Tesla is reportedly working on a redesigned Model 3

Tesla reportedly has a new Model 3 design in the works, according to four sources speaking to Reuters with knowledge on the matter. The new model, going by the codename “Highland,” will have fewer interior components and a slightly redesigned exterior, with the goal of both cutting production costs and increasing the appeal of the now five-year-old midsize electric sedan.

The redesigned Model 3 may also have some powertrain performance adjustments, although it’s unclear if this means we will see a faster or more tame vehicle. The sources say that the production of the new model will begin at Tesla’s Shanghai Gigafactory in the third quarter of 2023. It’s planned for Tesla’s Fremont, California, plant as well, though no timeline was provided.

Tesla’s Model 3 was originally designed to be the company’s EV for the masses and was supposed to start at an affordable $35,000. But since it went into production, the vehicle was only available at that price for a very short period — and only as a special order. That version had some interior downgrades, like no phone chargers, cloth seats, and an uncovered center console storage bin. Currently, the most affordable Model 3 starts at $46,990.

By design, the Model 3 already had a radically simplified interior compared to other vehicles in its class: with only one infotainment screen, no instrument cluster, and limited stalk buttons that don’t even have full windshield wiping controls. Some of the initial production runs had a higher-quality Alcantara-style soft liner for the ceiling trim before Tesla switched to a different material. Its last interior change came in 2021 with a new non-glossy center console finish with integrated wireless phone chargers and a sliding storage compartment.

Tesla recently revamped its first mass-production car, the Model S, with a newer and more powerful powertrain and a new interior that includes a yoke steering wheel with no stalk controls at all. The automaker redesigned the Model S front bumper in 2016, but the car has largely looked similar to the original release in 2012.

The newer Model S now has a landscape-oriented screen (similar to the Model 3) that’s powered by a computer, the performance of which is equivalent to a PS5. The Model 3, in comparison, had a minor AMD processor bump last year, replacing an aging Intel Atom-based infotainment computer.

A cheaper and more attractive Model 3 would certainly be helpful in a market where EVs are commanding higher prices. But just because the car will be cheaper to manufacture doesn’t mean the cost savings will be extended to the customer.

For years, Tesla CEO Elon Musk has been promising to make a $25,000 Tesla but has yet to deliver on it. Much will depend on whether the automaker can succeed in building its currently announced cars while reducing costs. Even for its long hyped but now delayed Cybertruck, the company will be increasing the original starting price of $39,900.

Most importantly, Tesla needs to keep loyal customers from straying to its competitors. Manufacturers like Volkswagen, Hyundai, and General Motors are ramping up EV production, which could spell trouble for Tesla’s time at the top of the sales ladder.