Localization is a key part of an autonomous system, such as a self-driving car. The main sensor for the task is the GNSS, however its limitations can be eliminated only by integrating other methods, for example wheel odometry, which requires a well-calibrated model. This paper proposes a novel wheel odometry model and its calibration. The parameters of the nonlinear dynamic system are estimated with Gauss–Newton regression. Due to only automotive-grade sensors are applied to reach a cost-effective system, the measurement uncertainty highly corrupts the estimation accuracy. The problem is handled with a unique Kalman-filter addition to the iterative loop. The experimental results illustrate that without the proposed improvements, in particular the dynamic wheel assumption and integrated filtering, the model cannot be calibrated precisely. With the well-calibrated odometry, the localization accuracy improves significantly and the system can be used as a cost-effective motion estimation sensor in autonomous functions.