Tesla Can Turn the Model 3 Into Its $30,000 Hatchback

There is starting to become pressure from retail investors and analysts against Tesla to make their $30,000 hatchback vehicle in order to compete in international markets and with BYD in China. Here's how I think Tesla can accomplish this.

The Tesla Model 3 Reduced In Scope

I currently own a 2022 Tesla Model 3 RWD with LFP batteries. After taxes and all fees, this vehicle cost me about $50,000. This price range is out of reach for many people, especially those who can't make a down payment.

However, a $30,000 vehicle - a hatchback, like a Toyota Corolla, except as an EV would be in reach of many more people. Gary Black, a strong voice in the Tesla community advocates for Tesla to create this $30,000 hatchback now in order to compete with BYD in China and other markets.

A $30,000 vehicle makes a lot of sense, but the question is if Elon Musk will do this, or if he instead will make the Model 3 become this hatchback over time by reducing features and using single piece castings to reduce the cost of it. I think it makes a lot of sense for Tesla to do this. There wouldn't be a need to train engineers on how to make a new vehicle, just to reduce the complexity of an already existing one.

Tesla announced its vehicle lineup at the last Tesla semi reveal event. There was a slide that showed a covered up vehicle called "robotaxi". It is possible that this vehicle becomes a hybrid of an autonomous vehicle and the $30,000 hatchback that so many are wanting Tesla to make. The only thing that would stop this is if this vehicle is truly being planned without a steering wheel, pedals, or many of the features a normal car has.

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What Will a Tesla Model 3 Look Like as a Hatchback?

The question is, what should Tesla do or what will they do going forward. If I know Elon Musk, I know that he is playing the long game with Tesla and that FSD (full self-driving) is part of his vision for the future. I worry about this because there are a lot of edge cases where FSD won't work right easily. I was driving in the snow yesterday and auto pilot and the pillar cameras were all blocked. What is a user of a Robotaxi supposed to do in this situation - bring a brush to clean the car? Nobody is going to want to do that.

I think Tesla should turn the Model 3 as it is into the hatchback by reducing complexity, parts, and making the cost of it drop considerably. If Tesla can do this, then you have a cheaper vehicle to satisfy the hatchback portion of the market. Tesla is going to need to remove a lot though and it would be interesting to see what would happen with existing Model 3 vehicles that have all the "bells and whistles". What would Tesla do with those?

It's one of two paths as I see it. Either Tesla needs to announce a brand new vehicle that will be the $30,000 hatchback, or they will need to reduce complexity and parts on the existing Model 3 to satisfy this hatchback market. If Tesla does neither, then they are going to bank on the long term vision of Elon Musk that robotaxis will be the ultimate end product for vehicles. This is a riskier bet because FSD still has a long ways to go to be able to operate in all conditions.

Tesla can reduce the stereo system in the Model 3 to normal. Tesla can take away the heated seats. Tesla can simplify the air vent and make it less complicated. Tesla can take away the heated steering wheel. There are many nice features that Tesla can remove from the Model 3 in order to make it more affordable. Tesla can create a "splinter" car that is built like the Model 3, but without all the nice things and complexity.

What do you think about Tesla's Model 3 becoming its new Hatchback? Will Tesla make a new hatchback to address the $30,000 market?

Jeremy Johnson is a Tesla investor and supporter. He first invested in Tesla in 2017 after years of following Elon Musk and admiring his work ethic and intelligence. Since then, he's become a Tesla bull, covering anything about Tesla he can find, while also dabbling in other electric vehicle companies. Jeremy covers Tesla developments at Torque News. You can follow him on Twitter or LinkedIn to stay in touch and follow his Tesla news coverage on Torque News.

Image Credit, Tesla, Screenshot