Tesla Confirms $25,000 Car | Tesla Battery Day Summary

Elon Musk revealed that Tesla will be building a compelling $25k EV in 3 years. Let’s discuss what it would take for Tesla make a $25k EV that we would want to buy.
Historic pricing of EV batteries
Musk’s prediction of EV batteries per kWh
What would a $25k EV car be like
History - In order to discuss pricing of EVs, we first need to talk about batteries and specifically the price per kilowatt hour. In 2010, the price per kWh was $1100 and last year in 2019 it was down to $156. Most experts predict that battery prices will reach $100 per kWh in 3 years.
Instead, Musk said that Tesla will have to get that $156 per kWh price down by half. So he’s talking about price per kWh in the range of $78.
We also have to add in the other components for the EV’s battery pack including cooling and packaging. That would add $25 per kWh to that total.
Musk says that Tesla will accomplish this huge reduction in price per kWh with eliminating cobalt from its batteries since it’s expensive. It will also use tabless cells which will make it more efficient and more powerful. Tesla also says that they will move towards making the batteries themselves rather than partner with suppliers like Panasonic and LG Chem.
So let’s say Tesla can get the battery pack down to $100 per kWh. Then a 60 kWh battery would cost around $6000. The Tesla Model 3 Standard Range Plus has a 54kwH battery so a 60 kWh car that’s smaller than the Model 3 could get 280 miles of range. If the battery costs about 25% of the price of an electric car, then the $25k Tesla seems possible.
Just to give you an idea of what is out there now that costs $25k. There is a Chinese EV maker Kandi that has the model K27 that is coming to the US next year. It will cost $20,500 and have a 18 kWh battery pack. The K27 is a small compact hatchback with very limited range so it’s if the battery pack in that cost $2800 at today’s prices, then if Tesla put in a 60kWh $6000 battery, this vehicle would cost about $23000. Of course, the Tesla will be a far superiorly built car so we’d have to add a couple of thousand dollars to improve the vehicle but still it seems possible.
Musk also said that Tesla wants to build 20 million cars per year. A very lofty goal since Tesla only sells less than 400,000 vehicles per year now. If Tesla can come up with the $25k Tesla that has 250+ miles of range, I wouldn’t put it past them to sell millions of cars every year.
Let’s hope that Musk’s vision comes true. What do you think of Musk’s goal of a $25k Tesla in 3 years?
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