Can Tesla Build A $25,000 EV In Three Years?

Elon Musk has a lot of ambition and a lot of drive with the Tesla company. His Model 3 is just finally getting past initial production challenges meeting only a 5,000 per month benchmark as of July 2018.

Tesla has planned to make the EV electric sedan more affordable to the general public. So far, the most affordable one is still $50k plus an additional $4,000 if you want all-wheel-drive. The Performance version of this Model 3 will cost you $64 grand. The $35,000 versions have not entered production yet. Is it reasonable to expect that Musk can produce a $25,000 EV in just three years?

“To get ultimately to something like a $25,000 car, that’s something we could do, but that’s probably three years away if we work really hard,” said CEO Elon Musk in a YouTube channel interview. The financial reports suggest that it is costing Tesla about $28k to build the current Model 3. This means they will have to cut $8,000 out to make it affordable to sell an EV for $25,000 with any hope of profit.

Entry-level Teslas are not a priority for the company at the moment. Tesla is planning to release the Model Y Crossover, the Tesla Pickup, a Tesla Semi, as well as a new version of the Roadster in the next few years. They also plan to improve their production so that they can make two cars at once. “Because the other car companies can make a lot more cars than we do, they got way better economies of scale," explained Musk. “To make the cars affordable, you need high volume. So you need economies of scale.”

Tesla has been hinting at a lower-end Model 3 since last June, but this announcement is the first time it has been attached to a specific price range. With the way production is currently going, it may just be a dream, but Elon Musk thinks the dream of a more affordable EV is a dream worth pursuing.