Tesla planning compact EV to beat Nissan Leaf

The boss of Tesla has revealed plans for an affordable compact electric vehicle that is set to go on sale early in the second half of the decade.

Fresh from the announcement that the company had paid back its US government loan in full, Tesla Motors founder and CEO Elon Musk said a weight had been lifted from the Silicon Valley-based manufacturer’s chest and it could now focus even more intently on future products.

“We did get criticised quite a lot for taking government funding, even though during the first several years Tesla was privately funded â€" mostly from me,” Musk told Bloomberg.

“I put my last money into Tesla in late 2008 just to keep the company alive.”

Amid suggestions that Tesla could be acquired by a larger company with bigger budgets, Musk said his current priority was to develop and build a compact EV that is better and more desirable than the Nissan Leaf.

“With the Model S, you have a compelling car that’s too expensive for most people. And you have the Leaf, which is cheap, but it’s not great,” he said.

“What the world really needs is a great, affordable electric car. I’m not going to let anything go, no matter what people offer, until I complete that mission.”

Musk said the new model, planned to launch by 2017, would offer a driving range of 320km and would be priced below US$40,000 ($41,500). The Nissan Leaf is currently available from as low as US$21,300 ($22,100) in the US after government tax savings.

The small EV is likely to be Tesla’s fourth model, following the original and now-discontinued Roadster, the Model S sedan and the Model X crossover, which launches in the US in 2014.