Tesla confirmed in a tweet yesterday that its third model will be called, creatively, Model 3. The car will debut after the Model X SUV, and will challenge such cars as the BMW 3 Series and Mercedes-Benz C-Class.

The car was previously thought to be named Model E, but Tesla dropped that trademark earlier this year. Tesla CEO Elon Musk revealed in an interview with Auto Express that Ford sued the company because it wanted to use the Model E moniker, which is why the name was changed. Musk also revealed the humorous reason behind the original naming scheme.

"We had the model S for sedan and X for crossover SUV, then a friend asked what we were going to call the third car," Musk said to Auto Express. "So I said we had the Model S and X, we might as well have the E."

Though naming the third car Model 3 seems to foil that suggestive progression of letters, Musk explains that the name still fits. "The new model is going to be called Model 3, we'll have three bars to represent it and it'll be S III X!" Who said billionaires have to be mature?

Tesla called the Model 3 a "Gen III" car in the tweet, which hints that the car will be built on a different platform from the Model S. That jibes with what we've heard previously, that the sedan will be 20 percent smaller than the Model S and based on a platform that uses other materials besides aluminum. The move away from an all-aluminum structure was made to keep costs down. Just what will the all-electric 3 Series-fighter cost? According to Musk, around $35,000 in the U.S.

Another contributing factor to that low price will be the Model 3's batteries, which will be cheaper thanks to mass production at Tesla's upcoming Gigafactory. The plant will supply batteries for Tesla and other automakers, rumored to include Mercedes-Benz and Nissan. The location for the plant has not yet been announced, but Tesla is looking at California, Arizona, Nevada, New Mexico, and Texas as potential sites. Musk expects the Model 3 to have a realistic range of 200 miles, while still delivering performance along the lines of the Model S.

The Model 3 will debut in 2016, with an on-sale date set for 2017.

Images of Tesla Model S shown.

Source: Tesla via Twitter, Auto Express