It has recently been revealed that Tesla is secretly working on a new redesign of the Model 3 called Project Highland. This news, which Reuters first reported, has caused a stir among Tesla fans and industry analysts alike. While the report does not provide many details on the specifics of the project, it does state that production of the updated Tesla Model 3 is set to begin in the third quarter of 2023 at two of Tesla’s factories located in Shanghai and Fremont, California. While the idea of a new and improved Tesla Model 3 is exciting, not everyone is pleased with this initiative. Some have already expressed displeasure at the possible changes to the Model 3. Regardless of people’s opinions, Tesla is moving forward with its plans to bring a new version of the Tesla Model 3 to market. The new and improved Tesla Model 3 is set to square off against its predecessor, with a host of flashy upgrades and features on the line. Will the newer model dominate, or will the original come out on top? Keep reading to find out how the updated Tesla Model 3 compares to the current model.
According to a Reuters report, the upcoming redesign of the Tesla Model 3 will take inspiration from the redesign of the Tesla Model S of 2022. The aim is to reduce production costs and improve the appeal of the Model 3, which was first unveiled almost seven years ago in early 2016. The project would like to optimize the profitability of the Model 3 by decreasing the number of components and complexity in the interior while focusing on features like the display and software, which are central to the Tesla Model 3 and are key to its identity. In addition to these changes, the project may include modifications to the Tesla Model 3’s exterior and powertrain performance. The initiative shouldn’t come as a surprise to anyone since Tesla is a publicly traded company, so it’s only fitting for it to increase its profitability and stay competitive in the market.
The Tesla Model 3’s center touchscreen display is a standout feature that sets it apart from other electric vehicles. Because it is bigger, more powerful, and has better software than other electric cars, Tesla Model 3 owners couldn’t help but love it. The technology and software in Tesla vehicles have been a selling point for nearly a decade since the first Model S was released. These features and regular software updates have kept the Model 3 feeling new and improved over time. These updates have included added security features, media enhancements, and improvements to the motor’s efficiency, autopilot, and full self-driving capability. Tesla’s focus on continuous improvement through software updates, including the frequent release of FSD beta versions, makes ownership of a Tesla a unique and exciting experience as the company works towards full autonomy.
Even though it still looks the same, the current Tesla Model 3 has already been updated from the version that first went on sale in 2017, according to Ed Kim, president of AutoPacific Group, which tracks market trends and production. These updates were made through software and included improvements to battery performance, information, and entertainment options.
Kim said, “Consumers still tend to equate visual changes with newness. Tesla knows visually tangible changes are in order. The upcoming changes potential customers can see and feel will be significant in ensuring that EV customers still have Tesla at the top of their minds as excellent alternatives to Tesla are starting to flood the market.”
On top of the constant software updates, Tesla will also be removing more features from the Model 3 to cut costs. Some of the most notable features that will be taken out include ultrasonic sensors, radar, passenger seat lumbar support, the center console tray, the mobile connector, which is now an optional purchase, and the glass roof that changed color in the presence of water droplets. So yes, Tesla made these adjustments to reduce the cost of building the Model 3 and improve its profit margins. With the highly-touted tax credit of $7500 in 2023 that requires electric sedans to be priced under $55,000 to qualify, now is a good time for Tesla to simplify the already minimalist Model 3 further. While these changes have upset some Tesla owners, the company’s focus on safety, including physical and digital safety, remains a priority, so there is no need to worry.
Moreover, it is likely that the 2023 Model 3 will include some modifications based on the revisions that were given to the Model S, including the removal of the stocks on either side of the steering wheel and the adoption of touch-sensitive buttons on the steering wheel for turn signals. The Model S’s redesign is centered around a 17-inch electronic display and no longer has conventional vents and several controls. Changing drive modes will also be moved to the touchscreen, giving the software and voice commands more responsibility in triggering certain functions, such as activating the wipers or enabling autopilot. The Tesla Model 3 may adopt the same structural battery pack used in the Model Y, which is designed to significantly reduce the number of parts needed to build the car. However, the Tesla Model 3 is unlikely to get The Model S’s yoke steering wheel, but that isn’t a huge concern.
To further reduce costs and make the Model 3 more affordable for buyers, Tesla is considering using smaller or cheaper LFP batteries or replacing the glass roof with a metal roof, which was originally intended for the base Model 3. As much as the company wants to make more significant changes to the Tesla Model 3, it simply can’t. This is because the Tesla Model 3, despite being one of the best in the market today, cannot offer that premium feel you get from gasoline-powered cars like the BMW 5 series and Mercedes E-Class, which offer luxury features such as heads-up displays, ventilated massage seats, and better noise insulation.
In an interview, Tesla CEO Elon Musk stated that the company seeks to downsize to a smaller car platform that would be half the Model 3’s cost. “Over and over, we found parts that are not needed. They were put in there just in case or by mistake. We eliminated so many parts from a car that did nothing.”
While many of Tesla’s competitors are still losing money, thanks to this strategy, Tesla has become the most profitable electric vehicle manufacturer. Disclosures show that in the third quarter, Tesla made over $9,500 in profit for each vehicle sold, while Toyota made about $1,300.
The rework of the Tesla Model 3 comes amid the company’s struggle to make sales in China—Tesla’s second-largest market after the United States. To boost sales, Tesla discounted the Model 3 and Model Y in China by up to 9% and provided additional rebates to customers who took immediate delivery.
Tesla has a history of not offering discounts on its vehicles and even Musk is against it. However, the recent end-of-year discounts on Tesla cars came after the company had already raised its prices multiple times, which may be concerning to some consumers. Deutsche Bank analyst Emmanuel Rosner expects Tesla to offer more price cuts “to align demand with supply.” Even if Tesla wouldn’t offer direct cash discounts, it could still give incentives to encourage purchases such as free maintenance, which is similar to the company’s current offer of 10,000 miles of free Supercharging. This type of incentive is often used by other car companies.
Edmunds automotive analyst Ivan Drury even said that Tesla is starting to look like any other car company.
“This is a company that raced to be different, but now it seems like they’re going to be the same as everyone else,” Drury said.
So, while the current design of the Tesla Model 3 is still attractive, a redesign in 2023 could bring a fresh new appeal to potential buyers and make it even more popular than it already is. The criticism from the redesign would also quickly fade away thanks to the Inflation Reduction Act of 2022, which grants a tax credit of up to $7500, making the Tesla Model 3 even cheaper and more attractive to buyers. After the tax credit is applied, the Tesla Model 3 Standard Range will start at $36,490, while the Performance version will be priced at around $46,490. Tesla must remember to avoid economizing the Model 3 too much or compromising its brand identity.