Tesla is reportedly considering cutting the price of Model 3s built in China by 20% next year

• Tesla may cut the price of Model 3 sedans built at its Shanghai, China, factory by 20% in the second half of next year, Bloomberg reported.
• Tesla hopes that using parts made by Chinese suppliers, rather than importing them from the US and paying tariffs, will lower production costs, according to Bloomberg's report.
• The Model 3 starts at around $50,800 in China and $39,990 in the US.
• The potential price cut comes as auto sales in China, the world's biggest market for both gas-powered and electric vehicles, are declining for the first time in almost three decades - and as the Chinese government is cutting electric-vehicle subsidies.
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Tesla may cut the price of Model 3 sedans built at its Shanghai, China, factory by 20% in the second half of next year, Bloomberg reported.

Tesla hopes that using parts made by Chinese suppliers, rather than importing them from the US and paying tariffs, will lower production costs, according to Bloomberg's report. Having a factory in China will also alleviate the shipping costs required to send US-made vehicles to the country.

The Model 3 starts at around $50,800 in China and $39,990 in the US.

Tesla did not immediately respond to Business Insider's request for comment.

The potential price cut comes as auto sales in China, the world's biggest market for both gas-powered and electric vehicles, are declining for the first time in almost three decades - and as the Chinese government is cutting electric-vehicle subsidies.

In the first half of this year, passenger-vehicle sales in China declined almost 10% compared with the same period last year. And in 2018, the country experienced its first annual auto-sales decrease since 1990.

After years of explosive growth, electric-vehicle sales have declined year-over-year since July following subsidy cuts from the Chinese government. China's government plans to phase out its generous incentives for electric and plug-in hybrid vehicles entirely by the end of next year.

Tesla said in October that it had begun trial production at the Shanghai factory, which it built this year, but it has not disclosed if it has begun delivering vehicles made at the plant to customers.

Read Bloomberg's full story here.

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