"Possibly in Europe it would make sense to do, I guess, a compact car, perhaps a hatchback or something like that," Musk told a European online conference on batteries hosted by the German government.
"In the U.S., the cars tend to be bigger for personal taste reasons," he said. "In Europe, (they) tend to be smaller."
Musk said he had had some problems parking his five-meter long Tesla Model X car in German capital Berlin.
"I was driving a Model X around Berlin and we had quite a bit of trouble finding a parking space where we could fit," he said.
All its vehicles are several tens of centimeters longer than Volkswagen's Golf car, the European reference in compact sedans.
On a global level, Tesla is also due to market its new "Cybertruck" pickup within two years.
(Reporting by Leigh Thomas and Gilles Guillaume; Writing by Matthieu Protard; Editing by Jan Harvey)