How did Tata come up with $2,500 for the Nano?

The Tata Nano, a two-cylinder minicar that weighs 1,300 pounds and emits 103 grams of carbon dioxide per kilometer, less than any other car, got its price tag when Tata Group leader Ratan Tata made an offhand comment to journalists that the company could make such a car for $2,500. Newspapers picked up the figure, and the company used it as a challenge to motivate employees, Tata executive Sunil Sinha said in a lecture at Harvard University.

Source: Harvard Business Review, The Daily Stat, 21st October 2010