Los Angeles, November 2019.
The skies are polluted.
The world is addicted to oil.
But we’re here to offer a solution.
The Cybertruck.
The number one mode of transport for a cyber girl.
The greatest evolution in vehicular fashion and function.
Hey, I’m Steven and this is Solving The Money Problem. If you’re new, welcome. If
you’re not, welcome back.
The Cybertruck broke the internet when it was revealed last year. Maybe you noticed?
While everyone immediately focused on its appearance, I was so struck by Cybertruck’s
engineering genius that it inspired this channel’s second ever video which I’ll link to below.
A lot has happened since.
Many of the people who initially vomited in their mouths at the sight of Cybertruck have
slowly fallen in love with its unique aesthetic.
Waves of “die hard truck buyers” have come out and said they’ve reserved a Cybertruck
to replace their Ford F150 or Chevy Silverado.
We’ve seen Cybertruck appear in music videos, tabloids and on Jay Leno’s Garage.
At the same time, many still believe Cybertruck is hideous and dumb.
There’s been no shortage of discussion. Is it beautiful or ugly? Utilitarian or useless?
Will traditional truck buyers be interested? Will non-truck buyers be interested? Will
it sell millions or be a huge flop?
I’ve been buying Tesla stock since 2016 and as a Tesla investor I’m more excited
about Cybertruck than any other product in Tesla’s history.
Before we drive in, I just want to point out that so much of what matters about Cybertruck
is not immediately obvious. It HAD to look the way it does. Tesla didn’t set out to
design a ridiculous looking vehicle. They set out to design one that was not only incredibly
functional and utilitarian for USERS, but hyper-efficient, fast and CHEAP to manufacture.
The genius of Cybetruck is what you DON’T SEE.
There are billions of dollars of savings hidden within Cybertruck’s design, and a MUCH larger
addressable market than most realise.
That’s what we’re exploring today.
Tesla is playing a game of 4D chess, outmaneuvering and out innovating entrenched automakers at
such a pace that the likes of Ford and GM are going to wake up in a few years and ask
one question:
“What the **** just happened?”.
This video aims to answer that question before it’s even asked.
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What Is Cybertruck and Who Is It For?
Cybertruck is a new class of vehicle. It’s part pickup truck, part armored personnel
carrier, part minivan, part off road vehicle, part sports car and part meme.
With bulletproof steel, armored glass, built in power outlets and an air compressor, a
secure locking bed, Tesla's autopilot software, instant torque plus a 0-60 time of under 3
seconds and a 500+ mile range on the top end version, Cybertruck is much, MUCH more than
a pickup truck.
Cybertruck will suit MOST--but not all--buyers of pickup trucks. The few cases in which it
won’t suit are special uses, such as those who need a flat bed for side loading, or perhaps
an extra long bed.
But let’s be honest.
Most pickup trucks are fashion statement first, and a tool second. Yes, I know occasionally
the owner may tow or put something in the bed but MOST of the time, MOST drivers of
pickup trucks don’t use any of the features unique to a truck. They just see themselves
as a “truck person”. It’s part of their identity.
Oh and don’t get butthurt if you’re one of the few pickup truck owners who ACTUALLY
uses their vehicle as intended. I know you’re out there. You’re just in a vanishingly
small minority.
Pickup trucks are the best selling type of vehicle in the United States with over 3 million
sold in 2019. Ford’s F150 series alone sold more than 900,000 units in the US last year.
That’s almost as many vehicles as Tesla has sold in its ENTIRE history.
It’s worth letting that sink in.
Cybertruck will appeal to tradespeople (think plumbers, electricians, carpenters), offroaders,
outdoors enthusiasts, hunters, rednecks, rappers, city councils, maintenance workers, repair
people, celebrities, rock climbers, campers, #vanlife proponents, police, military, archaeologists,
athletes, artists and more.
The potential market is MASSIVE.
Hidden Engineering Genius -- An Investor’s Dream
In my first Cybertruck video I outlined the reasons Cybertruck looks the way it does.
Its form is a manifestation of 4 key criteria Tesla had in its creation.
The Cybertruck had to:
1. Be low cost (to produce, and therefore, to buy).
2. Have extremely high utility & performance (more than any comparable vehicles).
3. Be very efficient (aerodynamic, light) 4. Be safe.
The first point is the one we’ll focus on here. LOW COST.
Nothing about Cybertruck is an accident.
Tesla is an optimization machine. They continue to improve technology, delete parts, delete
processes, find new efficiencies, save time, save space and save money.
Cybertruck is the culmination of more than a decade of innovation and experience in designing
and manufacturing electric vehicles.
Tesla focused aggressively on saving 3 things in Cybertruck:
1. TIME 2. MONEY and
3. SPACE (..as in, factory floorspace)
Keep these in mind as we continue.
The cheaper a vehicle is to produce, the cheaper it can be sold (which expands its market)
and/or the better its profit margins can be.
The Cybertruck is a real, visual example of what removing complexity from a vehicle design
does.
The process of manufacturing a vehicle is extremely complicated.
There are literally thousands of moving parts.
The Cybertruck has been engineered to be extremely efficient to manufacture.
This is VERY important.
There isn’t a single curve in sight for a reason.
The glass is flat.
The body--a stainless-steel exoskeleton--is folded from a single flat sheet of steel.
Its sturdiness eliminates the need for a vehicle frame, freeing up space and weight.
There are no stamping machines stamping exterior body panels because Cybertruck has none.
There is no paint shop.
Do you notice a pattern?
It’s time for us to do a little thinking.
I know, I know. It hurts. But it has to be done.
Don’t worry, this won’t take long.
Imagine you’re a bird with xray vision.
