Musk said at China's Tsinghua University that the company will work with a China-based manufacturer to produce the lower-priced sedan within the country, according to reports in both Teslarati and Reuters. No details were provided as to what that production partner might be, but building within China could cut the price of the Model 3 by 30 percent relative to having China-bound Model 3s made in the US. That's because local production would allow Tesla to avoid heavy import taxes while making customers' registration process more streamlined. Meanwhile, the Chinese government is looking to have an infrastructure within a few years that will be able to charge as many as five million electric cars daily.
Tesla is hoping to start Model 3 production in China in 2017. The car will be about 20-percent smaller than a Tesla Model S, and while no details have been released about pricing, the car will be substantially cheaper than the Model S or newer Model X SUV.
Through September, about 3,000 Model S vehicles had been sold in China. During the same period, Tesla sold about 18,000 units worldwide. The company is looking to produce the first batteries from its Nevada Gigafactory by sometime next year and be at full capacity at the $5 billion plant within three years.