Tesla will struggle to make $25,000 car compelling, says auto expert – Business Insider – Business Insider

  • Elon Musk said last month that Tesla will sell a $25,000 car “about three years from now.” 
  • The company has long worked to bring down its prices, and announced multiple innovations to help it get there at its “Battery Day” presentation last month. 
  • But those innovations may not be enough to create a vehicle customers are still willing to pay for, says auto manufacturing expert Sandy Munro. 
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Elon Musk had plenty of innovations to show off at Tesla’s Battery Day in September.

Advancements in battery design, chemistry, and even manufacturing processes should help the company bring down costs while producing more total power output and increasing factory efficiency. Coupled with factory automation improvements from the days of “production hell” and the infamous tent, Tesla should be able to produce a car that sells for $25,000 in around three years, Musk said.

It would be the culmination of years of effort toward his goal of reducing the cost of electric vehicles to affordable levels, but at least one manufacturing expert is skeptical of Tesla’s ability to actually do it without compromising in a fundamental way.

“We were at $158 per kilowatt hour when we did the Model 3,” Sandy Munro, CEO and “design prophet” of Munro and Associates, said on a conference call hosted by Bernstein analysts of his estimates when analyzing the vehicle. 

“Now for the Model Y we think that it’s around $108,” he continued.