Tesla Model 3 on sale 2017

Tesla's Model 3 will go on sale in mid-2017 as an all-electric rival to the BMW 3 Series, with prices starting at around £35,000

Production of the Tesla Model 3 will begin in 2017, company boss Elon Musk has revealed.

Announcing the first Tesla Model X production variants on social media, Musk added that Model 3 would "start production in about two years." He said this was because of the neccessity to have a fully-functioning Gigafactory up and running before producing the first vehicles.

The Gigafactory is currently being built with partner Panasonic, and is due to open in 2017. It's claimed the Gigafactory will revolutionise the way in which batteries are produced for electric vehicles, and bring crucial economies of scale for Tesla.

It's now been confirmed that the Model 3 will be revealed in March of next year, with Tesla planning a bespoke event away from the Geneva motor show.

Few details about the Tesla Model 3 have been revealed, but sources have indicated that performance up to 62mph could eclipse that of the BMW M3, which records a 0-62mph time of 4.1sec. Sources suggest the Model 3 will have a range of up to 300 miles on a single charge.

The Model 3 is expected to sit on bespoke underpinnings rather than a cut down version of the all-aluminium Model S platform, because it is tipped be around three-quarters of the size of the Model S and significantly lower in price. Prices will start at $35,000 (about £25,000) in the US, and export costs and taxes are likely to mean it sells for around £35,000 in the UK.

Chris Porritt, Tesla’s vice-president of engineering, previously told Autocar: “I expect there will be very little carry-over [from the Model S]. We’ve got to be cost-effective. We can’t use aluminium for all the [small car’s] components.” This suggests that the Model E will use mostly steel in its make-up although it will probably use bonding and rivets in its construction.

The Tesla Model 3 will compete in an increasingly crowded segment, taking on the likes of the Alfa Romeo Giulia, Audi A4, BMW 3-series, Jaguar XE, Lexus IS and Mercedes C-Class.

Tesla’s chief designer, Franz von Holzhausen, has previously told Autocar the Model 3 will boast more distinctive styling than the relatively conventional Model S.

“We will become more experimental as we develop as a brand,” he said. “Our cars need to have some personality.”

Tesla insiders have also revealed that the Model 3 has been engineered to accommodate a number of different bodystyles if the manufacturer decides to make them. As well as traditional estate and coupe options, company bosses have previously talked about making a Tesla pick-up.

The seven-seat Tesla Model X SUV will go on sale in the US later this year, ahead of UK sales early in 2016.

In addition, an all-new Tesla Roadster is under development for launch in 2019.