Cybertruck Affordability and Volume

[intimidator]

Glad you brought it up.

According to Elon Musk, a 6 ton Giga produces a cast every 45 seconds, and is working 75% of the time. Equals 10,000 casts per year. This equates to 250,000 cars per year. (front and back) = what Musk said.

I am assuming an 8 ton will have the same capacity.

As a business you just can’t be single point sensitive, you have to have 2 presses at least.

I think sometime in 2023, we will have a second Gigapress operating, and we will be quickly scoping towards 500,000 units per year.

Elon was clearly sandbagging.

500,000 Cybertrucks = 10 billion profit per year.

Buy TSLA

Elon is not sandbagging. He almost always over promises, and is late.

If he says the top end is 250,000 a year (at least initially), I believe him.
If he says they are still working to make the Cybertruck affordable, I believe him. I don't think they have finished the engineering of the vehicle, nor the engineering of the production line.

If he says he is "hopeful" Tesla can ramp the Cybertruck in 2023, I believe him. He is hopeful, but not certain. Maybe it will be 2024.

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[intimidator]

This is another bit of the transcript which I think is widely mis-understood. Musk is talking about the challenges of the Cybertruck and he mentions that making it affordable is one of the biggest challenges. This answer also confirmed Musk‘s previous estimate about planned volume for the Cybertruck at 250,000 units.

We’ve all seen the crazy tech they are trying to cram into it, but fundamentally I think it sounds like Musk is trying to keep the truck grounded. The big reason? Because while he’s talking about affordability he’s putting it into context here.

“…if it's not affordable, that will constrain people's ability to buy it because they don't have the money… Aspirationally, we'd like it to go, in terms of just a rough order of magnitude, we'd like Cybertruck to be at least on the order of a quarter million vehicles a year. But it will take us a moment to get to that level.”​

So we need to work backwards from here. How much would the Cybertruck need to sell for in order to move 250,000 trucks a year after their initial backlog? That’s his **minimum** expectation and very likely the scale they will want and need in order to get the margins they are looking for.

Toyota has the “Premium” pickup and reputation for having crazy high truck prices, and prices on the Tundra range from about $35,000 to about $57,000 (likely around $75k with options). Across the whole Tundra line, Toyota only sells about 84,000 trucks per year. I think that sets a pretty good baseline for what the Cybertruck will cost.

The trucks which actually sell more than 250,000 units per year are significantly less expensive than the Tundra. There are no 250,000 unit/ year trucks which sell for $100,000, not even remotely close.

There is absolutely going to be a premium attached for the fact that it is an electric truck, but if they are going to hit that sales number, it is not going to be double the cost of otherwise comparable trucks.

Spoiler: Full text from transcript

Martin Viecha

Thank you. And the next question is, what are the biggest obstacles for Cybertruck volume production besides battery shortage?

Elon Musk -- Chief Executive Officer and Product Architect

Batteries will probably not be the limiting factor in Cybertruck production. There's a lot of new technology in the Cybertruck that will take some time to work through. And then, there's a question of like, what's the average cost of Cybertruck and to what degree is that affordable? You know, there's -- you can make something infinitely desirable, but if it's not affordable, that will constrain people's ability to buy it because they don't have the money .I worry more about like how do we the Cybertruck affordable despite having awesome technology. That's the thing that will really set the rate.

Aspirationally, we'd like it to go, in terms of just a rough order of magnitude, we'd like Cybertruck to be at least on the order of 40 quarter million vehicles a year. But it will take us a moment to get to that level.

This transcript is again from The Motley Fool. I made a slight edit to their transcription which is obvious in red above. I had to re-listen to the audio because I was pretty certain Musk didn’t say they were planning on making “40 million“ Cybertrucks a year.

A lot of glass eyed believers will still cling to the belief Tesla is certain to be cranking out Cybertrucks by the end of 2022.

I think Elon was being very sincere....and offering some specific information.

1) 250,000 Cybertrucks a year is way down the road. "It will take us a moment to get to that level.". That won't be in 2023, because that is when he is "hopeful" they can start production.
So maybe, maybe 250,000 Cybertrucks in 2024. Or maybe it is 2025.

