No, I think they changed the strategy somewhat.
Who has the best margins in the automotive industry? Porsche. In fact, it's almost always been Porsche since their recovery from the mid-90s. Porsche's margins are so good, investors are complaining that the high-volume Macan is dragging down margins to a "terrible" 16% from their typical 19-20% -- which (the 19-20%) is double what Audi's (#2 for industry margins) margins are. To put this in perspective, Porsche brings in as much profit (in Euros) as the Volkswagen brand, despite selling 2% as many cars.
Porsche commands their premium by finding a niche and trying to be the most desirable in it. They have competitors, but they offer a package people are simply willing to pay a lot more for. There were never a lot of competitors to Porsche's sports cars in their price range -- Corvette aside, Porsche still commands a huge chunk of the traditional $50-150K sports car market, and has a very devoted fanbase. They also carved out a significant chunk of the high-end SUV market.
What competes with the Model S and Model X? Nothing from a powertrain perspective. Add in clever packaging and other features that are largely exclusive and they've created a niche for themselves.
The Model 3 is Tesla's Cayenne/Macan. The volume play to ensure their top-end electric vehicles can continue to command their prices, and to provide cash for general operations. Being the mass market player is admirable, but if someone (or several companies) outplay or match you, you could be in for a rough ride. To me, Tesla made the smart play by focusing on higher-margin vehicles.