Cybertruck Production

Just knowing where one is in the Reservation hierarchy is less helpful than it appears. This is because Elon has implied that Cybertruck will follow the 'typical' Tesla ramp up: 

1.  Start production with the potentially most profitable variants (Tri Motor and Quad version) 

2.  Increase economies of scale and margins and work out bottlenecks

3.  Transition in less profitable variants (Dual Motor then Single Motor), after margins improve

We predict the Cybertruck ramp up, particularly how the ramp applies to each trim variant.  We then use this predicted ramp to evaluate when a reservation holder's order will be ready for delivery. There are many assumptions that fold into this assessment and they build on each other. This could lead to large discrepancies between our predictions and what really happens OR errors in our assumptions could cancel each other and the estimates could be closer than some may expect. Our ramp prediction is not static; the more information we obtain the more it improves. 

CAVEAT: We have not accounted for regional delivery variations. Tesla typically delivers first to US locations closest to where a product is manufactured. Variations could occur; such as expiring incentives, that would prompt Tesla to push an area or country up in the priority list. When we have a reasonable way to estimate regional variations in delivery we will make corrections for that. 

Here are some of the major assumptions being made:

1. Continuous process improvements means each Gigafactory/Terafactory is at least as fast in ramp up as its predecessor(s).

2. Gigafactory Texas will eventually ramp up to 1,500,000 Cybertrucks per year. Freemont and Shanghai are quickly growing toward 1,500,000 cars per year and Giga Texas is designed to be even bigger. We do realize that Giga Texas will produce other cars and are effectively estimating that Giga Texas total output could reach 3,000,000 vehicles per year during this decade. We realize this is an aggressive assumption.

3. Batteries will not be a bottleneck to Cybertruck ramp up - assumption is that Tesla is on the verge of a major battery ramp. This is a major assumption that may fall apart due to supply chain constraints or manufacturing issues.  Tesla also could produce lesser range variants of the Cybertruck in order to appease appetite in a battery constrained environment.

4. We are conservatively estimating first deliveries (to employees and VIPs) in late2023. However, Elon slid Model Y deliveries then surprised everyone with an earlier than expected production ramp. This may happen with Cybertruck; however, we are not building this into the estimates. Conversely, production nightmares could push deliveries further into 2024; and likewise, we are not building this into estimates.

5. Cybertruck production will hit 500,000 units per within 16 to 20 months This is the rate at the end of 16-20 months. The total production for the first year would be closer to 200,000 units. 

6. Cybertruck production will ramp to 1,000,000 units per year by the end of  34 to 38 months. If one can fit 8 trucks to a carrier, that translates to 200 to 300 carrier loadings a day! Just for the Cybertruck! Add another 200 to 300 loadings a day for other models as well as all the deliveries of raw materials and it appears the roadways into Giga Texas will max out. Additionally, Tesla could need space for a hundred or more superchargers. Telsa could choose to maximize profits per vehicle on Cybertruck and focus on the mid to upper end exclusively. If Tesla did such we expect the ramp to max out closer to 500,000 units per year.  However, we do believe that Tesla inherently wants to put as many Cybertrucks in consumers hands as possible.

7. Steady state demand in the future will be around 1,500,000 Cybertrucks per year. We really don't have a basis for this other than it appears conservative and and we feel that Tesla has enough dials on price to make sure demand matches supply.  Tesla could choose to be more of a niche player with higher margins and focus on 500k Cybertrucks per year. We had to make a decision and are assuming that Tesla will focus on driving the world's transition to electric vehicles over max ROI and this will result in 1,500,000 Cybertrucks per year.  This assumption has a minor effect on delivery date estimates for current reservation holders (see max growth principal on the Cybertruck Tracking page).  1,500,000 Cybertrucks would represent approximately 25% of the projected global pickup market and rival Ford as the #1 seller of pickup trucks. Such may seem unlikely; however, the apple cart is already flipped over and there is gong to be a lot of scrambling to ramp up EV production in the next decade. Tesla is putting down a solid foundation for decades of growth. Ford, Rivian, and others will beat Tesla to the pickup truck market but Tesla is methodically ramping up to completely out-deliver everyone else if they choose to. If Tesla chooses to focus on higher margins than steady state demand, production could cap at closer to 500,000 Cybertrucks per year.  We predict it could take 7 to 8 years for fillable demand to reach 1,500,000 trucks (Tesla will control this timeline through pricing and production and do such in a way that demand matches supply).

