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Elon Musk Thinks Tesla Can Build A $25,000 EV In Three Years

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Despite the fact the $35,000 Tesla Model 3 still hasn’t entered production.

The Model 3 represents a major milestone towards Tesla's goal of making EVs mainstream. In reality, however, the electric sedan still isn't very affordable. It's been over two years since the Model 3 prototype was unveiled with a claimed price tag of $35,000, but it still hasn't entered production.

Currently, the most affordable Model 3 starts at $50,000, a Dual Motor all-wheel-drive model starts at $54,000, and the Performance version will set you back at least $64,000. The idea of Tesla launching an EV costing $25,000 seems far-fetched right now, but Musk believes this will be possible in three years.

"To get ultimately to something like a $25,000 car, that's something we could do, but that's probably three years away if we work really hard," the CEO said during an interview with YouTube channel. A recent report suggested it costs around $28,000 to build the Model 3, so the company would need to cut those costs down to less than $20,000 if it intends to sell an EV for $25,000 and still make money on it.

An entry-level Tesla clearly isn't a priority for the company right now. Within the next few years, Tesla will launch the Model Y Crossover, Tesla Pickup, Tesla Semi, and the next-generation Roadster, but the plan is to improve production so the company can make two cars at once. "We're really focused on making the cars more affordable, which is really tough," explained Musk. "In order to make the cars affordable, you need high volume. So you need economies of scale. Because the other car companies can make a lot more cars than we do, they got way better economies of scale."

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Musk has previously hinted at launching a compact EV positioned below the Model 3 back in June in less than five years, but this is the first time the CEO has provided a potential price. Considering the Model 3 still starts at $50,000, a new entry-level EV costing $25,000 in the next few years seems very unlikely, but you've got to admire Elon Musk's ambition to make EVs more affordable.