Development of an affordable Tesla electric car will take place in China, the head of the company's Chinese operations confirmed in an interview with state media.
An entry-level Tesla will be designed at a new R&D center currently under construction in Shanghai, Tesla China president Tom Zhu said in the interview with Xinhua Net, one of China's top news agencies—via the YouTube channel T-Study and a sponsored post on InsideEVs.
Note that the interview was conducted in Chinese, with English closed captions added by YouTube. As English speakers, we can't vouch for the accuracy of the translation.
We do know that Tesla aims to make 450,000 vehicles annually at its Shanghai factory beginning in 2021, and that the new R&D center—the first one outside the United States—will handle all aspects of design, vehicle development, and testing.
The ultimate goal: to design, develop, and produce a vehicle that’s manufactured in China and sold to the rest of the world, possibly with 100% Chinese components. Tesla started exporting cars from China to Europe last year, and also recently to Hong Kong and other Asia-Pacific markets.
Tesla CEO Elon Musk first discussed am affordable Tesla—slotting below the Model 3 in size and price—at the company's Battery Day event last year. At the time, he said this new model would have a $25,000 base price, and arrive in 2023.
Tesla starts delivery of Chinese-made Model 3 sedans on December 30, 2019
It's highly likely that such a model will have a lithium iron phosphate (LFP) battery pack, under a strategy already employed for some Shanghai-built Model 3 sedans that saves the most energy-dense cells for the Semi and Cybertruck. Tesla's ramp-up of its own battery cells over the next year will help in that, too.
However, Tesla has struggled even with introducing a more-affordable version of the Model 3 in the U.S. It's long teased the idea of a base $35,000 Model 3, adding it to the menu and retracting it, in several forms.