Electric Pickup Trucks: A Challenging Road Ahead

Key Points

• Developing a practical and cost-effective electric pickup remains a significant hurdle.
• Gate’s vehicle data reveals underwhelming sales figures for various EV truck models.
• General Motors stands out with positive growth in EV pickup registrations through July.

The skepticism expressed by former Lucid Group CEO Peter Rawlinson in September 2024 regarding electric pickups appears increasingly prophetic. “Creating a functional and economically viable electric pickup is extremely challenging in today’s market,” Rawlinson remarked during the company’s Technology and Manufacturing event.

Current Market Landscape

A survey of the electric pickup market paints a sobering picture. The Cybertruck, which has struggled to gain traction commercially, has vanished from its manufacturer’s U.S. order page amidst industry-wide difficulties. An attempt to boost sales by introducing a lower-priced base model in April, with approximately $10,000 slashed from the sticker price, resulted in a stripped-down version that lacked key features that had initially appealed to its niche audience.

The disconnect between initial promises and market realities is stark. The entry-level Cybertruck, originally announced to start under $40,000 before shipping, ultimately retailed for nearly $70,000. Sales projections of 250,000 to 500,000 units have proven overly optimistic. While exact sales figures are not disclosed, U.S. vehicle registration data provides insight into the market performance. Year-to-date through July, Cybertruck registrations stood at a mere 15,211, representing a 14% decline compared to the same period in 2024. July registrations plummeted by 54% year-over-year.

The challenges are not unique to one manufacturer. A major brand under Stellantis abandoned plans for its inaugural full electric pickup, citing declining demand for electric vehicles as the primary reason.

Registration data for Rivian’s R1T shows a 37% decrease year-to-date through July, with July registrations dropping by 40% to just 588 units. The F-150 Lightning experienced a less severe but still significant decline, with registrations down 12% through July and July registrations falling by 15%.

Amidst this downturn, General Motors emerged as a lone bright spot, with its Silverado EV, Sierra EV, and Hummer EV all recording registration gains through July.

Underlying Challenges

Despite GM’s positive performance, the electric pickup segment failed to surpass 50,000 sales through July, a stark contrast to the hundreds of thousands of units sold annually in the gasoline-powered full-size truck segment. This disparity raises questions about the fundamental differences between electric and traditional pickup markets.

The economics of electric pickups upend long-standing industry norms. Traditionally, gasoline-powered full-size trucks have commanded price tags two to three times higher than sedans, despite only marginally higher production costs. This pricing model has been a cornerstone of automotive industry profits for decades.

However, the cost structure for electric trucks is radically different. The battery, typically the most expensive component, significantly impacts profit margins. Consumers expect electric trucks to maintain the performance and towing capacity of their gasoline counterparts, leaving little room for cost-cutting measures. With current battery prices hovering around $50,000, achieving profitability, even at the gross level, becomes a formidable challenge.

Future Prospects

Despite these obstacles, the future is not entirely bleak. As battery prices eventually decrease, the potential for successful electric pickups may increase. Some manufacturers are already adapting their strategies to address these challenges.

One major automaker has intensified its commitment to electric vehicles, reimagining its production process. By developing an innovative “assembly tree” system, where three sub-lines produce components simultaneously before merging, the company aims to boost production speed by up to 40% compared to current methods. This new approach is expected to yield an electric pickup that could achieve profitability early in its lifecycle.

For investors, it’s crucial to recognize that full-size trucks, long a cornerstone of automotive investment strategies, may not yield the same returns in the near term as the industry transitions to electric models. While progress is being made, as evidenced by some manufacturers’ confidence in the profitability of their next-generation electric pickups, margins are likely to remain significantly lower than those of gasoline-powered counterparts for the foreseeable future.

The shift to fully electric vehicles represents a costly transition for the automotive industry. This reality may dampen the investment appeal of automakers in the short term, and the future profitability of the truck segment may never return to its previous heights.