# Let’s Do the Math on Tesla’s Electric Cars

To compete with today’s current EV cars, Tesla Motors would have to bring to market a vehicle that costs \$25,000 or less. This was an ambitious goal that was set by the CEO of Tesla Elon Musk.

However, they were not able to achieve this lofty goal back in 2012, when they announced the Tesla Model 3.

## The Model 3 was born

Unfortunately, due to several reasons, the Tesla Model 3 fully EV car did not reach the lofty goal of \$25,000. The price tag climbed to a staggering \$35,000 before the official sales launch was announced.

When the Tesla Model 3 went on sale in 2017 it did fairly well and while the price tag starting at \$35,000, most buyers did end up spending much more than that.

## Is a \$25,000 EV from Tesla still possible?

Elon Musk still believes that it will be necessary to deliver an all-EV vehicle to consumers at or below \$25,000 to convince enough people to switch over to all-electric from gasoline-power.

Musk explained that by doing the math, the rechargeable battery pack that would need to go into a car that could achieve that ambitious price point would have to be powerful.

As he explained it would have to generate 50 kWh and cost only \$2500. The current numbers put the battery packs at 100 kWh and they run \$5000.

This is the primary reason why the Tesla Model 3 was not able to come anywhere close to the \$25,000 price tag. Musk is hoping to develop the battery pack for the Model 2 to reach that lofty goal of 50 kWh.

## Why is it so important for the Model 2 to be \$25,000?

To compete against the current stalwarts in the auto industry, Tesla feels that it has to be able to achieve a 300-mile range and be at a price point of \$25,000. This is because a typical new car that price from Toyota and VW sells for just under \$25,000. The VW Golf and the Toyota Prius (both small cars) start at \$23,000 and \$24,000, respectively.

Musk and Tesla Motors realized that they have to be able to give the buyer a good reason to select the Model 2 over the current top sellers in the small car market.

Tesla is banking on having several things available on the Model 2 that will entice buyers away from the other car makers. These features include over-the-air vehicle computer updates and autopilot. However, the biggest of all factors that Tesla is hoping for is that they can achieve a driving range between charges that can exceed the 300-mile mark.

## The Bottom Line

As Tesla continues to push the envelope in the automaking industry, it realizes that it has to be competitive in price. So, to do that it needs to continue to drive its costs down to be able to lower its new vehicle price tag to be competitive.

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