Happy Birthday to Tesla’s Model 3. It’s hard to believe that five years ago, just 30 Model 3’s had rolled off the assembly line and been delivered. Now Tesla’s answer to a more affordable vehicle is the best-selling electric vehicle in the world, has been named car of the year, is considered one of the safest vehicles on the planet and has a long waiting list of eager buyers.
It’s a birthday, so we should reminisce about the early days. While this iconic car first appeared on the road in 2017, it was on Elon Musk’s to-do list for over a decade.
Elon Musk talks to Wired Science about the Model 3 in 2006
Years later, as it became more of a reality, the car was given the code name BlueStar. It was to be named the Model E, but Ford had already trademarked the wording. Then Musk turned the E into a 3, but he didn’t want the number; he envisioned 3 lines, similar to the current E in Tesla. But Adidas quashed that, arguing it was too close to that brand’s three stripes. So that’s how the 3 was named.
@awadsayeed Yes. Technically Model 3 or maybe three horizontal bars. Won't be three vertical bars.
The Model 3 was supposed to be the smaller, stripped-down version of the Model S to invite more buyers into Tesla and EVs. However, this more affordable, entry-level Tesla holds its own against luxury sedans and even its big sister, the Model S. Tesla has been rolling out several updates throughout the Model 3’s existence, allowing the vehicles to keep up and even pass the Joneses.
In 2019 the Model 3 received a significant software boost when the beta versions of Navigate on Autopilot and Smart Summon were added. Voice commands, a voice keyboard and new language supports were also implemented along with the popular Camp Mode. Once owners posted photos and videos of comfortable beds in the Model 3 with the backseat down, Tesla had to add climate control and a camp fire to complete the experience.
Tesla introduced Dog Mode in Teslas in 2019. In fact, the manufacturer used a Model 3 to unveil the feature to the world. With the help of a sleepy Husky and an excited German Shepherd, Dog Mode was demonstrated to the world on all of Tesla’s social media channels. This made Tesla a must-have for any dog lover!
Also included with the Model 3 in late 2019 and early 2020 was Sentry Mode. This all-encompassing security system records and notifies the owner if anything is happening around or to the Tesla. It’s arguably the most advanced stock vehicle alarm system on the market.
In 2020 the Tesla Toybox was overhauled and updated in all Model 3s. Emissions, sketchpad and many more favorites were revised and made even more fun. But it wasn’t just the games that have been updated; although plenty of games were added over time, Tesla improved it’s maps and dashcam. Later in the year, the Beta version of Full Self Driving was added to all Teslas, including the Model 3. While FSD is still a work in progress, for the system to be available in even the entry-level Model 3 was a big attraction.
A crowd pleaser is the Boombox. This was another addition in 2020 to all models. With the car in park, the boombox blasts music or sound effects through an external speaker. You can even add your own sounds through a USB drive. Perhaps the Boombox should be used by all Model 3 owners to wish their Tesla a happy 5th Birthday!
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In this article, we’ll cover Tesla’s updates on Optimus, batteries, and Tesla Energy.
Optimus
Tesla has been working away on their humanoid robot and continues to make progress in software and hardware.
First, Tesla is preparing the Fremont factory for the Optimus pilot production line, which is scheduled for completion later this year. Once it is, wider deployments of Optimus for internal use within Tesla’s facilities are expected as well. Tesla aims to have several thousand Optimus units working in its North American factories by the end of the year once the pilot production line is operational.
Tesla’s goals for production remain extremely lofty - 1 million units per year by 2030. However, they could face some challenges when ramping production.
Key components like the shoulder actuators use specialized permanent and rare-earth magnets, which are currently sourced from China. Due to recent Chinese restrictions on the overseas sale of these magnets, Tesla is seeking an exemption or alternative suppliers. They have not yet looked into modifying the shoulder actuator but will likely do so if they cannot obtain the necessary materials.
Batteries
Batteries are another item that Tesla’s teams have been working on behind the scenes for years now. The second generation of the 4680 - the Cybercell - has been IRA-compliant for some time now. This means that the Cybertruck is eligible for the US Federal EV rebate.
