The US carmaker needs to respond to VW.
Since launching in mid-2017, over 500,000 examples of the Tesla Model 3 have been sold, making it the best-selling electric vehicle on the planet. But there's still one significant issue troubling Tesla CEO Elon Musk: affordability. At present, the Tesla Model Standard Range Plus has a base price of $39,990 and the top-of-the-line Model 3 Performance will set you back $56,990. Meanwhile, the new Model Y Long Range can't be had for less than $51,190, although a cheaper version is in the works. But cutting the Model Y's price might not be enough, especially for Europe.
According to Autocar, a new hatchback model is under consideration. It's not exactly an all-new Tesla, but rather a redesigned hatchback version of the Model 3. It would be separate from the rumored small city car planned for the Chinese market.
Aimed directly at European customers, a lower-priced Model 3 hatchback would serve as a direct rival to the new Volkswagen ID.3 hatchback. One way the still-unnamed vehicle could be sold for less is by avoiding overseas transportation costs. Construction on Tesla's Berlin Gigafactory is currently taking place and is scheduled to be completed by July 2021. European market Model 3s will be assembled there and the new hatchback could very well be built alongside it.
Another cost-cutting measure is Tesla's new aluminum casting machine, which has a patent pending. This technology simplifies a car's unibody frame assembly and cuts back on the frame's individual parts from 70 to only two. Tesla is already using this building method at its Fremont facility in California for the Model Y.
The new hatchback (maybe called the Model 2?) would probably have reduced performance and total range compared to the Model 3 as yet another way to save money. Chances are, this rumored hatchback won't be sold in North America for the same reason the ID.3 isn't. Buyers here simply aren't interested in hatchbacks and prefer crossovers, a segment Tesla already has covered. Tesla is known to announce surprises from time to time, so it's possible we'll be hearing more about the new model relatively soon.
However, Tesla's current focus is on starting production of its Semi truck, Cybertruck, and second-generation Roadster, so a new ID.3 rival isn't expected until 2022, at the earliest.