The initial plan was for Tesla to be an affordable EV company. Now, cars like the Model 3 and Model X are fairly affordable to some – especially with various federal and local tax credits – they still aren’t exactly able to compete with other entry-level cars. During a recent conference call, Elon Musk stressed this fact and even alluded to making things right, part of which means that a smaller Tesla could grace the market, and in this case, we could be talking about a Model 3 Hatchback.

A Tesla Model 3 Hatchback Could Be Impressively Affordable

As reported by Autocar, Elon Musk has revealed how troubling it is that Tesla’s cars aren’t affordable enough.

At the same time, Musk didn’t really divulge how the company is going to fix that, which for the most part, is understandable considering how the company likes to keep future launches such a big secret. He did, however, allude to the fact that the company is considering both a compact vehicle and something larger.

That compact vehicle would likely be a hatchback version of the Model 3 that would compete with models like the Chevy Bolt, Volkswagen ID 3, and even the Peugeot e-208 over in Europe. And, it makes even more sense when you consider that the new factor in Germany features a big aluminum casting machine – the same thing that’s used in the California plant and reduces individual frame parts for the Model Y from 70 to just 2. That means that Tesla can, in theory, throw a hatchback rear end on the Model 3 without doing a lot of extra work and keeping costs extremely low. Why do I bring up the German factory? Well, we’re pretty sure that the Model 3 Hatch will be a Euro-only affair initially.

When Will Tesla Reveal the Compact Model 3 Hatchback?

When we’ll see the next compact Tesla really is a major wild card. When you consider the fact that Tesla already has a lot on its plate, it probably won’t happen soon. The Tesla Semi has yet to enter production, the Cybertruck still needs to hit the production line, and let’s not forget about the second-gen Tesla Roadster that’s been revealed for so long that it’s hard to believe it’s not on the road yet. When the compact Tesla, be it a Model 3 hatchback or not, is revealed and officially launched, you can expect it to command a price of around $30,000-$35,000 at most – this would put it in the “affordable” range that Musk is looking to achieve.

The only downside is that if Tesla can’t cut production costs enough to make the new car profitable and affordable, then there’s a good chance we’ll also see a reduction in battery size. The entry-level Model 3, at the moment, comes with a 45kWh battery pack, which is good for 250 miles. The thing to remember, however, is that batteries are the dominant cost factor when it comes to EVs, so Tesla may have no choice but to introduce a smaller battery with less range. You should also write off the Model 3’s base sprint time of 5.3 seconds as well, as a smaller battery pack and smaller motors would probably push the range to around 200 miles and the sprint time into the 6.5-7.0 second range. Yeah, it’s not quite that fast, but it’ll be competitive against other compact EVs on the market today.