How Tesla Can Make An EV That Costs Below $30K, According To An Ark Analyst

Even as Tesla Inc TSLA investors fret over the company not giving a timeline for the sub-$30,000 car, Ark Investment Management CEO Cathie Wood in March shared a tweet from one of her firm's analysts explaining how the EV giant would achieve that.

What Happened:  Tesla’s price cuts were the company just passing along drivetrain cost declines, Wood had said, citing Ark analyst Sam Korus. 

Wood quote-tweeted Korus who said the drivetrain cost declines will cut the price of the Model 3 in half to $25,000, undercutting the competition.

On @CNBC this week, @SaraEisen asked if #Tesla is cutting prices in response to competition. After investor day, @skorusARK illustrated that Tesla is passing along drivetrain cost declines that will cut the price of the Model 3 in half to $25,000, undercutting competition! https://t.co/snaJxXHl7n

— Cathie Wood (@CathieDWood) March 3, 2023

See Also: Everything You Need To Know About Tesla Stock 

Korus’ workings showed that with improving efficiency, the drivetrain would cost $6,240, including $5,250 for battery ($70 per kilowatt-hour for 75 kWh battery and powertrain cost of $1,000).

He noted that since the drivetrain accounts for 25% of the cost of the vehicle, an EVs cost will likely come down to $25,000 (which is 100% of the 25% or $6,250).

“The future is electric,” Korus said.

Why It’s Important:  All Tesla Model 3 sedan variants currently cost more than $30,000, even after federal tax credits are taken into account.

Given that affordability is one of the major factors limiting adoption, a cheaper model could help Tesla boost volumes. 

Price Action: Tesla shares were sliding before the bell on Thursday, following a record-breaking winning streak earlier in the week.

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This story was originally published on March 3, 2023. Some elements of the story have been updated.