Tesla Cybertruck is a flop. Its shocking depreciation proves it
What's the story
Tesla has finally started accepting trade-ins for its Cybertruck, more than a year after the electric pickup truck's first deliveries started. The move to accept trade-ins now highlights why Tesla had stayed away from the practice in the first place. Apparently, the depreciation rate of the Cybertruck has been way too high, hinting at possible issues with its commercial viability.
Sales challenges
High depreciation rate indicates commercial struggles
The Cybertruck's journey started on a promising note in late 2023, but it soon became evident that the vehicle was pricier and less efficient than advertised. Although Tesla boasted over a million reservations for the electric pickup truck, only some 40,000 of those were converted into actual orders. This has resulted in unsold inventory sitting for months and Tesla offering huge discounts to boost sales.
Depreciation details
Tesla's trade-in estimates reveal significant depreciation
Tesla has now started accepting trade-ins for the Cybertruck, at least for the Foundation Series. The company is offering estimates to Cybertruck owners via the Cybertruck Owners Club. For example, Tesla sold a brand-new 2024 Cybertruck AWD Foundation Series for $100,000 but is offering $65,400 after about 10,000km on the odometer, indicating a depreciation of nearly 35% in just one year.
Market impact
Cybertruck's depreciation rate surpasses industry standards
Normally, pickup trucks depreciate by 20% after a year and 35% after three to four years. But, as it turns out, the Cybertruck's depreciation rate is way higher than these industry standards. On Car Guru, the Cybertruck's depreciation comes closer to 45% after a year. This number is more indicative of what owners can expect from dealers, suggesting Tesla has overestimated demand for this model.
Overproduction consequences
Tesla's overproduction leads to inventory surplus
Tesla's move to manufacture as many Foundation Series trucks as possible has backfired, resulting in an inventory pile-up. Some units even had their Foundation Series badges stripped off and were sold as regular Cybertrucks. Even as of last month, Tesla had some Cybertruck Foundation Series in stock, suggesting they remained unsold for up to six months. This overproduction has led to thousands of unsold Cybertrucks and compelled the automaker to slow down production considerably.