No electric vehicle launching this year has dominated headlines so thoroughly and sparked so much interest as Elon Musk’s stainless steel Cybertruck. His iconoclastic take on the pickup segment is instantly polarizing, earning both wild enthusiasm as well as mocking jeers.
Love it or hate it, what the Cybertruck almost certainly will not be when it finally launches at the end of next month is cheap.
Recently filed documentation for a vehicle identification number (VIN) decoder—used by regulatory agencies and spotted by a Tesla fan forum—suggest that the truck will come to market initially with all-wheel-drive standard, with a motor driving each axle. A higher-priced performance version foresees adding a third motor to the equation for added acceleration.
But even as Musk keeps pushing for his product lineup to become more affordable for the average car buyer, it appears as if the rear-wheel-drive base version with a single motor, first teased back in November 2019, will in fact not be offered. At least, that is, it won’t be for many months, and possibly years.
It is not clear when, however. Nearly four years after the concept’s unveiling and almost two years since it withdrew the indicative specifications and prices, Tesla still has not revealed final details of the model set to launch on Nov. 30. The company could not be reached for comment.
Flurry of Tesla price cuts
Postponing the model is in apparent contradiction to the Tesla CEO’s words last Wednesday that “we need to make it at a price that people can afford.”
Tesla changes its prices frequently over the course of the year, but at one point the planned $39,900 RWD base version of the truck would have been its most affordable model across the entire lineup, despite its size.
Musk has justified a flurry of recent price cuts to his entire existing model range by arguing they are a must in view of rising borrowing costs. Big-ticket items like cars are increasingly less affordable as monthly interest payments rise. Only by offering cheaper EVs can he bring Tesla closer to its stated mission of supplanting gasoline- and diesel-fueled vehicles.
Launching the Cybertruck without the lowest-price variant would suggest an inconsistent approach to his strategy. But there are a few important factors to also consider.
Complex to manufacture Cybertruck at scale
First off, the vehicle is exceedingly complex to manufacture at scale because of its ultra-hard stainless steel exterior. The current state of technology does not allow for such an unusual choice of material to be stamped from flat steel blanks as is done with the carbon-based alloys that form the basis of all conventional cars and trucks.
Tesla had to find suppliers capable of inventing new 9,000-ton presses that can instead bend the metal into shape, which gives the vehicle its signature wedge-shaped look full of hard creases.
“I do want to emphasize that there will be enormous challenges in reaching volume production with the Cybertruck, and then making the Cybertruck cash-flow positive,” Musk told investors last Wednesday, explaining this was the cost of launching what he called Tesla’s best product ever.
Musk calls it a money loser for the foreseeable future
This means Tesla will be eager to introduce as little further complexity as possible at the start of production to maximize output. As a result, the initial batch of vehicles will likely be all but identical in both interior and exterior, since stainless steel is not suited for paint.
Another reason he will start on the high end is the need to protect margins from further dilution.
The slow and methodical production ramp curve planned for the Cybertruck will be a money loser until it can reach volume production in 12 to 18 months’ time, Musk admitted last week.
This he can ill afford right now, since gross margins in the automotive business have already halved from their 30% peaks early last year as his company cannot reduce costs as fast as he is slashing sticker prices.
Tesla can pick and choose from around 1 million potential buyers
Lastly, there is no need for Tesla to come with a low-price version initially as the Cybertruck has deposits on hand from over 1 million customers, according to Musk on Wednesday.
By comparison, Tesla only has capacity to build around 125,000 per year, and it may not be until mid-2025 that its factory in Austin can run at an annualized rate of 250,000 units.
While those $100 customer deposits are refundable and a very large number may not convert to firm orders once prices are unveiled, he will likely still end up with more than enough to fully book production out for this initial 18-month period.
That means Musk may likely prioritize delivering the more profitable tri-motor Performance version to buyers over its Standard AWD version, as supply—not demand—will be the bottleneck for Tesla. He employed this tactic during the chip crisis, when a similar mismatch existed.
With that many potential customers from which he can pick and choose and too few electric pickups to go around, Musk could afford some self-deprecating humor last week.
“We dug our own grave with the Cybertruck,” he joked.
