Tesla's economy Model 3 electric car to hit the road in 2017

Tesla's Model X will seat seven people and features gull-wing doors 

Tesla founder Elon Musk has confirmed his electric car company will launch a budget vehicle.

Mr Musk took to Twitter to announce that the Model 3 – a "smaller and lower cost sedan" – will begin production in "about two years".

The long lead time is down the company needing to complete its "gigafactory" – a giant $5bn (£3.2bn) plant to produce battery packs that is currently under construction in Nevada – according to Mr Musk.

Model 3, our smaller and lower cost sedan will start production in about 2 years. Fully operational Gigafactory needed.

— Elon Musk (@elonmusk) September 2, 2015

Mr Musk gave no further details about the new car.

Tesla's Model S saloon is priced at $70,000 in the US and almost £50,000 in the UK for the base model. Industry pundits think the Model 3 could sell for around $35,000.

The Model S - Tesla's first car

What it will look like is also unknown, although billionaire Mr Musk – who made his first fortune co-founding online transaction company Paypal – has previously said it would be "way different from any other car on the road".

The cheaper vehicle could see the popularity of Tesla cars explode, taking the marque out of the luxury sector and into the price range of far more motorists.

The entrepreneur also took to soc ial media to reveal the launch date for the long-awaited Model X sports utility vehicle (SUV), pictured left. He tweeted that the first production model would be delivered to buyers on September 29 at Tesla's factory in Fremont, California.

The billionaire said that the Model X "is $5k more than an S due to greater size & body complexity".

With same options, Model X is $5k more than an S due to greater size & body complexity. Sig Series is fully loaded, hence high price.

— Elon Musk (@elonmusk) September 2, 2015

With its distinctive gull-wing doors - called "falcon doors by Tesla" - designs for the seven-seat Model X were first displayed three years ago with production due to start in 2013. However, production was held back despite strong interest from buyers, leading to speculation that strong demand for the Model S could be causing hold-ups, or that engineering the vehicle was proving more difficult than expected.

First production cars will be handed over on Sept 29 at our Fremont factory

— Elon Musk (@elonmusk) September 2, 2015

Speaking at Tesla's results on August 6, Mr Musk called the Model X a "particularly challenging car to build, maybe the hardest car to build in the world".

He added: "But it is an amazing vehicle and I think it will blow people away. Our biggest challenges are with the second-row seat. It's an amazing seat, a sculptural work of art, but a very tricky thing to get right."

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Source: Tesla's economy Model 3 electric car to hit the road in 2017