In a 2006 interview with Wired Science, Elon Musk presented the Model 3 as likely being affordable by most people able to purchase new cars, aiming for a $30,000 price point.

[44][42] Current owners of Tesla vehicles got priority sales after employees but before the general public, as a reward for helping pay for the development of the Model 3.

[56] Other changes included the addition of a heat pump with an "octovalve" to improve climate control, a power-operated trunk, a redesigned center console with Qi wireless charging pads, and quieter double-pane glass.

[60] Tesla announced a design refresh of the Model 3 on September 1, 2023, bringing a longer driving range, lower production costs, technical improvements, and a restyled exterior and interior.

[66] The touchscreen for rear seat passengers and the steering wheel without stalks are changes that were previously implemented on the Model S and X during their "Palladium" refresh.

[67] The upgrade had shock-absorbing technology called Frequency Selective Damping, which uses a hydraulic amplifier to concentrate vibration in the 4–6 Hz range.

[68][69] The update came equipped with HW4 camera and processing technology, which permitted a wider field of view and improved Autopilot's cross-traffic emergency braking.

[70] In 2013, design chief Franz von Holzhausen called the Model 3, "an Audi A4, BMW 3 Series, Mercedes-Benz C-Class type of vehicle that will offer everything: range, affordability, and performance" that is targeted toward the mass market.

[80][81] Critics praised the screen's interface, but pointed out that the decision requires drivers navigate menus to accomplish what could otherwise be controlled by a button or knob.

[82] In a 2013 interview, Jerome Guillen discussed "BlueStar" (codename for the Model 3 project), stating that Tesla was expecting to eventually produce 400,000 cars per year.

[89] After the two Alpha prototypes were shown (silver and black; red was a shell) in April 2016, Tesla finished the design in late July 2016.

[90][91] Tesla began building Model 3 prototypes in early February 2017 as part of the testing of the vehicle design and manufacturing processes.

[93] Again in February 2017, Tesla said that vehicle development, supply chain and manufacturing are on track to support volume deliveries of the Model 3 in the second half of 2017.

[113][20] An analyst with Cowan and Company, an investment banking firm, said in November 2017 that "Elon Musk needs to stop over-promising and under-delivering".

[117] During the first half of 2018, the Model 3 was the top-selling alternative fuel vehicle in California with 12,674 units, followed by the Toyota Prius conventional hybrid (10,043).

[125] In 2018, Elon Musk predicted that eventual global demand would likely be between 500,000 and 1 million Model 3 cars per year— ranking in between the BMW 3 Series and the Volkswagen Golf.

[141] The Model 3 also was the top selling plug-in car in Canada, Spain, Belgium, Denmark, Switzerland, Australia, New Zealand, Taiwan and Mexico.

These figures also made the Model 3 the second bestseller in the UK new car market in 2021, only beaten by the Vauxhall Corsa, a cheaper B-segment vehicle.

Consumer Reports, impressed with the prompt OTA update, verified the improved braking performance and changed their rating to a recommended model.

[160] In November 2019 Consumer Reports reinstated the Model 3 recommendation, claiming it was the fifth-most reliable of twelve compact luxury cars.

[161] During long-term testing of a Model 3 in December 2019, Car and Driver experienced a rear inverter short after 5,286 miles (8,507 km) and 3 months of ownership.

As an IPM motor, it produces excellent starting torque; however, performance declines at high speeds due to counter-electromotive forces.

For high-speed operation, Tesla engineers used iron’s reluctance property, which allows it to spin in synchronization with the magnetic field of the stator if channels are cut into the core.

[175] For vehicles built at the Tesla Fremont Factory, the company sources 2170-type batteries with a nickel-cobalt-aluminum cathode chemistry from Panasonic's production line at Gigafactory Nevada.

[175] For vehicles made at Gigafactory Shanghai, batteries with a nickel-cobalt-manganese cathode chemistry are sourced from LG Energy Solution's factories in China.

[175] As lower-cost models were introduced, Tesla started using prismatic (rectangular) cells with a lithium iron phosphate (LFP) chemistry in vehicles produced in both factories.

The Long Range version carries 4,416 cells arranged in 96 groups of 46, and weighs[178] 1,060 pounds (480 kg) in a 0.40 m³ volume; a density of 150 Wh/kg (540 kJ/kg).

[183] The inverter for the Model 3 drive unit uses 24 pairs of silicon carbide (SiC) MOSFET chips rated for 650 volts[clarification needed] each.

[194] Sometime during August 2020, Tesla added heating hardware to the Model 3's charge port which was enabled by software update later in the year to prevent ice buildup.

[197] The changes included a revised suspension emphasizing ride comfort, additional noise reduction, lack of stalks on the steering column, ventilated front seats, a small rear screen, slightly improved aerodynamics, and new headlights, taillights, and wheels.