We would not be surprised if the rumors are confirmed next year.

According to Bloomberg's unofficial sources, Tesla is considering cutting prices on Made-in-China (MIC) Model 3 in China at some point next year.

The current price, starting at around ¥355,800 (including VAT) or $50,855, might be lowered by as much as 20% or more in the second half of 2020.

That would put the Model 3 below 300,000 yuan (80% is ¥284,640 or $40,684), which would help it to reach a broader market.

We assume that Tesla at the moment has plenty of orders on hand and will make the move when the order backlog dries out.

In 2020, the Tesla Gigafactory 3 should be able to produce the Model 3 at a higher scale, using locally made components, which will allow for a lower price from a cost perspective.

A lot depends also on the Chinese automotive market, and New Energy Vehicle market in particular - today, the NEV sales are in retreat.

Local production of the Model 3 to avoid import tariffs, as well as eligibility for 24,750 yuan ($3,537) incentive per car, combined with an eventual price reduction, is a great news for Chinese customers, but rather will not make life easy for other NEVs manufacturers.

Source: Bloomberg, Reuters