The infrastructure&#x2F;economies of scale to make that profitable don&#x27;t exist yet, but Tesla is working at setting them up. Elon Musk: &quot;Model 3, our smaller and lower cost sedan will start production in about 2 years. Fully operational Gigafactory needed.&quot;<p><a href="http:&#x2F;&#x2F;www.techinsider.io&#x2F;we-now-know-when-teslas-cheaper-model-3will-be-available-2015-9" rel="nofollow">http:&#x2F;&#x2F;www.techinsider.io&#x2F;we-now-know-when-teslas-cheaper-mo...</a><p>Two things are at play:<p>1. Tesla doesn&#x27;t really give a crap about owning the entire market. If their competition causes the big 3 to build low cost zero-emissions vehicles, then Tesla has fulfilled their part of Elon&#x27;s goals towards saving the world. Basically, putting a stake in the heart of the internal combustion engine and putting automotive economies of scale behind battery and energy storage development.<p>2. Cheap cars have awful margins, only worth playing in at scale. SUVs on the other hand are hideously profitable. The sport SUV has been the savior of BMW and Mercedes over the past decade, with high margins versus their cars. Porsche got in on this and built an SUV, now Lamborghini is too, margins are just too good to ignore.<p>Tesla&#x27;s pursued an Intel-like tick-tock strategy, where they shoot at the high end to make money and get performance knowledge (Roadster, Model X) and with the cash reserves take their next model downmarket (Model S, Model 3).