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

In September 2020, Elon Musk expressed confidence that Tesla would introduce a fully autonomous electric vehicle priced at $25,000 within three years. Fast forward over five years, and the question on many minds is whether we are closer to realizing this ambitious goal. Recently, Tesla unveiled a new Model 3, which starts at $36,990 before taxes, fees, and incentives. To understand how this aligns with Musk's original promise, we turned to inflation data. By utilizing the US consumer price index, we found that the inflation-adjusted version of Musk's $25,000 prediction is now approximately $31,118.03. When we compare this adjusted figure to the current price of the Model 3, we see a discrepancy of over $5,800. Musk had also indicated that this future vehicle would be fully autonomous. While the new Model 3 includes Autopilot features, the full self-driving package requires an additional payment. Considering the potential for tax incentives—though many have recently expired—the net price of the Model 3 could dip below $30,000 after applying a $7,500 federal tax credit. However, it raises the question of whether we should also adjust Musk's initial $25,000 estimate downwards. Despite these considerations, the Model 3 remains relatively affordable in a market where average new vehicle prices have surged. In August, the average transaction price for new vehicles in the US reached $49,077, with electric vehicles averaging a staggering $57,245, according to Kelley Blue Book. As we reflect on Musk's vision, it remains to be seen if and when Tesla will bring that $25,000 EV to life, but the current landscape suggests we are inching closer to that milestone.