Photo: Tesla
Tesla marked a new production milestone for the Cybertruck and is now focusing on reducing production costs. This is helped by an impressive ramp-up in the 4680 cell production, which has become more cost-effective as the output increases. Tesla expects both to lead their market segments by the end of 2024.
Tesla continues to send Foundation Series Cybertruck invites, and no one can tell when the regular variants will become available. The Foundation Series package, which adds $20,000 to the Cybertruck's price, is Tesla's way of marking up the Cybertruck as it has become the most wanted vehicle on Earth. It also allows the EV maker to offset some of the high production costs as it ramps up production, especially considering all the new technologies involved.
The Cybertruck has many industry-first and segment-first features, including a 48-volt electrical system, steer-by-wire, rear-wheel steering, and Gigabit Ethernet communications. Most of all, it features a stainless steel exoskeleton that is very difficult to produce. This is probably why Tesla did not expect to start volume production of the Cybertruck until later this year or even 2025.
However, based on the information Tesla included in the Q1 2024 shareholder update, things are moving faster than anticipated. Tesla reached 1,000 units of weekly production in April, less than five months after the start of production. This makes Tesla confident that it will have a market segment leader by the end of the year, surpassing the competitors from Ford and Rivian.
Production ramp-up is crucial to reduce manufacturing costs through economy of scale. However, Tesla warned that the production ramp-up still faces many challenges due to new technologies and supplier limitations. Thankfully, battery cells will not contribute to these difficulties. Tesla offered an update on the 4680 cell production ramp-up, which provides enough room for the Cybertruck production increase this year.
The 4680 cell production is ahead of the Cybertruck ramp-up, as revealed by Tesla's VP of Engineering, Lars Moravi. Tesla is ramping up cell production at the third of four manufacturing lines in Phase 1. Tesla aims to have a few weeks of cell inventory, but not more. As Moravi explained, the 4680 cell production is only relevant to the Cybertruck ramp now, and Tesla doesn't intend to produce more than it needs for its electric pickup.
The good news is that, with increased output, production costs are dropping rapidly week over week. Yield improvements also contribute to this, in addition to volume increases. Moravi revealed that Tesla's goal is to beat the supplier cost of nickel-based cells by the end of the year, and he was optimistic about achieving this target. On the other hand, this also means that 4680 cells are still more expensive than the 2170 cells Panasonic produces for Tesla in Nevada, let alone cells imported from China.
Tesla is also working on finding creative ways to reduce the Cybertruck costs, a process it called "Cost Grind." The areas of interest are design efficiency, supply chain improvements, and manufacturing simplification. Tesla included an exploded image of the Cybertruck in the shareholder update document to show its efforts. Other teardown projects provide feedback on cost reduction. Hopefully, this would not lead to fiascos like the accelerator pedal cover detaching. In that case, Tesla cut not only costs but also corners, leading to the recall of all Cybertruck fleet.
The Cybertruck has many industry-first and segment-first features, including a 48-volt electrical system, steer-by-wire, rear-wheel steering, and Gigabit Ethernet communications. Most of all, it features a stainless steel exoskeleton that is very difficult to produce. This is probably why Tesla did not expect to start volume production of the Cybertruck until later this year or even 2025.
However, based on the information Tesla included in the Q1 2024 shareholder update, things are moving faster than anticipated. Tesla reached 1,000 units of weekly production in April, less than five months after the start of production. This makes Tesla confident that it will have a market segment leader by the end of the year, surpassing the competitors from Ford and Rivian.
Production ramp-up is crucial to reduce manufacturing costs through economy of scale. However, Tesla warned that the production ramp-up still faces many challenges due to new technologies and supplier limitations. Thankfully, battery cells will not contribute to these difficulties. Tesla offered an update on the 4680 cell production ramp-up, which provides enough room for the Cybertruck production increase this year.
The 4680 cell production is ahead of the Cybertruck ramp-up, as revealed by Tesla's VP of Engineering, Lars Moravi. Tesla is ramping up cell production at the third of four manufacturing lines in Phase 1. Tesla aims to have a few weeks of cell inventory, but not more. As Moravi explained, the 4680 cell production is only relevant to the Cybertruck ramp now, and Tesla doesn't intend to produce more than it needs for its electric pickup.
The good news is that, with increased output, production costs are dropping rapidly week over week. Yield improvements also contribute to this, in addition to volume increases. Moravi revealed that Tesla's goal is to beat the supplier cost of nickel-based cells by the end of the year, and he was optimistic about achieving this target. On the other hand, this also means that 4680 cells are still more expensive than the 2170 cells Panasonic produces for Tesla in Nevada, let alone cells imported from China.
Tesla is also working on finding creative ways to reduce the Cybertruck costs, a process it called "Cost Grind." The areas of interest are design efficiency, supply chain improvements, and manufacturing simplification. Tesla included an exploded image of the Cybertruck in the shareholder update document to show its efforts. Other teardown projects provide feedback on cost reduction. Hopefully, this would not lead to fiascos like the accelerator pedal cover detaching. In that case, Tesla cut not only costs but also corners, leading to the recall of all Cybertruck fleet.
Q: What the heck is a Cost Grind?
— Wes (@wmorrill3) April 24, 2024
A: Revisiting every part and finding the places to reduce cost with design efficiency, supply chain improvements, and manufacturing simplification
Sorry @teardowntitan to beat you to the tear down review, I guess we'll have to compare notes pic.twitter.com/418H4NeUXO
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