2) It is not currently affordable as designed. My best guess is when he said the QUAD motor would be first Cybertruck built, his team came back to him and told him if you want to make a good profit on selling that Cybertruck, it is going to have to retail for about $80-85,000. Maybe more. (a lot of costs have gone up since Nov 2019) I don't think he is thrilled about selling the first 500,000 Cybertrucks, over a several year period, for $85,000+

Back to the drawing board to see what things can be changed, or re-engineered to cut costs.

I think most CyberTruck pre-order holders can safely go out right now and do a 3 year lease on a Ford or Ram and have it run out before they get an email from Tesla saying their CT is in production.

 

[intimidator]

Aren’t we over looking in this discussion that over half of the Cybertrucks presently on order, nearly 600,000; over two years of production capacity, are already the $70,000 Tri-motor version. I would be surprised if many of those buyers would back out if it increased to $80,000 for the quad motor 4 wheel drive replacement.

You are correct. I have a Tri-Motor order, Order # 300,000.
I would gladly buy an $80,000 Quad motor tomorrow.
I would also pay $85,000 if I could get it this month.

So, it is possible Elon is being told by his engineers and accountants that the Quad motor has to sell for $100,000 due to all the tech they promised. (Sliding locking bed cover, bullet proof glass and so on). I think if they could make it for $80,000, with a good profit margin, they would do it by the end of this year.

Look at what GM is selling the Hummer for. EV trucks are going to be expensive.

I'm new to the channel: The price for my ordered CT was ~50K (dual motor). Now I don't see a price on my Tesla page. Does anyone know if Tesla will honor those original prices?

I'll be selling my Y to pay for it when it comes. If there is a $10k adder for the CT, then no problem. If it's a $20k bump, then I'm definitely on the fence. I'm not hauling cords of wood, this is a purely recreational (read that as my toy), so justification gets pretty hard when I'm in it for 20 large.

If someone tells you they know the NEW prices for the Cybertruck, they are making it up.

No one knows.

Tesla has not said they would honor the original prices. EXPECT it will be significantly higher than was promoted way back in November 2019. We don't even know if they will ever make the Dual motor. If they do come out with the QUAD, it might a few years before they bring out the Dual. We think the Single and Tri motor versions are DOA.

 

[Walkstep]

When the Cybertruck rolls off of the assembly line in Texas (in 2023), it will be the ultimate example of Tesla’s and Space X’s engineering and production ramp experience from the last 18 years. Cross-team and cross-company engineering collaboration, rapid iteration at all levels, advanced materials science, in-house software design and computer science, automation simplification and internal supply chain for most key parts all contribute to sophisticated products at lower prices.

The benefits of large precision castings with custom alloys, a true structural 4680 battery pack, exoskeleton, no paint body, electrical and electronic advances, etc. will reduce weight, part count, assembly robot count, assembly time, rework and ultimately cost. All this will contribute to supplying us CT fans with the coolest truck ever at a reasonable price, even with >7% inflation.

 

[johnbeans]

I think enough signs are there to indicate that prices will be higher than originally quoted.

And if we've learned anything from past Tesla launches, it would be that you don't have to compete against legacy manufacturers using price.

A Tesla truck will have a premium over existing trucks. It won't be cheaper than similarly-sized trucks, because it's worth more. It can drive itself. It has a vault. It's built crazy tough. You can "fuel" it at home. You can give it verbal instructions. It has Netflix. It is the ultimate road trip vehicle. It will be the most safe truck to have in a crash.

The ramp of any new factory and/or program presents financial challenges and gross margin pressure on any manufacturer. At first volume will be constrained, but there is a lot of pent-up demand. So Tesla will maximize profit, because to do otherwise would just throw away money that people would willingly spend to get one sooner.

Tesla has done this before: let the most eager and wealthy customers subsidize that expansion.

And that will lead inevitably to a little bitterness among devoted followers who placed a reservation and eagerly followed all of the developments until launch, hoping for both better and cheaper (or at least affordably priced).

All of this has already happened before, and will happen again.

It is the way.

 

[Ogre]

I'm new to the channel: The price for my ordered CT was ~50K (dual motor). Now I don't see a price on my Tesla page. Does anyone know if Tesla will honor those original prices?

I'll be selling my Y to pay for it when it comes. If there is a $10k adder for the CT, then no problem. If it's a $20k bump, then I'm definitely on the fence. I'm not hauling cords of wood, this is a purely recreational (read that as my toy), so justification gets pretty hard when I'm in it for 20 large.

