To really take off in Europe, they need a smaller vehicle. Something the size of a BMW 1-series. Streets here are very narrow.
BMW 1: 173” x 69”
Model 3: 184” x 72.8”
The BMW 1 series and of course the best-selling VW Golf are both quite a bit smaller than a Model 3, still set up to 5 and also driven at high speeds exceeding 200kp/h over here. So there would be some market for a more compact Tesla.
But I think Tesla has currently enough on their plate and enough upcoming models, going into smaller (and cheaper) models will make sense only when they have perfectioned their manufacturing chain as the margins will be smaller.
I was going over the sizes of the S and 3 with my Dad in Australia, and it turns out the 3 is the same size as the most recent Ford Falcon, one of the biggest Sedans in Australia!
The 3 is NOT small in every country in the world except America.
Note that interior cabin cubic feet and total storage cubic feet will tend to be significantly higher in an EV for the same exterior footprint.