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Tesla will build smaller, cheaper sedan

Tesla is set to become more affordable with the introduction of an electric 3 Series rival.

Tesla CEO Elon Musk has offered up a few details about the next generation of the electric start-up's vehicles -- including a smaller and cheaper entry-level sedan.
At its annual shareholder meeting yesterday, Musk revealed a few more tidbits of the company's future product plan.

Joining its current Model S all-electric luxury sport sedan late next year will be the Model X crossover utility vehicle, with its top-lifting "falcon doors" and available all-wheel drive.

But it's the new base model sedan that will be a driving aim for Musk, he said.

"What the world really needs is a great, affordable electric car," Musk told Bloomberg. "I’m not going to let anything go, no matter what people offer, until I complete that mission.”

To that end, Tesla's third-generation car (known as Blue Star), will smaller -- about the size of a BMW 3-Series -- and about half the price of the Model S, which starts at US$69,900 in the US, but will be much more than that when it arrives here either late this year or early in 2014.

Tesla recently axed the base level Model S, which had offered the chance of Australians getting it under the luxury car tax level. Tesla had previously said it would start the Model S range below the luxury car tax level, which would have meant the base variant coming in under $77,000. That leaves us with the prospect of the two higher variants of Model S -- 60kWh and 85kWh -- which will cost much more.

And while just how much more has not yet been revealed, it's likely we'll see the 85kWh one at around $150,000. Tesla had claimed a range of 257 km for the 40kWh Model S, along with a 0-100km/h time of 6.5 seconds and a top speed of 177km/h. A 173 kilowatts motor generating 420 Newton metres of torque was specified, with production to begin this year.

So the prospect of a smaller sedan puts a more affordable Tesla back on the table. The styling of the smaller sedan will bear a family resemblance to the Model S, Musk said.

He said the new sedan would have a range of more than 330km, for a price cited as US$30,000 or less than US$40,000 in its home market -- which may reflect the effect of the $7,500 government tax credit buyers there will receive.

The new, smaller Tesla will continue to use lithium-ion cells from Panasonic, one of several companies that has a minority stake in Tesla Motors. But they'll be of a new and more advanced chemistry designed specifically for use in electric cars.