Elon Musk Claims Tesla Could Produce a $25,000 Car in Three Years

In an interview with YouTube tech reviewer Marques Brownlee, Tesla CEO Elon Musk claimed that the electric car company could produce a $25,000 car within the next three years.

During an interview with popular YouTuber Marques Brownlee of the channel MKBHD, Tesla CEO Elon Musk claimed that the electric car manufacturer could produce a car at the $25,000 price point in the next three years. Musk stated during the interview that Tesla’s smaller scale in comparison to other major car manufacturers makes it harder for them to stay ahead of the competition in an “insanely competitive industry.”

Musk stated during the interview that Tesla was “really focused on making cars more affordable, which is really tough. In order to make cars more affordable, you need high volume and economies of scale.” This led Brownlee to ask Musk whether or not Tesla would be producing cheaper vehicles in the future to which Musk said that they would.

“I think in order for us to get up to…a $25,000 car, that’s something we can do,” he said. “But if we work really hard I think maybe we can do that in about 3 years,” added Musk noting that the production of a cheaper car relied on time and scale. Musk compared the production of modern electric vehicles to the early production of portable cell phones which have jumped ahead technologically in leaps and bounds since their invention.

“With each successive design iteration, you can add more things, you can figure out better ways to produce it, so it gets better and cheaper,” Musk said. With the “natural progression of any new technology, it takes multiple versions and large volume to make it more affordable.”

During the interview, Musk boasted that Tesla spends little to nothing on advertising but that the majority of their sales come from word of mouth between customers: “Where I put all the money into and all the attention into is trying to make the product as compelling as possible,” Musk says. “If you love it, you’re going to talk and that generates word of mouth,” he added.

However, Musk seemed less optimistic in an earlier interview with the New York Times, “I thought the worst of it was over — I thought it was,” said Musk. “The worst is over from a Tesla operational standpoint. But from a personal pain standpoint, the worst is yet to come.” Since then, J.P. Morgan has stated their belief that Tesla shares will drop from $308 to $195.

Analyst Ryan Brinkman said in a new report: “We are reverting to valuing Tesla shares on the basis of fundamentals alone,” which entails a $113 reduction in our price target back to the $195 level where it stood prior to our August 8 note,” telling clients that the price target increase to $308 was based on a 50 percent probability that Musk had, in fact, obtained funding to take Tesla private at $420 a share.