In response to recent media reports that Tesla's Shanghai Gigafactory will produce a third electric model with a price tag expected to be around 160,000 yuan ($24,756), the US EV maker told Yicai.com that this is fake news.

PCauto previously cited channel sources as saying that Tesla will produce a third model at its Shanghai plant, which will be positioned below the Model 3 and may be priced at around 160,000 yuan.

The report said this new model from Tesla has been advanced as a separate project in September 2020 and is expected to complete product validation in March this year.

The new car is likely to be positioned as a compact two-seater sedan with a body chassis based on the Model 3, while the guidance price will be kept between RMB 150,000 - RMB 200,000, the report said.

Yicai.com cited analysts as saying that Tesla is expected to capture the largest segment of the consumer population in China by targeting the mid-range car market in the RMB 200,000 yuan to 300,000 yuan range.

Mid-range models in the RMB 200,000 to RMB 300,000 range are the most popular among Chinese consumers in Tier 1, 2 and 3 cities," said Liu Xiangping, a global partner at Bain & Company and an expert in the automotive manufacturing industry. But regarding how much room there is for price reduction for electric cars, it is important to know that prices are determined by costs and cannot be reduced indefinitely, Liu added.

Liu believes that the reason why Tesla is able to reduce the price of electric cars produced in China to a level that is more acceptable to consumers is because on the one hand it has certain advantages in terms of cost and control; on the other hand it is also a balance reached after the price is constantly tested.

"Tesla is also constantly finding a balance between cost, profitability and pricing, and it is exploring step by step to try to hit the market with the most appropriate price." Liu said, "Of course now can not be fully verified whether this pricing strategy is successful, in addition to the price, quality and production can keep up also need to withstand the test of time."