Tesla Cybertruck: Don't Even Think of Flipping It

The
Tesla
Cybertruck is almost here and people who ordered early can’t wait. But there won’t be all that many delivered in 2023. Low supply and high demand sets up an incredible opportunity for profit for those thinking of flipping it. But
Tesla
is trying to make sure those who get the truck actually keep it.

Tesla (ticker: TSLA) might be including what Barron’s is calling an anti-flipping provision in Cybertruck contracts. “You understand and acknowledge that the Cybertruck will first be released in limited quantity,” reads part of the Motor Vehicle Order Agreement terms and conditions. “You agree that you will not sell or otherwise attempt to sell the Vehicle within the first year following your Vehicle’s delivery date.”

People who need to sell can sell it back to Tesla. If Tesla declines to buy Cybertruck owners can sell the truck to whomever. The provision doesn’t appear to be in the updated Motor Vehicle Order Agreement on Tesla’s website anymore, but there isn’t any way to know if that is the agreement for early Cybertruck purchases. Tesla didn’t respond to requests for comment about the provision.

It might appear draconian, but it makes perfect sense. Desirable cars will often sell above the manufacturer’s suggested retail price, or MSRP, at dealers. And some will be flipped by early owners in the used car market.

It would have been interesting to see just how high Cybertruck prices could go. There are hundreds of thousands of preorders for the oddly shaped pickup truck skinned with stainless steel. Tesla will deliver only a handful in 2023. A delivery event is slated to happen at the end of November. Those will likely be the first deliveries of the truck to any customers.

Not that many will be delivered in 2024, perhaps tens of thousands. “I know that people are excited about Cybertruck. I am, too. I’ve driven the car, it’s an amazing product,” said CEO Elon Musk on his company’s third-quarter conference call in October. “I do want to emphasize that there will be enormous challenges in reaching volume production with the Cybertruck.”

He doesn’t see reaching “run-rate” production of 250,000 units a year until 2025, almost six years after the truck was introduced in November 2019.

“Run-rate” doesn’t mean 250,000 units in 2025. It means producing, say, 21,000 units in a month. That monthly number annualized to about 250,000 a year.

Tesla stock was up 4% in early trading Tuesday, along with the market after better-than-expected inflation data. The
S&P 500
and
Nasdaq Composite
were up about 1.8% and 2.1%, respectively. Tesla shares’ Tuesday gain follows on Monday’s strong showing when shares rose 4.2%.

Tesla stock was at $227 a share in early trading Tuesday. It closed out September at about $250 a share. It closed out October at about $200 a share, down some 20%, following weaker-than-expected third-quarter deliveries and earnings. Now it’s in the middle of the range while investors wait for what’s next.

One of the things that is next is Cybertruck.

What investors might want more than even Cybertruck is a smaller Tesla. That’s coming sometime in 2024 or 2025. Tesla hasn’t launched a small sedan since the Model 3 was released in 2017. That product void helped
BYD
(1211.Hong Kong) become a dominant producer of battery-electric vehicles.

BYD has about 25% market share of battery-electric vehicles in China. Tesla has about 13% share. Two years ago those numbers were about 13% and 18%, respectively.

Write to Al Root at [email protected]

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