What to Expect From the Upcoming Gen-3 Model That Tesla Will Announce at Investor Day

Tesla’s Investor Day is just around the corner, and the EV maker is expected to announce the details of its next-generation automotive platform. This should spawn a new compact model in Tesla’s lineup, most probably a crossover. Here’s what industry analyst Pierre Ferragu thinks about the upcoming model.
Alleged Gen-3 Tesla prototype 7 photos
Photo: sugardesign_1 via Instagram| Edited
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Although Tesla Cybertruck is a hot topic, there’s another product stealing the show, at least for a couple of weeks. As it announced during the Q4 2022 earnings call, Tesla will share the details of its next-generation automotive platform on March 1, during Investor Day. Although nobody expects to see a finished prototype, the new Gen-3 platform is enough to spark everyone’s imagination. The main reason is it will underpin Tesla’s true mass-market vehicle, with a projected price of around $25,000.

Many called it the Model 2, based on the fact that it would be smaller than the Model 3. That’s not how the Model 3 got its name, as Elon Musk explained a while back. Instead, 3 was another way of spelling E since Ford trademarked the Model E name. Nevertheless, knowing Musk’s love for memes, 2S3XY as the name of Tesla’s lineup doesn’t sound half bad. There’s another option floating around: Model Q or simply Tesla Q, a tongue-in-cheek jab at investors shorting Tesla shares.

Whatever its name, the Generation-3 platform and the compact model built on it are a great deal for the automotive industry and Tesla alike. There are rumors and speculations about what to expect, but the consensus is that the future affordable Tesla model will rock the establishment and start a new manufacturing revolution. The new platform should be easy to build at scale, with half the costs of the current Gen-2 architecture.

Industry analyst Pierre Ferragu has put together bits of information and has come up with a thorough analysis of the economic prospects of the future compact Tesla. According to his research, the new model should be around 15% shorter, 30% lighter, and have a 25% smaller battery than the LFP-powered Model 3. Because the Model 3 is not heavier than other family sedans on the market, notably the BMW 3 Series, Ferragu thinks the Model 2/Q should also be in line with modern compact cars like the Toyota Corolla.

At the current energy density of 128 Wh/kg, the LFP battery in the Model 3 weighs 420 kg and has a 54 kWh capacity. Ferragu expects the compact model’s battery to weigh 340 kg for a 40-kWh usable capacity. This assumes the energy density remains unchanged, although the slide Ferragu shared suggests a marked increase in energy density. The battery should still be able to offer upwards of 250 miles of range versus the 278 miles for the Model 3.

Ferragu expects the Gen-3 model to be 37% less expensive to produce than the Model 3, although Elon Musk wanted to cut the costs in half. The cost reduction should come partly from the car being smaller and partly from design, architecture, and manufacturing innovations. Based on this, the Tesla compact should have production costs of less than $22,000. Selling it at $25,000 will allow Tesla to keep a fat 15% margin on the car, even before factoring in the software revenues like the FSD.

As you can see, even being conservative shows that Tesla is putting together a money-printing machine. Even better, the Gen-3 compact model should be affordable and retain key technological advantages, including the FSD capability and superior performance. At the proposed price, the compact Tesla can address 80% of the car market, a key factor in scaling to the extreme, as Musk wants.

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About the author: Cristian Agatie
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After his childhood dream of becoming a "tractor operator" didn't pan out, Cristian turned to journalism, first in print and later moving to online media. His top interests are electric vehicles and new energy solutions.
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