Tesla also achieved the lowest cost-per-kWh of any of its cells with the 4680 battery - and it is potentially one of the cheapest cells being manufactured by any vehicle battery manufacturer at this point. With dry-cathode still being worked on, Tesla may be able to squeeze more optimizations and cost efficiencies from the 4680 cells.
Additionally, Tesla is progressing with its plans for lithium refining and cathode production in the US, both of which are scheduled to commence in 2025. While the company says they’re no longer supply-constrained for non-LFP vehicle batteries, on-shoring production and sourcing critical minerals from nations outside of China will be key.
LFP batteries continue to be supply-constrained, namely for the Tesla Energy division. LFP batteries and their materials are sourced from China. Due to tariffs and limited exports, Tesla can’t obtain enough and is considering potentially building an LFP production facility in North America.
Energy
Tesla’s energy division is still experiencing some of the highest growth of any of its divisions. Year over year, Tesla saw a 154% increase in energy storage deployments, including both Megapack and Powerwall - for a total of 10.4 GWh deployed in just Q1 2025. While deliveries in energy storage remain volatile due to the nature of Megapack installations, Tesla expects growth to continue rapidly in this segment.
Tesla also deployed 1GWh of Powerwall 3 residential storage this quarter, marking its strongest quarter. Powerwall 3 has received positive feedback from customers, many of whom appreciate its new capabilities with its built-in inverter for solar.
Megapack is continuing to see demand increases, currently highlighted by utility-scale Megapack systems, as well as data centers requiring stable power delivery. Megafactory Shanghai is also online now and producing Megapacks - with an annual production capacity of 20GWh today and up to 40GWh in the future. The site has also produced over 100 Megapacks this quarter, which are all awaiting delivery.
There was a lot of interesting news from Tesla’s Q1 2025 Earnings Call, covering everything from FSD and Robotaxi - to the less glamorous but equally important Megapack and Powerwall.
Tesla is heavily leaning into artificial intelligence, and its insurance offering is just another example of how it’s improving its product or lowering costs by leveraging AI.
Tesla recently started offering an insurance discount in select states when drivers use FSD for at least 50% of their drives and now it’s introducing an AI to help handle customer claims.
Tesla has developed an in-house voiced AI agent that can assist customers in handling simple support requests for Tesla Insurance.
For customers calling in from those states, the new AI agent provides a unique way to address the most common support calls. And it’s not just answering common questions but actually making requested changes to the owner’s account.
Policy Changes
The first key item is that it automates policy changes. Simple policy updates, including adjusting your deductible or coverage limits, are now done via AI. For policyholders who are simply looking to make quick changes and don’t have any questions, this makes the process a lot quicker by not having to wait for a representative. Tesla isn’t eliminating representatives, but this could reduce the number of representatives required or reduce wait times.
Continue Where You Left Off
The second item here, highlighted by Raj Jegannathan from Tesla’s internal IT team, is that Tesla’s AI agent is able to offer summaries of the user’s last interaction with Tesla Insurance. It will summarize your last interaction and provide assistance on that particular topic if you need to continue it. That means that you don’t have to wait for a human to review your file - the AI will kick off right where you left off.
Tesla appears to be focused on improving efficiency and making support more accessible. While actual items like claims are left up to humans due to their inherently complex nature, this helps free up employees to handle more complex items. While there’s no doubt Tesla will continue to develop this AI like they do everything else, we may soon see it take on even more tasks.
More AI
This isn’t the first AI agent that Tesla has demoed - there is now a chat-based AI sales agent available on the front page of Tesla’s website, which is able to answer common questions on Tesla vehicles.
Tesla has also been improving their AI support tool available in the Tesla App is able to provide feedback on common issues and also guide users towards either solving the problem or placing a support request.
Tesla’s strategy here is to influence the cost-heavy areas associated with having humans address simple requests and instead leverage AI, which can offer instant answers and reduce support costs.
Roll Out to More States
While this new AI is currently limited to just 12 states, it is likely to follow Tesla Insurance’s expansion. Insurance seems to have been at a bit of a standstill lately. Tesla continues to improve features such as the improvements to Safety Score V2.2, but we haven’t seen Tesla roll out support to new states since it added Minnesota in November of 2022.
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