Tesla Cybertruck's High Margins Stun Experts

Tesla's Cybertruck has the potential for high gross margins due to innovative technology, competitive pricing, and cost-cutting measures, despite initial high costs and low production volume 

Questions to inspire discussion

• Why did Tesla's Cybertruck pricing disappoint fans and investors?

  —The higher prices are due to factors such as manufacturing costs and demand exceeding supply, which are discussed by a supply chain expert in the video.

• Will Tesla's Cybertruck margins be low due to high costs and low volume?

  —Some experts believe that demand will outstrip supply, leading to higher margins, despite initial high costs and low production volume.

• How has commodity inflation impacted the cost structure of the Cybertruck?

  —Commodity inflation has led to higher prices for products, impacting the cost structure of the vehicle, as discussed in the video.

• What potential advantages does Tesla's Cybertruck have over competitors in the market?

  —Tesla's pricing and supply chain efficiency give them a significant advantage over competitors in the market, as mentioned in the video summary.

• How does Tesla's Cybertruck use innovative technology and design to reduce manufacturing costs?

  —Tesla's Cybertruck uses innovative technology and design to reduce manufacturing costs and increase features, leading to potential high margins and lifetime pricing strategies, as discussed in the video.

Key Insights

• 🔋 The potential margins for the Cybertruck are expected to be influenced by savings from automation, 4680 batteries, the new 48 volt architecture, and a manufacturing first approach.
• 🚚 The Cybertruck's extended range offers a much lower price compared to the Rivian, making it a strong competitor in the market.
• 💰 Tesla's pricing strategy for the Cybertruck could have been even higher and still sold every truck, indicating strong demand and market positioning.
• 🔋 Tesla's Cybertruck design and technology suggest a focus on cost reduction and scalability for the future.
• 🔌 Tesla's approach to communication architecture is ethernet-based, using higher voltage and less current, resulting in a thinner wire and lower total mass of copper.
• 🔋 Tesla's Cybertruck is removing raw materials and mass from the vehicle that will never need to be produced over its lifetime.
• 🚗 Tesla's Cybertruck could potentially have the highest gross margin in the lineup.
• 🔌 The 48 volt system in the Cybertruck will require much less wiring, making it a game-changer in the automotive industry.

