Elon Musk promises to make a $25,000 Tesla in 3 years

Tesla is working on cheaper, more powerful batteries for its electric cars, but many of the required innovations are still works in progress, its chief executive, Elon Musk, said Tuesday at a much anticipated presentation at the company’s California factory.

The advances could ultimately cut battery costs more than 50% and increase the distance Tesla’s vehicles can travel by nearly as much.

That would set the stage for the company to make a “compelling” $25,000 electric vehicle three years from now, Musk said, speaking to a parking lot full of Tesla owners in their vehicles, honking in approval.

But Musk, who has a reputation for promising game-changing innovations that often take far longer than expected or never arrive, said the company had not yet made the advances needed to get to that point.

Investors were hoping that Musk would announce a major technical breakthrough, in part because of the way Tesla had pitched the Tuesday event, which it called “Battery Day.” Tesla’s stock was down about 7% in extended trading Tuesday afternoon after falling more than 5% in regular trading.

The company is piloting production of batteries at its car factory in Fremont, California, and plans to build a cathode production plant somewhere in North America, Musk and Drew Baglino, senior vice president of powertrain and energy engineering, said at the event.

“It just really bodes well for the future, and it means that the long-term scaling of Tesla and the sustainable energy products we make will be massively increased,” Musk said.

Battery efficiency is central to success in the electric car market. The cost of batteries typically is the single biggest expense in producing such cars.

Tesla has an edge, for now. The company’s Model S Long Range Plus can complete a 400-mile journey without needing to be recharged, which is much farther than electric cars made by traditional automakers like Audi, General Motors and Jaguar. But an upstart rival, Lucid Air, which is run by a former Tesla engineer, says it has developed a car that can go more than 500 miles on a single charge.

Despite those competitive threats, Tesla has enjoyed a remarkable year. Its stock price has increased more than eightfold since it reported a quarterly profit last October. And the company has maintained profitability ever since, even as the pandemic hammered the auto industry from April through June.

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