Tesla order invite now says: “We expect to deliver only the foundation series through late 2024”

[GuyV]

I suspect they will keep ramping production towards the end of the year and then take a look at their progress in reducing production costs and make the most logical decision as to how to proceed from there. One thing I'm confident of is they will keep ramping to higher numbers. What we don't have any visibility on is what their actual production costs are, we can only make wild ass guesses. And that includes guessing whether the $7500 tax incentive for trucks under $80K remains intact with a potential change in administrations on the federal level.

Most likely scenario is the tax credit stays intact and Tesla wants production to be ready to hit the ground running when they start running low on buyers willing to pay for Foundation Series. If I'm right about this, we will see a sudden jump in weekly production numbers around that time so they can sell them for $79,990. I think they will use the tax credit as a lifeline to get them through the rocky transition period of Foundation Series ending. Because the end of FS comes with a bunch of buyers who have been waiting to get their hands on one without having to pay for FSD. And FSD is what is likely keeping their margins positive (in addition to the rest of the Foundation premium). With the FSD take rate going from effectively 100% to perhaps as low as 10%, they will also have some enticing high margin goodies to offer new buyers. Because some people who have opted out of the Foundation premium did it because they didn't want to pay the premium, not because they didn't have the money. Of course, such goodies would put it over the tax credit limit if they were attached hardware, therefore would only appeal primarily to people who aren't eligible for the tax credit. So it would be nice if they come up with software goodies that are compelling enough for people to pay $2-$4K for while still retaining the tax credit.

The future is so hard to see because Tesla has many different ways they can handle this, depending upon costs. We don't know their current cost to produce (or their expected cost to produce at higher volumes). The question is, which strategy gets them to high production the quickest without becoming a financial drag (or while improving margins since we don't know where they stand yet).

In other words, they will prioritize volumes over profits but will take all the profits they can get while ramping to high volumes ASAP. The only thing that has been (and could continue to) slowing the planned speed of ramp is risk mitigation. Tesla will ramp as fast as is financially prudent. Without knowing for sure whether they have negative or positive margins, and the size of any negative or positive margins, it's really difficult to accurately predict how Tesla will handle the non-Foundation transition, from a pricing perspective and otherwise.

The scenario I laid out above assumes they currently have siingle-digit positive margins but expect to be somewhere close to breakeven when they switch to non-Foundation production. Hence the sudden jump in production volume. Iin this scenario, delaying the jump in production volumes mitigates risk because it extends Foundation sales.

To derive the price to get to the same level of equipment and software in the above scenario, just take the $80K tax credit limit and add the cost of FSD, the $2500 voucher, maybe $1000 for ten years of premium connectivity ignore the little stuff. So, perhaps a savings of around $8-9K over Foundation Edition. And no laser engraving (or perhaps it will say something else since they already have the laser engraving machine and it doesn't slow down the production). None of this is very precise because I don't want to waste too much time going down a rabbit hole, without even knowing what Tesla currently knows about production costs.

The price will be whatever it will be, and we will find out soon enough. I understand why people would want to know sooner but we don't have enough info. So, the most likely scenario is the most sensible, most straightforward one above. Getting the price down to the tax credit limit.

I think they are still stuck on batteries, that the 4680s are still not getting satisfactory cost/yield and the harder they try to boost production and make the improvements they were aiming for the more it is costing them. That's bad for both Cybertruck volume ramping and profit margins. I thought the continuing scrap dumpsters full of battery canisters seen in the daily flyovers were really concerning.

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[kctreecare]

It looks like Tesla is going to squeeze the Foundation Series for all it's got!

Which is funny because there have been a lot of Tesla detractors, for a number of weeks now, saying Tesla is running out of demand for the Cybertruck at $100K. Maybe people are figuring out how much better this pickup is vs. legacy offerings at $70-$100K and more.

I think it’s actually bullshit and for all of us that were early adopters it’s basically throwing sand in our face. I mean just think if Chevrolet or Ford did that. The pick up comes out and they sell the high dollar unit at first, though there is an end within three months. We ordered it years ago and now there trying to sell us a $100.000 truck when we want a 60-80,000 truck.
.t’s greedy of Tesla because people like my self and you have and are supporting them. My 2022 X is already $35,000 cheaper then when I bought it, which is Ok and I understand, though yeah I know this is just going too far .

It’s just gonna hurt them in the long run, I may decide to go buy something else. There are options and I will spend a lot
less and be able to travel 250-300 real miles and fuel up any where I want.

