Can't say I agree with him on the need for a ground to LEO FRLV, but I most definitely agree on the need for a fully reusable system going to and from LEO to any other destination.
Still think that ground to LEO RLV's are and always will be cost prohibitive but I will be happy if the RFL project proves me wrong.
LEO-Mars spacecraft reusability gives at best a factor of 10 reduction in costs, and in my opinion much less.
Balancing no need to launch the spacecraft each time (which only reduces launch costs by 20%) are increased R&D costs, refurbishment cost, any extra fuel needed to put the spacecraft in an orbit where it might be reused, decreased production economies of scale and lower rate of introduction of technological improvements.
If launch costs are 30% of a typical HSF mission at present then changing to a RLV will at best reduce costs by 30%. Add in spacecraft reusability for another 10x reduction then a mission similar to DRM5 but using reusable elements would cost at best 7%.
Musk needs 4 orders of magnitude improvement in cost, just adding reusability to existing mission architectures gives at best 2 orders of magnitude reduction and probably only a bit better than 1 order of magnitude.
His plans/hopes are on a much bigger scale than for DRM5 and economies of scale will give lower unit costs, but I doubt that will be more than an order of magnitude.
What remains are architecture improvements. He seems to be aiming for mainly one way (to Mars) for colonists, return flights are necessary for reuse not having to provide consumerables for many passengers on the return trip leads to efficiencies all through the architecture.
I just can't see how Elon hopes to get prices down to $500,000/person. With reusability and economies of scale and a lot of optimism I could see $5M/person, but that last factor of 10 must be either imaginary or something I've overlooked.