More than five years after it first became available to consumers, Tesla is at last developing a new version of its Model 3 battery-electric sedan as it looks to reduce the amount of parts it uses, particularly on the interior, which would lower production costs.
Codenamed Highland, Tesla is working to increase the appeal of the Model 3 as battery-electric vehicles as the number of models entering the market increases, including the upcoming Volkswagen ID.4, as well as the recently introduced Hyundai Ioniq 5 and Kia EV6.
The Model 3 will be built at the company’s manufacturing plant in Shanghai as well as its Fremont, California facility with Shanghai production expected to begin in the third quarter of 2023, although U.S. production start dates weren’t revealed. That said, like any Tesla deadline, it can be taken with a grain of salt.
Reuters was the first to report the revamp of the Model 3, which has not officially been announced. The battery-powered sedan is Tesla’s second-most popular vehicle, behind the Model Y SUV.
What to expect
While Tesla is thought of as an EV startup, despite being nearly 20 years old, its redesign strategy follows that long used by traditional automakers, where top-of-the-line models receive redesigns first before the rest of the line-up.
Tesla’s Model S received an update in 2021, with more angular sheet metal and a revamped cabin that featured a 17-inch horizontal, rather than vertical, touchscreen, revised air vents and a yoke steering wheel not unlike that used the 1980s TV show Knight Rider.
Expect to see some sort of performance upgrade as well.
While the interior design updates will be welcome, exterior design changes could do more to stoke sales of the vehicle, which remains largely unchanged from its debut. That’s not to say the company hasn’t changed the vehicle; over-the-air updates enable Tesla to update performance capability or revise the control panel touchscreen software.
Simplification and its cost
But the company has also sought to continually reduce the number of parts it needs to build a Model 3, by enlarging its casting machines to produce single, large pieces for final assembly or redesigning its battery pack as a structural element, rather than one that uses modules. All help increase production speed by reducing the number of parts used for manufacture. It also increases the cost of repairs. In fact, a study released late last year shows that the Tesla Model 3 is the most expensive mainstream vehicle in the U.S. to insure, followed closely by the Tesla Model Y.
As other automakers are seeking to make their EVs profitable in the future, Tesla’s EVs currently produce a profit of $9,500 per vehicle, although that comes after many years of losses. This is the point where traditional automakers currently find themselves. And while Tesla’s lead is admirable, the question becomes can the company can maintain it?
Tesla CEO Elon Musk’s purchase of Twitter, and the subsequent morass that has enveloped Musk’s attention, engineers and funds calls into question whether Tesla is firing on all cylinders just as competition is increasing. It’s hard to bet against Musk; but it will be inetresting to watch.