8. A significant number of reservation holders will not follow through with a purchase. A year from now there should be other truck options to lure away reservation holders and even with aggressive cancellations, it will take almost six years to deliver Cybertrucks to some reservation holders.  There also is a subset of reservation holders that reserved multiple variants with the intention of cancelling all but one of them. The total cancellation rate has a major effect on delivery estimates. It is clear that Tesla will have a massive backlog of Cybertruck reservations that far exceeds any other backlogs they have experienced even with aggressive cancellations.

   1. 1. Some Single Motor reservations will upgrade to Dual or Tri Motor in order to receive a Cybertruck earlier

      2. Some Dual Motor reservations will upgrade to Tri Motor or Quad Motor in order to receive a Cybertruck earlier

      3. Some Tri Motor reservations will upgrade to Quad Motor in order to receive a Cybertruck earlier

      4. Tesla will likely introduce range variants of each Motor configuration, such a Long Range Quad and Mid Range Quad. These variants are another dial Tesla has to control delivery and demand.

      5. Max Growth Principal: Ultimately, the number of reservations that will be filled is simply limited to how many Cybertrucks Tesla can produce.  This viewpoint assumes that Tesla will remain production limited and there will be no problem with demand. Given that Tesla has been and remains production limited and the demand for EVs will continue to grow exponentially, it is fairly safe to say demand will far outpace supply for many years.  Therefore, we ultimately believe that cancellations and net reservations will naturally adapt to achievable production goals. For example, many people will likely stop ordering the Cybertruck or cancel their order if delivery is 5 years out. As other manufacturer EV truck options present themselves, the reservation pool will naturally cull itself. We believe that Tesla will ramp faster and better with each Gigafactory and they could find a way to ramp  production to 500k Cybertruck /Year within 1.5 year and 1 million Cybertruck within 3 years.  Pairing that ramp with estimates of steady state orders leads to a max delivery growth and that can be used to back out how many reservation orders will have to cancel simply because there are not enough Cybertrucks to go around. Takeaway: if you don't like your current delivery date - hold on to your reservation as the ones left standing will get the Cybertrucks first (e.g. your delivery date may move up dramatically).

The above assumptions translate to the following Cybertruck ramp up. Production roughly meets demand after the 7th year.

Battery Production: A critical bottleneck in the production of any Electric Vehicle is availability of sufficient batteries at reasonable cost. This will continue to be an industry wide problem for many years, if not many decades. A quick set of calculations illustrates that significant additional battery capacity is required for the Cybertruck to even begin its launch. The estimates of Pack Size that we used for the Tri-Motor versions are from Keith Ritter  and George Bower at InsideEvs. We then scaled the Tri-Motor to the Single-Motor and Dual-Motor variants by assuming that moving from 3 motors to 1.5 motors would equate to 10% decrease in WH/mi (based on Model 3 LR AWD compared to Model3 LR RWD).  Quad Motor assumption is a wag at best. This wag is based on Tesla producing a 'Plaid' type variant designed to haul big loads a distance (e.g. 500-600 miles range). Telsa may produce Mid Range variants in order to keep production levels up if battery supply is a bottleneck. For example a midrange Quad motor could have a pack size of around 175 KWH. Having a dial like this allows Tesla to partially decouple Body production rates from battery demands.

We start with  estimates of KWH required for each model of Cybertruck and fold that into the above ramp up estimates to arrive at battery ramp up requirements. 

Several takeaways:

• 200 GWH per year peak capacity needed just for Cybertruck! (based on peak monthly demand in late 2026)

• Terafactory is an appropriate moniker for the Texas factory! Cybertruck alone is projected to consume  almost 1TWH of batteries by 2030 and many of those will likely be produced at the Texas factory.  This does not include batteries needed for other products planned for the factory. 

• Battery Production/Supply will likely be a formidable bottleneck  for Telsa during the 2020's.