So I was watching one of the videos going around trying to get everyone hyped up on the Hilux truck.
My first thought when I see it is that the auto industry will never have it. Hell it doesn’t even serve Tesla’s interests (even if an electric version would fit their mission better than that thing they are selling.)
My second thought is most American’s won’t have it. The auto execs have been telling us that for years. On the other hand, you can’t find a dependable used car for under $5,000 hardly anywhere so a new and safe vehicle for $15k or so is pretty enviable.
Based on that I retract my second thought and replace it with there will be some marketing challenges to get people into it. There is not a less fun car on the market. haha
My third thought was economic…because of the last thought. I wondered how many new small businesses would be created if all the sudden lots of lower income people could afford a truck big enough to haul lawn care stuff, or other small business materials to job sites. Currently the option is a used truck or van that has 100k miles on it for $25 grand. How much is that choking our commercial building industry? How much is it limiting housing? EEEK. Actually this is a good thought. The economic benefits could go well beyond the fuel cost savings I planned on writing about and forgot when the other thought occurred.
The fourth in a long line or random things I considered was the environment. I am sure a bunch of people are screaming mad because I didn’t design it electric or with hydrogen or something.
Well you aren’t entirely wrong,
but you are still wrong.
Sometimes we are solving different problems. What is really wild is that even with that fair criticism….its still a small, high efficiency, biodiesel potential motor…on a truck that will get 40+ mpg and 30+ with biodiesel without a doubt.
Which brings us to the fifth thought. The final. The finale even. This is thought experiment, so lets engage the robot as see what it thinks could happen.
I gave the robot the task and here is what it said—
Creating a minimalistic, reliable, and affordable light-duty truck for $15,000 retail while adhering to modern safety and efficiency standards is a bold but achievable goal, especially if the approach emphasizes simplicity and leverages modern manufacturing techniques. Here’s a breakdown of how this could be realized:
Key Design Principles
- Barebones Design: Simple, functional design with minimal electronics and a focus on mechanical reliability.
- Small Diesel Engine: Efficient, low-maintenance, possibly a modified version of an existing small-displacement eco-diesel engine (1.5L–2.0L).
- Lightweight Construction: A mix of high-strength steel and simple aluminum parts to reduce weight without compromising durability.
- Minimal Comfort Features: Basic air conditioning, manual windows, and a no-frills interior.
- Mechanical Components:
- Manual steering (hydraulic assist only if necessary).
- Manual transmission.
- Simple leaf-spring or torsion-bar suspension for durability and cost-effectiveness.
- Compact Size: Smaller footprint than modern trucks, ideal for urban and rural settings.
Estimated Cost Breakdown
Development and Engineering
- Simplified R&D:
- Adapt existing platform designs (e.g., from older, proven models) to minimize costs.
- Estimated Cost: $10M–$20M (lean engineering teams, outsourced components).
- Prototyping and Testing:
- Focus on crash safety, emissions compliance, and basic durability testing.
- Estimated Cost: $5M–$10M.
- Compliance and Certification:
- Meeting global safety and emissions standards (can focus on specific regions like SE Asia, Africa, and South America for lower regulatory hurdles).
- Estimated Cost: $5M–$15M.
Manufacturing Setup
- Simplified Assembly:
- Few components, shared tooling for multiple parts.
- Estimated Cost: $100M–$200M (smaller scale, efficient setup).
- Tooling and Equipment:
- High initial investment in durable tooling for high-volume production.
- Estimated Cost: $50M–$100M.
Production Costs (Per Unit)
- Materials:
- High-strength steel frame, aluminum panels, basic interiors.
- Estimated Cost: $4,000–$6,000 per unit.
- Labor:
- Reduced labor intensity with simpler assembly.
- Estimated Cost: $800–$1,500 per unit (manufactured in low-cost regions).
- Engine and Drivetrain:
- Small diesel engine adapted from existing models (e.g., Kubota, Isuzu tech).
- Estimated Cost: $1,500–$2,500 per unit.
- Basic Electronics:
- Engine control unit (ECU), basic instrumentation, minimal sensors.
- Estimated Cost: $500–$1,000 per unit.
- Safety Features:
- Basic crash structure, airbags, ABS brakes.
- Estimated Cost: $500–$1,000 per unit.
- Overhead and Logistics:
- Supply chain and distribution.
- Estimated Cost: $800–$1,000 per unit.
Business Model
- Target Markets:
- Emerging economies where durability and low cost are priorities.
- Rural contractors, small business owners, and farmers globally.
- Entry-level markets in developed countries for utilitarian vehicles.
- Sales Channels:
- Direct-to-consumer model via online platforms.
- Partnerships with local distributors in key regions.
- Volume Production:
- Achieving economies of scale by targeting production of 100,000–200,000 units per year.
Challenges
- Regulatory Compliance: Meeting emissions and safety standards while keeping costs low.