Foundation series will go on for a long time.

 

[Crissa]

I think they are still stuck on batteries, that the 4680s are still not getting satisfactory cost/yield and the harder they try to boost production and make the improvements they were aiming for the more it is costing them. That's bad for both Cybertruck volume ramping and profit margins. I thought the continuing scrap dumpsters full of battery canisters seen in the daily flyovers were really concerning.

Well, first off, those rarely get picked up and taken away.

Secondly you always have failed cells in the production, since it's a chemical reaction under electrical field, they randomly fall outside of spec.

Yes, their ramping is moving slowly, but there is progress.

-Crissa

 

[GuyV]

GDP ≠ Inflation. While the two measures usually move together, inflation is an independent number regarding costs while GDP regards transactions. They ca, and have, totally moved in opposite corners.

The portion of the economy that the S&P represents fluctuates depending upon how much of the economy is captured by the top 500 public companies - if a larger portion is represented by private or just more companies and startups, the S&P will be less of the economy. If companies gobble each other up, more will be represented by the S&P.

And inflation itself isn't really a measure of true cost - but cost, in that moment. It includes friction that raises price and profit taking which also raises prices and shortages which also raises prices; not just demand, which itself can also, raise prices as people bid against each other for goods and services.

Having inflation is good, because it raises the cost of capital hoarding things and money away from the markets - hoarding, cornering, and saving all reduce GDP while increasing inflation.

Gotta remember these things are balances.

-Crissa

Sure, but taking all of that into account, I was pointing out that inflation isn't the only, or necessarily the best measure of the comparative value of the Cybertruck when and as announced versus at delivery. The S&P 500 is a pretty good and instantly measurable proxy for the value of business activity. I also expect it has a solid relationship to the financial condition of lot of potential Cybertruck buyers. The state of my portfolio certainly made my buying decision easier.

 

[Crissa]

I also expect it has a solid relationship to the financial condition of lot of potential Cybertruck buyers. The state of my portfolio certainly made my buying decision easier.

Yeah, and ruined mine. It's also why they went through the reservation list so quickly.

I think it’s actually bullshit and for all of us that were early adopters it’s basically throwing sand in our face. I mean just think if Chevrolet or Ford did that.

Chevrolet did do that with the Silverado, Blazer, and especially the Equinox. Ford took a bunch of reservations for the Lightning, but when push came to shove the actual price for the specs was twice the advertised.

-Crissa

 

[GuyV]

Well, first off, those rarely get picked up and taken away.

Secondly you always have failed cells in the production, since it's a chemical reaction under electrical field, they randomly fall outside of spec.

Yes, their ramping is moving slowly, but there is progress.

-Crissa

Haha, of course there's progress, I got my truck, but if you watch the flyovers as religiously as I do you will see they did fill up fast and get hauled away pretty quickly. Something has to have been going in a wrong direction that so many to got scrapped, it has really been a lot. I kept waiting for it to tail off, as if progress were being made.

 

[GuyV]

Yeah, and ruined mine. It's also why they went through the reservation list so quickly.

Sorry to hear that. Generally the market is way up since November 2019. I don't think they got through the list nearly as fast as they originally thought they might, hence Foundation Series stretching into a whole year rather than the anticipated 1000. I've read that has significantly raised Tesla's overall average selling price in spite of all of the 3 and Y deals and discounts.

 

[CyberTW]

I think it’s actually bullshit and for all of us that were early adopters it’s basically throwing sand in our face. I mean just think if Chevrolet or Ford did that. The pick up comes out and they sell the high dollar unit at first, though there is an end within three months. We ordered it years ago and now there trying to sell us a $100.000 truck when we want a 60-80,000 truck.
.t’s greedy of Tesla because people like my self and you have and are supporting them. My 2022 X is already $35,000 cheaper then when I bought it, which is Ok and I understand, though yeah I know this is just going too far .

It’s just gonna hurt them in the long run, I may decide to go buy something else. There are options and I will spend a lot
less and be able to travel 250-300 real miles and fuel up any where I want.

