The car that truly made Tesla faces unprecedented competition.
When I set off for IAA Munich earlier this week, I started my journey in one of my least favorite places: the back seat of a Tesla Model 3.
Don’t get me wrong—I actually love driving the Model 3, and by that, I mean actually driving it, not just letting Autopilot have all the fun. But a trip to the airport in a ride-hailed Model 3 helped me remember why those rear seats have never been up for any awards.
Fixing that problem is one key highlight for the 2024 Tesla Model 3, which made its public debut at the German automotive and mobility trade show this week just days after its unveiling and the initial first-drive tests hit the internet. (If you somehow haven’t already, check out InsideEVs’ test here.)
Gallery: New Tesla Model 3 In Munich
Even a few days into the public portion of the show in Munich, the sedan once codenamed “Highland” consistently drew flocks of awe-struck civilians and employees of competing automakers alike. A Tesla rep told me they’d been overwhelmed by people from all over the world queuing up to see the car. Frankly, I’ve never seen this much hype around what’s basically a facelift for a six-year-old sedan.
Then again, this is Tesla we’re talking about— the most scrutinized yet inscrutable automaker on Earth, and the one that does the unexpected as standard operating procedure.
What was truly unexpected was that the new Model 3 was there at all. Tesla famously eschews advertising, and it also hasn’t had a presence at most auto shows in several years. Seeing Teslas at an event like this, with an actual communications team and marketing folks walking around and talking to people in white Tesla-branded button-down shirts, was a bizarre sight to behold. The last time I saw Tesla like this in America was sometime in the middle of the last decade; it has since dissolved its communications operation and most outreach events other automakers go big for, but it’s certainly done just fine selling cars without going to these things.
But times change. Maybe Elon Musk, who’s desperately trying to woo advertisers back to the social media platform formerly known as X, is embracing the power of public awareness. And there are now more EVs than ever on the market, nearly all of them running some version of the Tesla playbook. I suspect the real reason Tesla went to IAA might’ve had something to do with this:
For a German auto show, the real headline-makers came from China this time.
IAA’s home teams like BMW, Volkswagen and Mercedes-Benz are still figuring out how to profitably build EVs at mass volume, while China’s electric automakers are basically kicking Europe’s door down and letting all their friends into the show without paying the cover.
BYD had a sprawling, extravagant display at IAA, dwarfing Tesla’s tiny two-car setup. The Chinese powerhouse showed off six new-to-Germany EVs at the show, including one all-new debut, the Seal U crossover. I got to sit in one of some of BYD’s cars for the first time here, and while I’ll save any final judgments for the day when I get a test drive, I was impressed by their designs, tech, and vaguely supercar-like interiors. I’ve been covering this industry long enough to remember when we’d joke about the Chinese cars that made it to Western auto shows. Nobody’s going to be laughing at what BYD is selling now.
And BYD was just one such automaker at the Munich Trade Fair Center. Brands like Zeekr, HiPhi, and Xpeng made big splashes here, some getting tons of European attention for the first time ever. In fact, some of those cars were even designed by poached Europeans, a sign of any serious new player in the car market. No wonder the European automakers are getting nervous. They’re worried they won’t be able to compete on price and will get their lunches eaten by more advanced Chinese EVs, built at scale, and at lower costs than they can achieve right now. IAA Munich was an EV show, but it was especially a Chinese EV show, probably much to the chagrin of BMW and the rest.
Make no mistake: this is a problem for Tesla, too. Just probably not in the U.S., and not for a while, anyway. Its sales here remain incredibly strong, and while its share of the EV market has declined this year, it’s still far and away America’s electric leader. Even if the Model 3 and Model Y have been around a few years (more than a few, in the Model 3’s case) the rapid-fire price cuts have ensured they’re still fresh and novel for American consumers.
Many of those people are going the Tesla route for their first-ever EV purchase. Considering how good Tesla’s Supercharger network is and how consistently bad the other networks are, can you blame them? That may even out someday as more automakers go to Tesla’s charging standard, but the full effects of that are years off. Tesla’s largely fine in America, and you could say that even without the Cybertruck coming out soon.
But it’s a different story in China, where the car market may be slowing down but is far from out of gas. (Or electrons, in this case.) China is where Tesla got the long-sought stability and consistent yearly profits it had always longed for, but now, the local EV market—one that Tesla helped kick into high gear—may be surpassing it. Chinese car buyers want the latest, greatest thing, and Tesla, for all it’s good at, is still not very good at launching new automotive products. Software, charging, and battery production, sure; but its lineup is getting pretty long in the tooth.
The Chinese automakers, on the other hand, can roll out new models and new features at breakneck a pace that has the rest of the industry terrified. They cost less than Teslas do, too, both in China and in Europe. Musk’s company can certainly survive losing market share in China, particularly as its factory produces models for export, but it’ll sting. Meanwhile, Chinese EVs are kept out of the U.S. by steep tariffs—for now.
Consider Europe to be that middle ground, and not just geographically. Tesla’s still the best-selling EV brand in Europe, but with the rate Chinese cars are coming to market, that could shift fast. It needed updates to its key, volume-selling products to stay fresh and relevant in every market, including this one.
So does the upgraded Model 3 pull that off? As with BYD, I’ll withhold judgment until I drive one. But I can say this: the rear seat is a lot more comfortable. It has features that industry analysts have told me Chinese buyers covet in particular, like that rear touch screen and ambient cabin lighting. I still think options from BMW and Mercedes surpass it in overall luxury, but these cosmetic, tech, and comfort upgrades are quite welcome. It’s a nicer, better car than it was before and that’s obvious even from briefly sitting inside.
I suspect I’d get used to the push-button turn signals quickly, as I often do when Tesla adds features that are against the grain. I’m far less convinced about the touchscreen-based gear selector that’s been added in place of that stalk off the steering column. But both of those are features from the Model S and Model X that are making their way into vastly more mainstream cars. In fact, that’s probably the best way to describe the new Model 3—it feels like a baby Model S, more than ever. The range improvements only further drive that point home.
The upgraded Model 3 will go on sale in China and mainland Europe soon; Tesla hasn’t said when it’ll come to the U.S., but I expect it’s not far off. Nor is the “Juniper” Model Y with presumably similar upgrades. In America, at least, I suspect they’ll both be hits and keep the Tesla juice going for a while (along with our generous tax credits.) On a longer timeline, Tesla’s got to up its new-car game, and I don’t mean with stainless steel trucks, either. The Chinese EVs aren’t messing around.
But even with all the hype around those cars, and the considerable real estate around Munich devoted to things like BMW’s Neue Klasse and Mercedes’ Concept CLA Class, the updated Model 3—just the one car on display, too—was still what everyone was lining up in droves to see. To me, that spoke volumes. Even if the EV fight is more intense than ever, don’t count Tesla out yet.
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Keyword: I Sat In The New Highland Tesla Model 3: It’s Better, But Is It Enough?