American buyers LOVE pickup trucks. The Ford F-150 has been the best selling vehicle for the last 30+ years. During, this time, Ford typically sells ~1 million F150’s each year.
Due to the cost structure of vehicle development, sales volume and customer pricing, pickup trucks are also tremendously profitable for automakers. This often allows them to subsidize the development costs of smaller, more fuel efficient vehicles.
And, here’s where the Tesla, Cybertruck, benefits most; vehicles with electric powertrains are extremely fuel efficient. When you own a pickup truck, the typical buyers need the vehicle to do 2 things well: hauling and towing. These buyers want to place lots of items into the pickup truck bed and they want to be able tow their boats or trailers.
In exchange for this, buyers typically have had to make big trade offs in fuel efficiency. That’s why pickup trucks are often known as gas guzzlers. Up until now, buyers have accepted this trade off because quite frankly, there haven’t been any other options.
Tesla has essentially taken their electric powertrain that combines advanced electric motors and battery technology and paired it with the most desirable vehicle type in America.
Most of the hot takes on the launch have focused on the look. Some people like it, most people don't. However, the aesthetic appeal or lack thereof completely missed the point. If you dive deeper and analyze the towing and hauling capabilities (the areas buyers care most about), the Cybertruck exceeds expectations. Tesla knows this. This is why during the Cybertruck reveal, they showed the Cybertruck and an F150 engaged in a towing competition. As you might imagine, the Cybertruck won. The torque benefits of electric motors are extremely hard to compete with.
In technology development, this is one of the key insights that has made technology based innovation so successful over the last several decades. Technology companies have excelled on the core of their product or service offering being exactly what customers want and then relentlessly iterating and improving on everything else. The end result of this approach is a solution that delivers a big delta between the established solution and the newly developed solution.
Remember the iPhone
When the iPhone first launched in 2007, Apple was really only trying to solve for how to bring together your personal music collection and your phone. From their experience with the iPod, they already had an understanding of how to make a personal music collection portable. They just needed to learn how to combine that with a phone.
The initial iPhone was good not great at the jobs to be done (carrying my music and making phone calls). However, it was good enough that customers gave Apple permission to improve. As Apple added and improved on functionality, it went from novelty to a core element of our daily lives.
Where it gets interesting is Apple worked hard to get the form factor right from the very beginning. They carefully thought about how would they miniaturize and fit all this technology into something that could fit in your pocket. Customers were willing to invest alongside Apple in helping their technology development efforts improve over time. And now, Apple’s iPhone is still the best selling smartphone 10+ years after its introduction.
Back to the Cybertruck
Here’s what makes the Cybertruck so efficient, the big challenges of hauling and towing have only previously been solved by larger gas guzzling engines and heavier vehicle frames. This means that pickup truck development has in many ways reached a natural limit.
Traditional automakers have innovated in the use of lighter weight materials and other iterations to engine design but didn’t address the problem at a systems level. The powertrain and the vehicle frame/structure needed to dramatically evolve so that customers could get all the benefits they required without having to directly pay for them in lower fuel economy.
Tesla’s Cybertruck has done this in the most efficient and effective way. The look and the unbreakable windows (which broke during the demo) are all things that can be solved in future iterations of development. The cycles for frame design and windows are much shorter than the very difficult challenge of powertrain and vehicle weight.
Using a technology first development process, Tesla has solved a problem in a decade that has alluded traditional automakers for a century. My hypothesis is that automakers in Germany, Japan, Korea and the United States are all going to push had to figure out how to quickly launch an all-electric pickup truck in the near future. The real question, how could they not have seen this coming?