Tesla Inc (TSLA stock) is working on a revised version of the Model 3, with the goal of reducing production costs and increasing the attractiveness of the electric car, which is already five years old.

According to the people, who requested anonymity because the redesign has not yet been made public, one of the focuses of the redesign, codenamed “Highland,” will be to lessen the complexity and number of parts in the Model 3’s interior while focusing on features that Tesla (NASDAQ: TSLA) buyers value, such as the display. This will be accomplished while remaining focused on features that Tesla buyers value.

The electric sedan is facing growing competition from models made by companies such as China’s BYD (002594.SZ), Hyundai (005380.KS), and upcoming releases from other major automakers. The makeover, which was previously undocumented, comes as a result of this heightened competitiveness.

According to two of the sources, the revamp of the battery-powered sedan, which could possibly include modifications to the Model 3’s exterior and powertrain performance, would go into production at Tesla’s factories in Shanghai and Fremont, California. They indicated that production of the redesigned Tesla Model 3 would commence in the third quarter of 2023 at the Shanghai Gigafactory.

It was unclear when production would start at the Fremont factory nor how much of a cost savings Tesla would accomplish while it works with suppliers on the redesign.
This project highlights a strategy for vehicle development that was pioneered by Tesla and is now being imitated by other manufacturers, notably Toyota Motor (7203.T). This approach reduces the complexity of the production process, which in turn reduces the cost associated with it.

It is also an example of a crucial project at Tesla that has gone along even though Chief Executive Officer Elon Musk has been focusing on his problematic acquisition of Twitter in recent months, which has been a source of concern for Tesla investors.
Reuters submitted a formal request for comment, but Tesla did not react to the request.
CHANGE YOU CAN SEE

The redesigned Model 3 follows in the footsteps of Tesla’s flagship electric vehicle, the Model S, which debuted a year ago after undergoing a facelift of its own. This makeover substituted a yoke reminiscent of an airplane for the conventional steering wheel and did away with buttons and conventional air vents in order to achieve a minimalist interior appearance. The 17-inch electronic display now serves as the primary focus of the cabin.

The Model 3, Tesla‘s least expensive electric vehicle, which starts at little under $47,000 in the United States, has been the automaker’s best-seller; now, the Model Y crossover is beginning to overtake it in terms of sales. Because Tesla produces only four different models, any aesthetic modifications to any aspect of its lineup are given a disproportionate amount of weight in comparison to those made by more established automakers.

Even though it maintains its original outward appearance, the current Model 3 has already been upgraded from the version that was introduced to the market in 2017, according to Ed Kim, president of AutoPacific Group, which monitors market trends and production. This is due to the fact that Tesla updates the performance of its batteries, as well as its information and entertainment options, via software.
“However, consumers still have a tendency to link visual changes with newness,” he remarked. “Having said that…” “Tesla is aware that adjustments that are easily observable are necessary.”

“”This will ensure that EV customers still have Tesla at the top of their minds even as truly excellent alternatives to Tesla are starting to flood the market,” he said. “The upcoming changes that potential customers can see and feel will be very important in ensuring that EV customers still have Tesla at the top of their minds.”
KEEP IT SIMPLE

According to people who are familiar with the work, Musk has been pushing for a streamlined approach to design and production at Tesla, and the Highland project extends this approach.

To manufacture single, larger sections of a car in assembly, so cutting costs and increasing production speed, Tesla was an industry pioneer in the use of gigantic casting machines known as Giga Press. These machines were manufactured in Italy by IDRA Group. In addition to this, it has developed a structural battery pack that eliminates the need for more costly components.

Musk has stated that Tesla is working on a basis for a smaller car that would be approximately one-half the price of the Model 3, and he has also stated that Tesla is seeking to reduce costs through simplification.

“We kept coming across components that aren’t required in any way. They may have been placed there accidentally or as a precautionary measure. We removed a great number of components from a car that served no purpose, “Musk stated in an interview earlier in the month while he was attending a Baron Funds conference.

This strategy is one of the reasons why Tesla has become the most lucrative manufacturer of electric vehicles, in contrast to many of its competitors, who are still operating at a loss. According to the reports filed by both firms, Tesla made a profit of well over $9,500 for each vehicle that it sold during the third quarter, whereas Toyota only made a profit of approximately $1,300 per vehicle sold.

The redesigned Model 3 is being released at a time when sales in China, the company’s second-largest market after the United States, are experiencing challenges. According to the China Passenger Car Association, sales of the Model 3 in China dropped by nine percent in the first ten months of the year compared to the same period a year earlier. Meanwhile, sales of the BYD Qin and Han electric cars surpassed sales of the Model 3.

In an effort to boost sales, Tesla reduced the prices of the Model 3 and Model Y in China by up to 9% in October and offered additional rebates to customers who took immediate delivery of their vehicles.

Sam Fiorani, a Tesla and industry-wide production analyst at Auto Forecast Solutions, said the upcoming Model 3 changes, which he knew were coming, demonstrated the power of Tesla’s approach in removing complexity. He anticipated the changes because he monitored Tesla and industry-wide production.

Featured Image – Pexels © Pixabay

Please See Disclaimer