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The Next Gen. 3 Tesla Is Coming - Why It's Lights Out For Everyone Else

The next generation (version 3) of a Tesla compact car is coming out and this is going to be lights out for everyone else but Tesla.


Next Generation Tesla

The Cybertruck has been stealing most of the spotlight lately, but it's going to be a drop in the bucket when it comes to the impact the Tesla next generation 3 model is going to have. This car isn't talked about enough. Let's look at the numbers and see why this car will be lights out for everyone else.

First, EV adoption has grown from 1.6% in Q1, 2019 to 11.8% in Q3, 2023. There is a steep increase in adoption at Q3, 2020 to Q4, 2020 from 2.8% to 4.2%, and it's rising quickly since then, which is 7% in 3 years. From Q2, 2021 to Q2, 2023, adoption went from 4.7% to 9.1%, an increase of about 5% in 2 years. Here's a chart that shows it:

EV Adoption

Things are accelerating, but there needs to be smaller and more affordable models around the world for EV adoption to get to 100%. This is where the next generation 3 Tesla comes in. We're at an all-time high of EV adoption at around 12% right now at the end of Q3, 2023.

Tesla is doing by far the best when it comes to selling pure EVs globally. It's on track to have the best-selling car overall - not just the best-selling EV - in the Model Y.

The Model Y is the third most expensive BEV, and Tesla sold about 900,000 Model Y vehicles from January to September 2023.

The next generation vehicles are going to cost 50% of the Model 3 and Model Y, which means, I think, that Tesla is going to create TWO compact vehicles based off of the Model 3 and Model Y. They'll just be smaller and more simple versions of these vehicles.

You May Also Be Interested In: Tesla Cybertruck Will Be Equal to 10 Tesla PowerWalls - How To Use It as a Mobile Power Source.

Lights Out For Everyone Else

Tesla is going to do very well with its next generation 3 vehicles. With them costing 50% of the Model 3 and Model Y, you get a cost that looks something like this:

* Cost: $16,500
* Price: $25,000
* Profit: $8,500
* Margin: 34%

These numbers can be adjusted slightly in multiple ways, but the point is that Tesla, with their new manufacturing processes, will be able to produce this vehicle cheaply and for a higher profit than existing models. Here's what a Model 3 costs to make and sell for (the RWD version):

* Cost: $33,000
* Price: $40,000
* Profit: $7,000
* Margin: 17.50%

It's much more profitable to make the next generation 3 vehicles, and Tesla is hopefully working very hard and fast to get this ready.

How May Can Tesla Sell?

How many compact vehicles can Tesla sell? I'm not sure if there is a limit to this, but I would say they can sell 5 million or more a year easily - once all factories are ramped to volume production.

Eventually, interest rates are going to come down and next year, there is going to be a $7,500 point of sale tax credit in the U.S. This is going to make the new vehicles cost less than $18,000, which is a no-brainer to buy.

This vehicle will be the best-selling vehicle of all-time, of any kind that has ever existed. Tesla can't take 4 years to make this like it did for the Cybertruck, and I don't think it will. The Cybertruck is a MUCH more complex vehicle to manufacture, and a compact car should be as simple as possible.

For more information, see this wonderful Tweet thread from Ramy:

In Other Tesla News: Toy Tesla Model Y - Nearly a Foot Long - For Sale For $200.

What do you think about the next generation 3 of the Tesla vehicle line up? Is this going to be the end of other automakers?

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Jeremy Johnson is a Tesla investor and supporter. He first invested in Tesla in 2017 after years of following Elon Musk and admiring his work ethic and intelligence. Since then, he's become a Tesla bull, covering anything about Tesla he can find, while also dabbling in other electric vehicle companies. Jeremy covers Tesla developments at Torque News. You can follow him on Twitter or LinkedIn to stay in touch and follow his Tesla news coverage on Torque News. Image Credit, Ramy, Screenshot