Tesla small car back underway, set to outsell all current models

Tesla CEO Elon Musk said the brand’s third-generation electric vehicle platform could cost half as much to produce as the current Model 3 and Model Y architecture.

The information was disclosed during a recent earnings call, according to Clean Technica, with Musk claiming a smaller model would significantly reduce the brand's entry price.

While details on the smaller EV are thin, it is expected to comprise a hatchback body to rival the Volkswagen ID.3, with production likely to take place in Shanghai, China – the country of origin for Australia’s Model 3 and Model Y.

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The Chinese plant has a capacity of approximately 750,000 units per annum, which is the highest installed capacity of Tesla’s vehicle production facilities. It could also be produced across several plants, as seen with the Model Y, which is made in China, Germany and two US plants (California and Texas).

With the potential for a 50 per cent cut in production cost, the smaller vehicle could start as low as US$23,495 (AU$36,810) – half as much as the cheapest Model 3 in the US. However, it will likely be priced at around US$30,000 (AU$47,000) for greater profitability.

“We don’t talk exact dates, but this is… the primary focus of our new vehicle development team, obviously. At this point, we’ve done the engineering for Cybertruck and for Semi,” said Elon Musk, in response to a question regarding cost cuts for the third-generation electric vehicle platform.

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“It’s obvious you can guess what we’re working on, which is this next-generation vehicle, which will be about half the cost of the 3/Y platform. It’ll be smaller, to be fair, but it will I think swiftly… exceed the product of all of our other vehicles combined.”

Tesla’s chief financial officer Zach Kirkhorn added: “We’re going to take everything we learned from S, X, 3, Y, Cybertruck and Semi into that platform”.

“As you’ve said to us many times, we’re on a 2-for-1 target. So we’re trying to get to that 50 per cent [reduction] number again.”