During Battery Day, CEO Elon Musk announced that Tesla will produce a $25,000 vehicle by 2023.
“Three years from now, we’re confident we can make a very, very compelling $25,000 electric vehicle that is also fully autonomous”, Musk said. “We’ve had the best technology, but now we’re achieving economies of scale.” “It’s absolutely critical that we make cars that people can actually afford”, Musk added. “Affordability is key to how we scale.”
Crunching the numbers
Assuming that Tesla will roll out the EV in question in 2023, its price tag will pale in comparison to other models.
It will cost at least less than $6,690 than Tesla’s most affordable car at the moment, the Model 3. The latter starts at $31,690, a price that includes potential savings worth $6,300. So the standard Model 3’s price range most likely amounts to $37,990.
The yet-unnamed vehicle will also cost at least $49,690 less than the Model X. It will also be $175,000 cheaper than Tesla’s upcoming sports car, the next-gen Roadster.
An Unrealistic Timeline for the $25,000 Vehicle?
Musk and SVP of Powertrain and Energy Engineering Drew Baglino announced that Tesla will produce EV batteries with cobalt-free cathodes.
Musk did not give a timeline as to when zero-cobalt batteries will reach mass-production levels.
Cobalt is the most expensive material used in batteries. Discarding it from battery production will undoubtedly help EVs become most affordable and achieve cost-parity with gas-powered cars.
A surefire product was already unveiled during Battery Day: the 4680 Battery Cell. It is set to increase energy density to vehicles by five times, increase range by 16%, and improve power output by six times.
The 4680 cell is currently being mass-produced at Tesla’s Fremont factory in California.
Thus, the ability to mass-produce such a vehicle by 2023 does not seem to be an overambitious proposition.
Our Take on $25,000 Vehicle Being Available in 2023
It is true that Musk has a knack for being overly-aggressive with his deadlines.
Back in 2015 for example, he stated that Tesla will have fully-autonomous vehicles in “approximately three years.” In 2016, the Tesla CEO said that vehicles would be able to drive themselves across the United States by the end of 2017. That has yet to happen.
Musk seemed to have adopted a more conservative approach ahead of Battery Day. On September 21, Musk tweeted that everything that will be announced “will not reach serious high-volume production until 2022.”
This indicates that Musk is perhaps shifting his business approach: undersell, then overdeliver.
And judging from the concrete announcements made on Battery Day, this might just work.
Tesla will probably be able to roll out an affordable EV with a $25,000 price tag in 2023.