Tesla could build cheaper US$25,000 car in three years

Elon Musk has revealed that Tesla could be making more affordable cars that cost under US$25,000 (RM100k) in three years’ time, but the company has to work really hard to do that. In an interview with tech YouTuber Marques Brownlee, the Tesla CEO said there’s definitely room for less expensive, quality cars.

“Yeah, absolutely. A US$25,000 car is something we could do. And if we work really hard we could do that in three years. The key to make it affordable is design, tech improvements and scale,” said Musk. Affordability also comes after having multiple versions and large volume, he added. “It’s a natural progression.”

Meanwhile, Musk also said his team has way more product ideas than resources to execute. The company recently sought refunds from suppliers (money it had spent with them in the past) in order to increase its profitability and improve liquidity. It was even looking to go private with the backing of a Saudi Arabian sovereign wealth fund.


Currently, Tesla’s most affordable vehicle is the Model 3 (pictured above). When it was revealed to cost around US$35,000 (RM140k), the pre-orders skyrocketed, with 115,000 bookings collected within the first 24 hours. The cheaper US$25,000 model, should it ever become a reality, could potentially create an ever bigger hype.

The Model 3 was originally said to cost around US$35,000 (RM140k), but several reports show that it’s hard to buy one for under US$50,000 (RM200k). Besides production delays and order cancellations, a group of German engineers suggested that it costs approximately US$28,000 to build the Model 3, and about US$10,000 of which is for labour and production costs. The rest are material costs.

For Tesla to sell an electric car at US$25,000, those costs will have to be much lower. Just as a comparison, the Hyundai Ioniq Electric is one of the most affordable EVs in the United States, with a starting price of US$29,500 (RM118k). So, what do you think? Could Tesla, a small-scale automaker, have the economies of scale to sell a car at US$25,000?