Why is the Cybertruck so Cheap?
The clever design choices Tesla made to make the Cybertruck cheap to make.
At $39 000, the Tesla Cybertruck will be sold at the same price as Tesla Model 3, a considerably smaller car. It is also extremely competitive price wise against traditional internal combustion engine trucks, which is something I think surprised a lot of people.
But is it actually cheap?
Electric cars will usually be more expensive that internal combustion engine cars because batteries are really expensive to make. That is the bulk of the cost of EVs. However, in the long run an EV will often be cheaper because electricity is significantly cheaper than gasoline and EVs require much less maintenance.
Here is the crazy thing about the Cybertruck: It does not merely have lower total cost of ownership, the sticker price in the store is also lower than the typical price for a fossilfuel powered truck. How did they pull that off?
Before answering that question, I have to address some popular claims that the Cybertruck isn’t cheap at all. When making comparisons we need to make apples to apples comparisons. It is true that the cheapest Ford F-150 — which Tesla is trying to compare themselves to — has a lower starting price.
However, that is deceptive. The cheapest Ford F-150 starts at around $29 000, hence seemingly $10 000 cheaper, but this truck can only fit 2–3 passengers. The length of the bed behind the truck is also just 5.5 feet.
The Cybertruck, by contrast, comes with a bed (the vault) which is 6.5 feet long and can fit 6 people comfortably. Yes, people who have taken a ride in the Cybertruck remark on how spacious it is inside. A lot of that is due to the use of a unibody exoskeleton, rather than a body-on-frame design used by Ford.
To actually compare, you need to adjust the basic configuration for the $29 000 Ford so it has the same size bed and can fit 6 passengers. Once you do that the F-150 ends up costing $36 300.
And we are not even done at this point because the Tesla Cybertruck comes standard with autopilot, built-in air-compressor, 110–220V outlet for electrical equipment, adjustable air suspension, and built-in cover for the vault which can automatically slide up and down. And finally we have the built-in ramp. Add all these things and you quickly blow past the Cybertruck starting price.
So we can agree that this truck — if Tesla delivers — is an amazing value proposition.
That brings us to the original question.
How on Earth can they make it that cheap!?
Tesla’s trick is to simply avoid doing a lot of the things that add costs in a traditional factory.
Cost of shaping metal
In an automotive plant, the stamping press is the most expensive equipment. It takes massive amounts of force to take a flat piece of metal and form it into a door, fender etc. The tooling is expensive because multiple stamping dies must be created for each of several stages for stamping of each part.
The Cybertruck avoids this cost because it uses flat steel sheets all over. That is not merely to avoid costs but also because the 30X cold-rolled stainless-steel Tesla uses is so hard that a normal stamping press would break if applied these steel plates.
However, you can bend these steel plates in different ways. One innovative way is to use a laser cutter, do a partial cut, bend and then weld the joint afterwards to make it strong. This means cheaper and simpler manufacturing than using stamping machines, which requires a multi-stage process with enormous machines needing massive power to drive them.
Paint is Expensive
Another expensive part of car making is painting. Cars typically need paint because their mild steel exterior would otherwise rust to pieces. However stainless steel does not rust and it is hard to paint in any case.
Tesla simply embraced the disadvantages of stainless steel, such as it being hard to shape and paint, to create real advantages such as a strong rust-resistant car body that is cheap to manufacture. Stainless steel may not be the cheapest metal but it is still considerably cheaper than aluminum.
Tesla is good at using their design aesthetic to their advantage. Usually a unique look costs you more money, but the simple clean interior of a Tesla is much cheaper to make.
The dashboard that looks like marble is in fact made from a paper composite. Teslarati gives some details:
These materials are then combined and baked at extremely high temperatures to create a durable and dense material that is water-resistant, environmentally sustainable, and very cost-effective.
This is much cheaper than leather and other expensive materials usually used in cars. Sticking to a single large screen also dramatically reduces complexity and cost.
We think of touch screens as fancy, but they are not that expensive to make. A dashboard full of dials, knobs and instruments would be far more expensive.
How Much Cheaper is the Tooling?
This is an update to this story. Since I first wrote this piece, an interesting video has come out from Autoline Network, where Sandy Munro , a well-known advisor to manufacturing companies, has done a breakdown of the tooling cost of a Cybertruck compared to a Ford F-150.
I highly advice you to watch the video. These are real experts, unlike me, discussing this topic. Fortunately for me, they largely confirm the analysis I have provided here. Munro concludes that at production volumes of about 50 000 Cybertrucks per year the tooling cost would be $30 million. To produce the same number of F-150 style trucks in contrast would require $210 million in tooling. So this is the cost of the machines needed inside the factory to crank out 50 000 trucks per year.
Why the huge difference? As I mentioned, the painshop is a huge part of the cost. It will cost $150 million alone, according to Munro.
Tesla has basically used clever design to make a truck with a unique look, is cheap to make, and that has superior performance and attributes.
That is what good design is all about. Bad design is an afterthought, something added to make a product the engineers already made look cool.
In this case, we can see how great design thinking has added immense value at every step.