- Scaling Manufacturing: Requires strategic partnerships and lean operations.
- Market Penetration: Overcoming competition from used vehicles and well-established brands.
Estimated Total Investment
- Initial Development and Setup: $150M–$300M.
- Per-Unit Production Cost: $8,000–$10,000.
- Retail Price: $15,000 (assumes ~25% markup for logistics, distribution, and profit).
Comparison to 1930s Trucks
- Simplicity: Mechanically operated components.
- Modern Efficiency: Small diesel engines and lightweight materials.
- Affordability: Focus on durable, replaceable parts.
This design philosophy can deliver a robust, reliable, and affordable truck tailored to specific markets while balancing modern standards and traditional utility.
Long story short, TL;DR, and all that.
For $300 million up front, this little simple ass truck could be a viable solution to a huge market hole.
So the next thing is….well if it is possible, can it make money?
So started with the assumption that it was going to have a strong market presence quickly and grow fast….so we targeted a 20% plus margin and ran the numbers to see how many units we would have to sell the first year to be on solid growth footing. Here is what the robot came up with.
To ensure strong growth strength and long-term competitiveness in the market, the company must achieve profitability beyond just breaking even. This requires covering fixed costs, generating sufficient profits for reinvestment (e.g., marketing, R&D, scaling production), and building a sustainable business model.
Key Metrics for Long-Term Strength
- Profitability Target:
- Aiming for at least 20-30% net margin after covering all costs to reinvest in growth.
- Market Penetration:
- Capturing a significant market share, especially in emerging markets, where demand for low-cost, reliable vehicles is high.
- Volume Scaling:
- Achieving economies of scale to reduce per-unit production costs, which strengthens competitive positioning.
Assumptions
- Fixed Costs (Year One): $150M–$300M.
- Variable Costs Per Unit: $8,000–$10,000.
- Retail Price: $15,000.
- Contribution Margin: $5,000–$7,000 per unit.
- Target Profit Margin: 20% of sales revenue reinvested.
Calculation: Units for Strong Growth
- Revenue Needed:
- To cover fixed costs and achieve a reinvestable profit:Revenue Target=Fixed Costs+Target Profit\text{Revenue Target} = \text{Fixed Costs} + \text{Target Profit}Revenue Target=Fixed Costs+Target Profit
- For a strong margin, assume 20% of sales revenue is reinvestable:Revenue Target=Fixed Costs/(1−0.20)\text{Revenue Target} = \text{Fixed Costs} / (1 – 0.20)Revenue Target=Fixed Costs/(1−0.20)
- Low End (Fixed Costs: $150M):Revenue Target=150,000,0000.80=187,500,000\text{Revenue Target} = \frac{150,000,000}{0.80} = 187,500,000Revenue Target=0.80150,000,000=187,500,000
- High End (Fixed Costs: $300M):Revenue Target=300,000,0000.80=375,000,000\text{Revenue Target} = \frac{300,000,000}{0.80} = 375,000,000Revenue Target=0.80300,000,000=375,000,000
- Units Needed:
- Divide revenue target by retail price per unit:Units Needed=Revenue TargetRetail Price\text{Units Needed} = \frac{\text{Revenue Target}}{\text{Retail Price}}Units Needed=Retail PriceRevenue Target
- Low End:Units Needed=187,500,00015,000=12,500 units\text{Units Needed} = \frac{187,500,000}{15,000} = 12,500 \text{ units}Units Needed=15,000187,500,000=12,500 units
- High End:Units Needed=375,000,00015,000=25,000 units\text{Units Needed} = \frac{375,000,000}{15,000} = 25,000 \text{ units}Units Needed=15,000375,000,000=25,000 units
Reinvestment for Long-Term Growth
- R&D Expansion:
- Develop new models (e.g., EVs, hybrids) to remain competitive as regulations tighten.
- Manufacturing Scaling:
- Build or upgrade facilities to improve efficiency and output.
- Marketing and Distribution:
- Invest in brand recognition and sales channels, especially in emerging markets.
- Aftermarket Ecosystem:
- Develop a network for affordable parts and maintenance, increasing long-term appeal.
Strong Growth Sales Target
To achieve strong growth potential and long-term competitiveness, the company should aim to sell 12,500–25,000 units in Year One and grow annually by 20–30% in unit sales over the next 5–10 years.
This approach balances profitability, reinvestment, and scaling to compete with established players.
Now that’s enough to piss you off.
There is a severe shortage of affordable trucks in this country and year one would only need to sell 25,000 the first year to be staged for consistent growth (if people buy in).
I am a shit salesman and I could sell 25,000 of these trucks on either coast without leaving coastal cities. You could literally load them up on a car hauler and pop down the coast and sell them like a garage sale at the freight yard.
So, all you world saving billionaires….got an extra half billion I can borrow?
