas for several hours earlier today – gonna be awesome!” Twitter. https://twitter.com/elonmusk/status/1642416728444669952?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1642416728444669952%7Ctwgr%5Ecc63f9326825d338f2c82d2183a376343d476951%7Ctwcon%5Es1