Elon Musk promised a $25,000 EV in 2020. Including inflation, we’re getting closer, but are we there yet?

• In 2020, Elon Musk predicted Tesla would make a $25,000 electric vehicle.
• Inflation soared between then and now, partly due to the pandemic.
• With the cheaper Model 3 now rolling out, we crunched the inflation-adjusted numbers.

“About three years from now, we’re confident we can make a very compelling $25,000 electric vehicle that’s also fully autonomous,” Elon Musk said in September 2020.

It’s been just over five years since then. Are we any closer to Tesla’s new, cheaper vehicles?

On Tuesday, the company rolled out a Tesla Model 3 that costs $36,990 before taxes, fees, and incentives.

If we applied the US consumer price index rate to the $25,000 price in September 2020, what’s the inflation-adjusted sticker price of Musk’s prediction now?

There was significantly high inflation during the COVID-19 pandemic, so this number has likely increased substantially.

Because I studied English Literature in college, I reached out to Andy Kiersz, an economics and data whiz at Business Insider, for help.

He took me to an inflation calculator run by the US Bureau of Labor Statistics. This uses the broad US CPI, which encompasses most everyday costs such as fuel, food, and rent. The latest numbers are through August.

$25,000 in September 2020 is now $31,118.03. When you compare that to today’s new Model 3 price of $36,990, it’s more than $5,800 above Musk’s prediction.

He also said back in 2020 that the $25,000 EV would be “fully autonomous.” This latest Model 3 has Autopilot features, but you have to pay more for FSD, the more autonomous software package.

What if we include US tax incentives for EV purchases? Most of these just went away, but let’s try it anyway.

$36,990 minus $7,500 is just under $30,000. So maybe Tesla has reached Musk’s prediction? Should we adjust that original $25,000 prediction lower as well, though?

Either way, the new Tesla Model 3 is pretty cheap. That’s because new vehicle prices have soared in recent years.

The average new-vehicle transaction price in the US in August was $49,077. For EVs, that number was an eye-watering $57,245, according to Kelley Blue Book estimates.

Sign up for BI’s Tech Memo newsletter here. Reach out to me via email at [email protected].

Read the original article on Business Insider

The post Elon Musk promised a $25,000 EV in 2020. Including inflation, we’re getting closer, but are we there yet? appeared first on Business Insider.