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A cut-price Tesla is coming! Elon Musk confirms $35,000 Model 2 could be here as soon as 2023 to take on cars like the Toyota Corolla Hybrid

A more affordable Tesla is coming soon.

Tesla boss Elon Musk has confirmed his intention to produce a cheaper electric vehicle, saying a $US25,000 EV is coming around 2023.

That marks a significant decrease in the cost of Tesla ownership, with a straight currency conversion equaling $34,401. dollars in our market - or Australia's cheapest electric cars.

"We are confident that long-term we can design and manufacturer a $25,000 electric vehicle that will be compelling," Musk said at his Battery Day event.

"This has always been the dream since the beginning of the company. Our first car was an expensive sports car, then a slightly less expensive sedan, and then finally a mass-market premium vehicle.

"But it was always our goal to make an affordable electric car. And we're confident that in around three years from, now we'll be able to make a very compelling US$25,000 electric car that's also fully autonomous."

The new of a Tesla Model 2 will be welcome to buyers who can't stretch to the $73,900 starting of for the Tesla Model 3.

Musk has previously said the new model would likely be designed and built in Germany - that would take the shape of a "European-style hatchback" to battle cars like the Toyota Corolla Hybrid.