Tesla is reportedly planning a hatchback version of the Model 3, a concept that makes sense, especially given the likely runaway success of the incoming Volkswagen electric ID.3 hatch.

Tesla founder Elon Musk recently stated that he needs Teslas to be more affordable. He has reportedly been unhappy that the Model 3, whilst a hit, is too expensive.

A lower cost hatchback model, based on the Model 3 just like the Model Y is, could be pushed on to the global market relatively quickly if it was built at Tesla’s upcoming plant in Germany and its existing plants.

However, the key will be getting a hatchback to the market cheaply and quickly, as competition will soon hot very quickly in the compact sector with all luxury brands having smaller models under development.

Tesla has an edge on its electric only brand reputation and its technology features, well ahead of competitors. But the gap could close quickly when customers have more choice.