Model 3 is not tiny, but it’s IMO as small as you would ever want a car that travels highway speeds for safety reasons. I doubt Tesla will ever make a tiny 2-seater but I guess if the market is there they will follow it!
Size is somewhat overrated with respect of safety. If you crash at high speeds, the safety of the car will little help you, unless you get the impact speed down to below 60kp/h.
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.
It's amazing how different parts of the world see that.
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.