We know Tesla honored all other previous pre-order prices. We also know Tesla has been relentlessly driving down their cost structure and that the Cybertruck was designed to be affordable to manufacture.

We know Rivian honored their pre-order prices. (And was similarly affected by delays, inflation, and supply constraints)

We know Ford did…

We know GM did…

No. We know know one way or the other until they ship.

 

[Ogre]

People are probably around $45k-$50k average for a model 3 and $55k - $60k for a model y and they can’t make enough and they are in that 250k range. People expect to pay $20k for a truck for its capabilities. I can see them selling every one they can make for 10 years at $80k. Also the demand for trucks in the US is double the demand for cars.

That is just about double the average cost of a pickup truck. In 2021, the average cost of a pickup truck is $41,000. There are zero cars which are comparable to the Model Y selling for $21,000. Which is your assumption here that people pay $20k more for a pickup truck would require.

The number of pickups selling for $80k is in the low 10s of thousands. That’s $10-20k more than the most expensive Tundra. And you aren’t even talking about the top end Cybertruck.

Lots of people just cannot swing a $1200/ month truck payment. They are eliminated right out.

Lots of people buy trucks for work purposes. Most of them are going to do look at the $80k price tag and skip it. There is a reason Rivian is going for upscale recreation and not marketing it as a work truck. People buying a truck for business will skip it at $80k.

Tesla might release the quad motor at $80k and just crank those out until demand starts to slack off, then start cranking out the dual motor Trucks for $50-60k. I could totally see that.

 

[Ogre]

All of this has already happened before, and will happen again.

Example please.

Preferably in the auto industry. Even better, with Tesla.

Just tossing around boogeymen and expecting to be taken seriously doesn’t work.

 

[Arctic_White]

That is just about double the average cost of a pickup truck. In 2021, the average cost of a pickup truck is $41,000. There are zero cars which are comparable to the Model Y selling for $21,000. Which is your assumption here that people pay $20k more for a pickup truck would require.

The number of pickups selling for $80k is in the low 10s of thousands. That’s $10-20k more than the most expensive Tundra. And you aren’t even talking about the top end Cybertruck.

Lots of people just cannot swing a $1200/ month truck payment. They are eliminated right out.

Lots of people buy trucks for work purposes. Most of them are going to do look at the $80k price tag and skip it. There is a reason Rivian is going for upscale recreation and not marketing it as a work truck. People buying a truck for business will skip it at $80k.

Tesla might release the quad motor at $80k and just crank those out until demand starts to slack off, then start cranking out the dual motor Trucks for $50-60k. I could totally see that.

Well said.

I see quad CT at around $80K or so, with DM CT coming it at significantly less. I'd be shocked if CT is much more expensive than the top-line F-150 Lightning.

 

[Crissa]

People are probably around $45k-$50k average for a model 3 and $55k - $60k for a model y and they can’t make enough and they are in that 250k range. People expect to pay $20k for a truck for its capabilities. I can see them selling every one they can make for 10 years at $80k. Also the demand for trucks in the US is double the demand for cars.

Average price of a full-sized truck in the US $56k.

Average price of a new car is $47k.

-Crissa

 

[Cybertruck Hawaii]

I’ll take any pickup truck brand just as long as it is a battery electric vehicle which is under fifty thousand dollars in America. I own Tesla stocks, but am not bias towards becoming an owner of another electric pickup brand.

 

[Crissa]

I think enough signs are there to indicate that prices will be higher than originally quoted.

...Signs that Tesla has the highest margins ever, higher than all other major automakers?

That they've never upped the price on sitting reservations before?

-Crissa

 

[Ogre]

Record numbers of people are saying it’s a bad time to buy a car Or truck.

The number 1 reason people are saying it’s a bad time to buy a car?

Not shocking. Price is the number one reason people say it’s a bad time to buy a car.

This assumption that people are going to just swallow huge price increases is complete nonsense.

 

[charliemagpie]

If Tesla makes $20,000 avg profit and has a million on back order, that is 20 Billion profit on table.

Elon said we should be over the chip shortage by the end of this year.

We see Engineers crawling all over the Cybertruck right now, and its January 2022. I thought Tesla can make changes at the speed of light.

Why plan like we are talking about a legacy company ?

Unless there is a constraint we don’t know about, Elon was sandbagging Cybertruck will be flying out in January 2023.

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