Tesla is developing a revised Model 3 that aims to cut production costs and improve the appeal of the five-year-old electric sedan, according to four people familiar with the matter, Reuters reported.
According to the people, the redesign of the Model 3, codenamed “Highland,” is focused on reducing the number and complexity of the Model 3’s internal components while focusing on features that are important to Tesla buyers, including the display.
The facelift could also include some changes to the exterior and powertrain performance of the Model 3, which will go into production at Tesla’s factory in Shanghai and the company’s plant in Fremont, California, two of the people said. Tesla’s Shanghai mega-factory will put the revised Model 3 into production in the third quarter of 2023, they said.
It’s unclear when production will begin at the Fremont plant or how much cost savings Tesla will realize through a redesign as it works with suppliers.
Last year Tesla introduced a facelifted Model S with a new Yoke steering wheel to replace the traditional steering wheel and eliminated buttons and traditional air conditioning vents in favor of a 17-inch center screen.
Ed Kim, president of AutoPacific Group, which tracks market trends and production, said the current Model 3 has been updated from the version that first went on sale in 2017, as Tesla updates battery performance, information and entertainment features through software, even though it still looks the same. He said, “Nonetheless, consumers still tend to equate visual changes with freshness, and Tesla knows that visually tangible changes are necessary.”
Elon Musk has pushed for a streamlined approach to design and production at Tesla, and the “Highland” project extends that approach, people familiar with the matter said.
Tesla pioneered the use of a large casting machine known as the Giga Press, made by Italy’s IDRA Group, to make single, larger car parts at assembly to reduce costs and speed production. It has also designed a structured battery pack that eschews more expensive modules.
Elon Musk has said that Tesla wants to reduce costs by simplifying and is working on a smaller car platform that will cost half as much as the Model 3.
This approach is part of what makes Tesla the most profitable electric car maker, while many competitors are still losing money. In the third quarter, Tesla made slightly more than $9,500 in profit per vehicle sold, compared with about $1,300 for Toyota, according to disclosures by both companies.
Tesla’s sales in China are currently under pressure. Model 3 sales in China fell 9 percent in the first 10 months from the same period last year, according to data from the Passenger Association, while BYD’s Qin and Han outsold the Model 3. To boost sales, Tesla cut the price of the Model 3 and Model Y in China by 9 percent in October and offered an additional rebate to buyers who take delivery immediately.