#Tesla #Cybertruck 

Clips

• 00:00 🚗 Tesla's Cybertruck pricing and margins are a topic of debate, with some experts attributing the higher prices to manufacturing costs and supply chain dynamics, while others believe demand will outstrip supply, leading to higher margins.
  • Tesla's Cybertruck pricing disappointed fans and investors, and the question is whether the higher prices are due to manufacturing costs or simply demand exceeding supply, with a supply chain expert discussing potential margins and cost-saving measures.
  • Experts debate whether Tesla's Cybertruck margins will be low due to high costs and low volume, but some believe that demand will outstrip supply, leading to higher margins.
  • Tesla's Cybertruck is initially high cost and not making any margins, but the price is increased to compensate for factors such as supply base, utilization, yields, and commodity inflation.
  • The price per ton of steel for Tesla's Cybertruck increased by 30-50% from the time of announcement, impacting the cost structure of the vehicle.
  • Commodity inflation has led to higher prices for products, and the supply and demand dynamics may not be fully understood by some on Wall Street.
  • Suppliers are operating at their lowest capacity for the Cybertruck, leading to increased costs over its lifetime.
• 05:33 🚀 Tesla's Cybertruck margins are leaving experts speechless as suppliers sign contracts with Tesla to produce parts at certain costs, but the reality is that it's a startup at the lowest point of efficiency driving the price structure.
  • Suppliers sign contracts with Tesla to produce parts at certain costs, and they factor in efficiency and pricing curves to make more money, but the reality is that it's a startup at the lowest point of efficiency driving the price structure.
  • The highest launch pricing and cogs for a product line will decrease over its lifetime, and financial planning considers the average takedown on cogs and pricing perspective.
  • The speaker discusses the lifetime view of the product, including launch costs, lifetime costs, and end-of-life planning.
• 08:06 🚗 Tesla's Cybertruck has competitive pricing, higher performance, and better payload compared to competitors, giving them a significant advantage in the market.
  • The Cybertruck prices are competitive compared to gas trucks and other electric trucks, with higher horsepower, faster acceleration, and better ground clearance.
  • The Cybertruck has better payload and pricing compared to the Rivan R1T, with the added benefit of being in the market for a shorter time.
  • Tesla's pricing and supply chain efficiency give them a significant advantage over competitors in the market.
  • The speaker thanks Jee, Chris Hilbert, and zilling for the information and charts, and will post the slides on their website.
• 12:02 🚗 Tesla's Cybertruck pricing is competitive, with potential for higher margins despite potential higher cost of goods, and improvements in charging infrastructure and battery efficiency.
  • The starting prices for the Cybertruck are in line with other comparative trucks, and when factoring in the federal tax credit, it is actually right in line, making it a better option.
  • Tesla's Cybertruck has lower range than the Rivan R1T, but with battery extension and charging benefits, it surpasses others, despite 4680 cell efficiency not meeting projections.
  • Tesla has improved their charging infrastructure and engineering team to increase charge rate and sustainability, and there are multiple factors to consider for the battery's sweet spot.
  • Tesla's pricing for the Cybertruck is competitive and they could have priced it even higher and still sold every truck.
  • The margins for the Cybertruck are being debated, with the weight of the truck potentially leading to higher cost of goods, but there are also manufacturing efficiencies and cost savings from the lack of paint to consider.
• 16:43 🚗 Tesla's Cybertruck uses innovative technology and design to reduce manufacturing costs and increase features, leading to potential high margins and lifetime pricing strategies.
  • Tesla's Cybertruck uses innovative technology and design to reduce manufacturing costs and increase features, leading to potential high margins and lifetime pricing strategies.
  • Suppliers are running at their lowest rate of utilization, resulting in high cost structure for Tesla, but when divided over the lifetime of the product, the cost will be minuscule.
  • Tesla's Cybertruck has potential for high gross margins, especially with the accessories business, and the absence of certain production costs.
  • Tesla aims for true deletion and removal in their manufacturing processes, such as with the door handle, and considers potential defects associated with new processes like air bending.
  • Tesla's approach to using a 48 volt communication architecture in their Cybertruck will result in higher launch costs but lower lifetime costs compared to the traditional 12 volt system used in the auto industry.
  • Tesla's Cybertruck design is simpler and more efficient, removing raw materials and mass from the vehicle, leading to negative margins initially but long-term benefits.
• 22:41 💡 Tesla's Cybertruck has high gross margin potential due to increased speed, utilization, and yield, despite initial high costs and low production volume.
  • Companies set a break-even point for production and distribution, and by increasing speed, utilization, and yield, they can lower their cost structure and reach break-even faster.
  • The supplier negotiation process for the rear bumper of the car involves speed, utilization yield, and getting the supplier's tools and supply chain up and running efficiently.
  • The Cybertruck's high gross margin potential is attributed to speed, utilization, and yield, despite initial high costs and low production volume.
• 25:48 🚗 Tesla's Cybertruck has the potential for high gross margins due to engineering and accessories, with the possibility of turning accessory approval into a profitable business.
  • The Cybertruck product line has the potential to have the highest gross margin due to its engineering, accessories, and value in the marketplace, despite the increase in steel prices.
  • Tesla's high-margin accessories, such as wraps, could contribute significantly to their overall profit.
  • Tesla could potentially turn accessory approval into a profitable business by either making their own accessories or qualifying others and entering into revenue share agreements, leveraging the value of the Tesla brand.
  • The 48 volt architecture in Tesla's Cybertruck will require much less wiring and allow for components to be connected through a single cable interface.
• 29:53 🚗 Tesla reduced wiring in the Cybertruck by 77% to cut costs and weight, and is sharing methods with other auto companies, while also looking to ramp up supply base for 48-volt architecture to reduce costs and make cars lighter and cheaper to build.
  • Tesla reduced wiring in the Cybertruck by 77% to reduce weight and cost, and they are sharing their methods with other auto companies.
  • Tesla is looking to ramp up the supply base for 48-volt architecture in order to reduce costs and make their cars lighter, more sustainable, and cheaper to build.
  • The speaker discusses the impact of pricing and cost of goods on Tesla's Cybertruck margins and directs viewers to a comprehensive resource for Tesla investors on his website.

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