Tesla is riding high off the success of Model 3 launch and reservations, but there's more to come after the launch of the $35,000 electric car: smaller and more affordable Tesla cars. Tesla CEO Elon Musk, speaking in Norway, said that after the Model 3, the next generation of Tesla vehicles will include smaller and more affordable vehicles:

I'm super excited about being able to produce a car that most people can afford. And there will be future cars that are even more affordable down the road, but, with something like the Model 3, it's designed such that roughly half the people will be able to afford the car. Then, with fourth generation and smaller cars, we'll ultimately be in the position where everyone will be able to afford the car.

Tesla Model 3 A prototype Tesla Model 3 at the Gigafactory. Credit: Motor Trend.

Musk has been clear from the start that the goal of Tesla was to create affordable electric cars, but admitting the challenges of the market and that raising capital and awareness required the production of low-volume, high-price cars like the Model S and Model X first.

The Model 3, due to start production at the the end of 2017, is the most affordable vehicle Tesla has unveiled to date, but it's still out-of-reach for the budget of roughly half the car-buying market (not to mention something of a budgetary stretch for a good portion of the market that could conceivably afford it), There's a reason that the Toyota Camry and Corolla are the best-selling cars in the United States — they're good cars and are priced at, respectively, roughly 2/3 and 1/2 the price of the Model 3.

Tesla does have a huge challenge to come in scaling to produce the Model 3. With nearly 400,000 reservations already placed, Tesla as a company has produced right around 100,000 vehicles to date. The Gigafactory 1 battery manufacturing facility under construction in Nevada will go a long way towards fulfilling Tesla's expansion needs, but even it too won't be enough should Tesla's goal of a truly affordable EV come to light.