Tesla Motors may build its upcoming Model 3 sedan in China to meet local demand, CEO Elon Musk says.

The company currently imports all cars sold in China from the U.S., but as it seeks to grow sales volumes, local factories for key markets could prove more attractive.

For the time being, though Tesla will continue to build cars in Fremont, California, and batteries at the soon-to-be-opened "Gigafactory" outside Reno, Nevada.

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The company will augment that arrangement based on demand for the higher-volume Model 3.

The Model 3--which will offer a range of 200 miles at a target base price of $35,000--will start production in less than two years, Musk tweeted yesterday.

A Chinese factory could come online to meet local demand as soon as a year after that, he said, adding that a European factory could be built for the same reason.

2012 Tesla Model S

2012 Tesla Model S

"These are all things I've said before," Musk noted, "and are naturally needed to improve in-market affordability, so no real news here."

Shipping costs and import duties add significantly to the cost of a Model S sold in China--a market Tesla has coveted for the past few years.

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But the company has faced difficulties there, including inadequate charging infrastructure.

Tesla will unveil the Model 3 in March, and begin taking pre-orders for the car at that time, Musk previously said.

The Model 3 is expected to launch as a sedan, but a crossover model may be added to the lineup as well.

2012 Tesla Model S

2012 Tesla Model S

Tesla has said production will start in calendar-year 2017, but some analysts predict it may slip to sometime in 2018.

The company hasn't been able to meet any of the deadlines it has set for new-car launches so far.

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By the time the Model 3 enters production, the Nevada Gigafactory should be cranking out lithium-ion battery cells at full capacity.

Tesla is relying on the economy of scale offered by such a large factory to achieve the Model 3's $35,000 base price.

[hat tip: John C. Briggs]


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