Tesla’s Next Car to Be Smaller and Cheaper, Musk Says

Elon Musk, the CEO of automaker Tesla, said his company is considering introducing a smaller car in its third electronic vehicle platform anticipated to be cheaper to build.

Musk pointed out this new development during Tesla’s Q3 2022 earning, noting that the next platform will be smaller than the current compact one and would cost roughly half of the Model 3 architecture.

The world’s richest man also announced that the primary focus of the electric vehicle manufacturer is new vehicle development, although he did not clarify a specific timeframe for the launch.

Tesla’s current two car platforms

Tesla, currently the leading electric car manufacturer globally, comprises two vehicle platforms: one for the Model 3 and Model Y, and the other for the Model S and Model X.

Model S and Model X are Tesla’s large vehicle architecture, meant for full-size cars.  In contrast, the shorter and more compact architecture supports the Model 3 and Model Y compact cars.

Reflecting on the upcoming smaller electric car in the next vehicle platform, the Tesla CEO claims that it would outshine the Model 3 and Model Y production. Those made up 95 percent of the automaker’s total vehicle deliveries in the third quarter of 2022.

“The next-generation vehicle will be about half the cost of the 3/Y platform and it will be smaller. It will, I think, certainly exceed the production of all other vehicles combined,” Musk said, claiming that Tesla’s third vehicle platform will suppress the production of all other Tesla cars combined.

The cost of building Tesla’s new car verses its final price

Regarding production costs of Tesla’s impending new car, Elon Musk claimed his automotive company would be able to make two units of the new smaller EV at the same cost as a single Model 3.

“We do believe this can be done,” he stressed.

It should be noted however that production costs do not necessarily scale directly with retail pricing. For that reason, it would be premature to assume that Tesla’s next-generation vehicle will also cost half as the production compared to the Model 3. One element to take into consideration, for example, is that fact that automakers are attempting to recover more from production models that were priced before inflation swamped the market.

Currently, Tesla’s Model 3 comes at a starting price of $48,490 in the US. Therefore, if retail prices are strongly considered, it can be assumed that the new Tesla car would significantly undercut the pricing of the Model 3 thanks to its cheaper architecture, smaller dimensions and economies of scale.

Yet it should be noted as well that this is not the first time the automotive company discussed its intentions of a smaller and more affordable electric car. Indeed, it t has long been rumored that Tesla would bring a $25,000 electric car in the form of a hatchback.