Major Tesla Model 3 redesign to aim for drastic cost cuts in 2023 as a dress Model 2 production rehearsal

Tesla is reportedly working on a looks and interior redesign for its bestselling Model 3 sedan whose exterior is getting a bit long in the tooth after five years in service. The new Tesla Model 3 should enter production by early fall next year, meaning that it could be billed as a thoroughly revamped 2024 model. Tesla did something similar with the Model S by introducing new body styling as well as a rather controversial yoke steering on the inside that is an acquired taste, but its Model 3 revamp may be less radical.

That's because the so-called Project Highland is allegedly aimed at a drastic production cost reduction as Tesla faces an increasing number of Model 3 competitors from its main global rival BYD, but also from legacy carmakers like Toyota. Apparently, Elon Musk is pushing for a Project Highland focus on improving redundancies in the Model 3 design or engineering, and streamlining production to keep its profit margins intact. Another way to cut costs may be the Model 3 move to CATL's cheaper yet more power-efficient M3P phosphate batteries, and the first units with those packs are expected to hit the conveyor belts early next year.

The brand new 2023 Model 3 may thus be a dress rehearsal for the transition to an affordable mass market Model 2, arguably the most important Tesla vehicle to get right in the foreseeable future. Last month, Elon Musk mentioned that a smaller and cheaper Model 2 would be lowering production costs in half compared to the Model 3, and the rumored redesign of its larger sibling may be used as a testbed for what's possible to cut in order to arrive at a cheaper sub-US$30,000 Model 2 price.

"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," tipped Elon Musk, hinting at how he intends to approach the manufacturing of the upcoming Model 3. As for the interior, Tesla will eventually be gunning for a more minimalistic look that will focus on the features that drivers actually use in the car. Chief among those will be the big central display console. Last year's Model S interior overhaul disposed of buttons and air vents that Tesla apparently now considers eyesores, so the new Model 3 may undergo a similar transformation.

The production of the cheaper Model 3 will start in the July quarter of next year, report the industry insiders probed on the matter, and Tesla will split its manufacturing between the Fremont and Shanghai Gigafactories. First in line for assembling the refreshed Model 3 will be the newly modernized Giga Shanghai plant, though, as the Fremont factory is one of Tesla's oldest and least efficient.

This could mean that China will get the Model 3 2023 refresh earlier than US customers, as Tesla tries to increase the output of its most efficient factories in the production mix in order to achieve those coveted cost reductions. Moreover, Tesla China was recently forced to cut the Model 3 price and may be readying another reduction by year's end on softening demand and increased competition, so a new design may play best there first.

In any case, a new Model 3 may be on the horizon, and Tesla could tease it at some point in the not so distant future so as to drum up additional interest in its bestselling electric sedan.

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