The graph shown under the tweet below from Torque News, gives an idea of just how rapidly steel prices have been increasing. This chart documents the last year of steel prices which spans roughly from April 2020 to April 2021. The price of steel went up steadily from April 2020 to November 2020. Then in November of 2020 prices started to skyrocket. They have remained on a steep upward trajectory since November 2020, and they are still climbing.
With the sharp rise in steel prices I am thinking it is reasonable to think that the #Cybertruck price will increase before launch, especially that #Tesla has updated the #Model3 prices 5 times this year. This is the price chart of steel in the past 12 months. (Please follow us). pic.twitter.com/gn6NIl4II0— Torque News (@torquenewsauto) April 24, 2021
Steel price increases could be an issue for Tesla
There has been a bevy of price increases to the Tesla Model 3 and other Tesla models over the past several months. It seems that the Model 3’s price is being raised in $500 increments quite often. The Model 3 is Tesla’s best-selling car, and Tesla delivered a record number of Model 3’s in the first quarter. On the other hand, the Cybertruck is a specialty vehicle. The Cybertruck will start at approximately $39,900. The dual motor all-wheel drive model will start at around $49,900, and the Tri motor all-wheel drive Cybertruck will start at about $69,900. New cars that come out often have their prices marked up. Tesla also has a lot of options you can add which cost thousands of dollars each in many cases. If that is coupled with a price increase in steel, we could be talking about some price figures that would be astronomical for a Cybertruck.
What people think of these increases in steel prices
There have been some fairly nuanced takes pertaining to the increase in the price of steel and how it will affect the price of the Cybertruck. It is reasonable to assume that increases in the price of steel will lead to increases in the price of the Cybertruck. Some tweets expressed that the price increases in steel weren’t so big of a deal. The argument laid out here is that steel and batteries don’t even make up half of what it costs to bring a Cybertruck to market.
"Steel is definitely an important cost of Cybertruck. So are batteries. But those combined aren't even half the variable Cost of Sales of a Cybertruck. I expect we'll continue to see little price adjustments from Tesla over time, the same as we do for other auto manufacturer," writes a Tesla owner James Stephenson in reply to Torque News.
However, Stephenson also think that Tesla's margins will ultimately be superior because Tesla will be able to charge a huge premium for software that no other manufacturer will even be able to offer a close facsimile of.
The tweet then ended with a statement on how few price increases are expected to be seen over time. This tweet could turn out to be correct, but right now there are too many variables. The price of steel could plateau or even decrease at some point, but it’s not doing that right now. Another thing to take into account is that Tesla needs to buy steel for the Cybertruck now. Prices are sky high as of April 2021. Tesla will have to invest more money into steel than they otherwise would have if prices were lower. This could affect the company’s bottom line by forcing them to raise the price on the Cybertruck. These price increases will hopefully not be too big.
"Cars use highly specialized cold-rolled steel sheet, which is a much higher value-added steel product with a higher price, its price fluctuations are much smaller and it is all made to order and sold under long-term supply contracts," writes a Twitter EV expert JPR007.
He says Cybertruck uses an even more specialized and much higher value-added stainless steel product with a higher cost which we understand Tesla makes or has made to their own recipe and specifications, and would therefore not typically even have a market price.
The future of the Cybertruck
It is somewhat unclear how well the Cybertruck will do when it comes to market. It is a revolutionary truck. There have been some articles here at Torque News that have been documenting the capabilities of the Cybertruck. One thing that the Cyubertruck can do is power a luxury camper. The Cyberlandr has been branded as the camper to go with the Cybertruck.
The Cybertruck could become a difference maker in the Tesla lineup if it really catches on. The Cybertruck likely won’t be a best seller, but it could be that truck that puts another notch on Tesla’s belt. Luxury pickups have risen in popularity over the past several years. Many buyers enjoy the comfort and practicality of a pickup truck. They aren’t necessarily buying trucks anymore just to tow a 20 foot trailer. The Cybertruck will be a commuter car in addition to being an asset at the campsite.
Do you think the price increases in steel will cause issues in the rollout of the Cybetruck? Let us know in the comments.
Daniel Cappo reports Tesla developments at Torque News. He has had a passion for cars ever since age five when his grandparents let him drive their old golf cart around their property in Upstate NY. He has attended numerous auto shows, and even got the chance to drive a Ferrari California on the track. Ever since Tesla opened up a dealership at his local mall, he's been an avid follower of their cars and technology. Dan has a B.S. in Public Communication from U Vermont. Follow Daniel on Twitter and LinkedIn for daily Tesla News.