Tesla compact hatch to rival Volkswagen ID

However, Tesla and Panasonic are expected to reach €100 per kWh by 2020. The upshot is that a Volkswagen Golf-sized Tesla launched at the tail end of 2022 could have a €70-per-kWh battery, allowing the production of a 60kWh pack that costs just €4200 (approximately £3700).

If these medium-term projections prove to be accurate, then Musk has good reason to be optimistic about Tesla being able to offer a significant price advantage over mass makers within his five-year time frame. But before Tesla can make a potentially genuinely affordable EV, the company needs to finally nail down the Model 3 production process and prosper.

The struggle of the Fremont factory to consistently reach the initial ‘take-off’ speed of 5000 Model 3s every week by June 2018 rattled some investors.

However, building the new compact Tesla at a brand-new Chinese facility makes sense because this is where an affordable EV would have most market traction.

Indeed, China is already the largest market for EVs, steered strongly by national and local government and the need to address pollution in Chinese cities.

As Autocar revealed (23 May), Tesla registered a new company in Shanghai called Tesla (Shanghai) Co Ltd in May. This new factory is likely to be less of an experiment than the highly robotised Model 3 line in California and its construction and organisation will be greatly aided by China’s now world-class automotive manufacturing capabilities.

Funding this plant will be a serious challenge but building a factory in China is likely to be a quicker and less complex process than building one in the US or western Europe.

Another potential technical advantage Tesla has over its mass-market competition is the company’s new ‘flex circuit’ technology. Expected first in the Model Y crossover, flex circuits are extremely thin conductive elements sandwiched between very thin flexible plastic mouldings.

As Autocar has reported, the Model Y’s new flex circuits could use a wiring loom length of just 100 metres. This is in marked contrast to the current Model X, which has around 3km of wiring. Even the Model 3 has 1.5km of wiring.

Applying this technology to the compact Tesla would give the model another significant factory cost advantage when it arrives in 2022.

How Tesla will expand its line-up:

Alongside Tesla’s existing cars, the Model S, Model X and Model 3, the following will arrive in the next four years, according to Musk’s plans.

TRACTOR UNIT - 2019

Pre-orders for the lorry are already open. It is claimed to have a 600-mile range and costs $180,000 (about £136k).

MODEL Y - 2020

Based on the underpinnings of the Model 3, the Model Y will be a smaller SUV sibling for the Model X.

PICK-UP - 2020

Tapping into Tesla’s home market, the pick-up is expected to rival the Ford F150 and be based on the Model X.

ROADSTER - 2020

The sports car will become Tesla’s halo car. Musk reckons it will be capable of 0-60mph in just 1.9sec.

COMPACT CAR - 2022

VW ID rival will be Tesla’s most affordable car yet, especially if Tesla can keep its battery-cost advantages.