Ok. Rivian and ford make good trucks for in the 70s (about what CT with tax credit will be).

do you think Tesla sat up in their ivory towers and thought, “hmmm let’s price this truck so we can really screw early adopters and destroy our brand loyalty.. that will make good sense”?
There is a lot of reasons why it could have been higher including difficulty of manufacturing it will all new tech, inflation, ability to scale and make enough to continue to scale, inability and inefficiency to make a 500 mile truck (isn’t there literally only one car that goes over 500 Licid with incredible aero?)
I mean they could have priced it low like 60k but then they would be losing tons of money for each truck they make —- like Rivian and Ford.. I mean you buying one of those inches them towards bankruptcy, because they priced their trucks low to be competitive but was a horrible financial/business strategy.. so what did you want/expect?

maybe there were people like myself who came slightly later to the EV game, but believe in Tesla’s products and mission, and this FS is allowing me to get my truck in a week or two instead of 2-3 years out. So you wait 8 months to save 28k? Is that such a bad thing?

 

[Crissa]

Haha, of course there's progress, I got my truck, but if you watch the flyovers as religiously as I do you will see they did fill up fast and get hauled away pretty quickly. Something has to have been going in a wrong direction that so many to got scrapped, it has really been a lot. I kept waiting for it to tail off, as if progress were being made.

That's not how battery production works. As the percentage that pass increases, the number of lines employed (and therefore total cells) increases.

They get really high battery reliability by ditching all even slightly dubious cells.

I mean they could have priced it low like 60k but then they would be losing tons of money for each truck they make

They aren't losing money on the trucks. Tesla has the highest margins amongst automakers, and the highest cash on hand.

-Crissa

 

[CyberTW]

That's not how battery production works. As the percentage that pass increases, the number of lines employed (and therefore total cells) increases.

They get really high battery reliability by ditching all even slightly dubious cells.


They aren't losing money on the trucks. Tesla has the highest margins amongst automakers, and the highest cash on hand.

-Crissa

??? What I said was Rivian and Ford are losing money on their trucks ..
so do you know how much it costs to manufacture each Cybertruck? Have seen the financials on it? You are saying they are making the Cybertruck (right now) for less than 60k? Like they could sell them for 60k and make a margin? That’s what you are saying? Ok..

what’s going on? You feel VERY antagonistic of late, which isn’t the value you bring to this forum (which I really enjoy)

 

[Crissa]

??? What I said was Rivian and Ford are losing money on their trucks ..
so do you know how much it costs to manufacture each Cybertruck? Have seen the financials on it? You are saying they are making the Cybertruck (right now) for less than 60k? Like they could sell them for 60k and make a margin? That’s what you are saying? Ok..

Oh, yeah, they would not be making Cybertrucks at all if the expected cost per unit over the lifetime of their machines wasn't below 60k.

-Crissa

 

[CyberTW]

Oh, yeah, they would not be making Cybertrucks at all if the expected cost per unit over the lifetime of their machines wasn't below 60k.

-Crissa

So you KNOW or believe that the moment they are making non-FS that they will be making 20-40k per truck (25-40% margins) immediately.. they won’t be paying off any of the tools or anything to help ramp? Ok

 

[Crissa]

So you KNOW or believe that the moment they are making non-FS that they will be making 20-40k per truck (25-40% margins) immediately.. they won’t be paying off any of the tools or anything to help ramp? Ok

How do you determine how much they're making, though?

-Crissa

 

[CyberTW]

How do you determine how much they're making, though?

-Crissa

This whole conversation was why the CT is priced so much higher.. what I am hearing from your argument, is they are building trucks for less than 60k currently. Thus making HUGE margins already. And they could price them now at 60 or slightly higher and make a profit (right now). That’s the discussion. I agree they will be building them for less, but with all their costs incurred on a ramp, it makes sense it is priced higher early..
And my whole point is that Rivian and ford are selling their cars for a mass loss, but they are cheaper… but that doesn’t tell the whole story..

do you think Tesla should have been true to their original word and sold them for their original prices? Would that be good business right now.. ?

 

[GuyV]

That's not how battery production works. As the percentage that pass increases, the number of lines employed (and therefore total cells) increases.

They get really high battery reliability by ditching all even slightly dubious cells.


They aren't losing money on the trucks. Tesla has the highest margins amongst automakers, and the highest cash on hand.

-Crissa

LOL, what do you mean that's not how battery production works? The lower the yield the greater the waste of time and materials. Elon even admitted their costs are not competitive yet with outside supplier prices and was only hoping to get the there by end of year, and we know how optimistic he is.

The 4680s are also not the higher density and more efficient manufacturing process structure they were trying to get to either. According to Munro they've only achieved dry coating for one electrode so far, not both as they have long planned.

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