As the Tesla Model S sedan rockets in popularity and sales, and as the electric automaker begins to turn a profit, Elon Musk just announced that the next Tesla production model will go on sale “hopefully” in 2016, but no later than 2017. Speaking to Engadget, Musk suggested that the car would be “slightly smaller” than the Model S and could retail for around half the price—the electric sedan currently starts at $70,000.

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There’s little doubt that a cheaper, more accessible EV could be a huge step for Tesla. However, as Engadget notes, the cheaper 40 kWh Model S was withdrawn from the market earlier this year after making up a paltry four percent of Model S sales, and was in Musk’s words “slightly sluggish.” The challenge with the “third-gen” Tesla—which will be their fourth car, if one includes the Roadster—will be to make a car that not only meets the reputation and standards that Tesla has established (and aggressively defended), while massively reducing the cost. Or, as Musk phrases it “[t]he trick is: how to build a compelling affordable car. It doesn’t help to have a car that’s cheap, but that sucks.”

Engadget suggests that in order to accomplish this, Tesla will need to cut the cost of the battery pack and the electric drivetrain by 50 percent, “just to have a chance.” While Musk believes that the combination of the as-yet-unnamed new model’s smaller size will help, as well as banking on economies of scale.

+ Tesla

Via Engadget, Autogreen Blog