Once you’re done looking at tits and boobys (guys, get your mind out of the gutter, they’re
bird species), you hover over a Tesla factory and peer through the roof.
Looking down, you see materials going in one end and vehicles coming out the other. In
between, there’s a LOT of movement - sheets of metal head off to be cut and stamped, robots
and people ferry parts from here to there, things need to be painted and dried, components
need to be assembled. You also notice huge parts of the factory footprint are taken up
not by production lines, but by stored parts.
Now imagine deleting a part. It no longer needs to be stored, moved or assembled. Less
time, less physical space, less movement, less error, less complexity, less tooling
and robots and therefore capital expenditure, less human hours. Less everything.
What if you delete 10 parts? Or 50? Or the entire ****ing paint shop.
In my Cybertruck Is Engineering Genius video, I copped a little flack in the comments from
a few armchair Einsteins who told me that unless I drove a truck and also had experience
in the automotive manufacturing industry, I should just shut up.
Lucky for me, I’m no longer confined to deductive reasoning.
Sandy Munro, the expert of experts when it comes to automotive manufacturing, has since
been interviewed about Cybertruck and well, take it away, Sandy.
you accept the premise that this thing was designed to drastically reduce tooling costs?
It did drastically reduce tooling cost we went and looked at this and I I had three
or four of my guys that I wanted to make sure that we were all in kind of an accord because
some people are going to say oh that's entirely wrong but it's probably not going to be wrong
His confidence comes from experience and consensus. Now let’s listen to Sandy as he compares
the cost of building a Cybertruck production line to a Ford F150 at both low and high production
volumes.
I think the capex for fifty thousand would be about 30 million bucks which is nothing
well I've got the other stuff too so let's look at an f-150 type truck and we're going
to use everything like an f-150 but we're looking at we're looking at a 50,000 a year
so well stock will come in and it'll go into blank dyes and whatnot that's about 25 million
the body shop with partial automation and multi spot welders about another 35 million
in paint shop 150 million that means the capex total for that is 210 million so you're looking
at a difference between two for an f-150 built at a fifty thousand a year evaluate right
and I need two hundred and ten million whereas with the truck we just looked at it's like
30 million
In case you missed that, a 50,000 per year production line for the Ford F150 would cost
$210 million dollars to build.
A production line for Cybertruck with the same annual capacity of 50,00 units would
cost just $30 million. One SEVENTH as much.
And what about costs for production capacity of 600,000 per year?
okay things have to be a little different I'm gonna try and figure out how to use dies
to get the job done that's gonna be 30 million for sure the body shop is gonna be about another
35 million I am going to need a paint shop and I they're a vertically integrated integrated
kind of group so that's going to be another 60 million but that only gets me up to one
hundred and a quarter, one hundred and twenty five million and that's to paint what goes
underneath the stainless steel you're not getting them broad but is that what you're
talking out there yeah we'll be doing our own you're still not painting the outside
in this scenario no no right it's just for things that have to be painted underneath
but aren't that aren't stainless steel so I don't f-150 mmm this one here is conservative
and on the light side dies 50 million bodyshop 65 million paint shop if it's new just likeI
you know new for new 500 million paint shops are expensive so that gives us a total capex
of 615 million versus one hundred and a quarter that's a big big big big big huge difference.
Is this all predicated on the body panel design? yes.
$615 million vs $125 million. This isn’t an incremental difference. It’s absolutely
absurd.
For what it would cost Ford to create F150 production capacity of 600,000 units a year,
Tesla could create, for the same cost, capacity for almost 3 million Cybertrcks a year.
This cost differential is a microcosm for how Tesla continues to innovate, disrupt,
optimize, learn and grow.
Time, Money & Space
Remember I said to keep these savings in the back of your mind?
These three things are multipliers. Saving one usually saves the others.
And in the case of Tesla’s Cybertruck, this REALLY matters.
It’s not just that Tesla can build a Cybertruck production line for pennies on the dollar,
or that they can build them cheap and profitably.
It’s that they can build them FAST, out of a tiny factory footprint.
No paint shop, no stamping, no bullshit.
Ford and GM are in danger of falling asleep at the wheel while Tesla eats their lunch.
How do you compete with a superior product which your competitor can make cheaper and
faster?
People who need trucks to do truck things won’t remain loyal to brands whose products
no longer serve them.
The Numbers
In the US alone, over 3 million pickup trucks are sold every year.
If Tesla captures just 10% of this market, that’s 300,000 Cybertrucks per year.
At $50,000 each, that’s $15 BILLION DOLLARS OF REVENUE.
For context, Tesla’s entire business did just shy of $25 billion last year.
Is a 10% market share realistic?
Only time will tell but current indicators suggest more than half a million Cybertrucks
have been reserved already so, there’s that.
The bottom line is that Cybertruck has flipped automotive manufacturing on its head and is
on the cusp of redefining consumer expectations.
Tesla has innovated aggressively and deleted enormous amounts of complexity, resulting
in both Cybertruck’s unique appearance and its ability to be manufactured at high volume
for astonishingly low costs.
There is simply no way automakers can compete with Cybertruck on cost and utility without
copying its exoskeleton design and removing the same complexity.
Ford and GM should be quaking in their boots.
But I’m not sure if they’re smart enough to realise.
Yet.
Maybe they’ll cotton on when Tesla announce their Texas Gigafactory, or perhaps after
they’ve built it in record time…
or maybe they won’t realise until chapter 11 proceedings.
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I’m Steven Mark Ryan. This is Solving The Money Problem and I love you all.
Thanks so much for watching. Let me know your thoughts in the comments below. Have you reserved
a Cybertruck? Is it beautiful or ugly? Are Ford and GM ****ed? And of course, if you
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