Previously, the starting price for Model 3 sedans made in Tesla’s Shanghai factory with a standard driving range was 271,550 yuan, after state purchase subsidies.

Sources told Reuters that the standard range Model 3 sedans would now come with lithium iron phosphate (LFP) batteries which are cheaper than the nickel-cobalt-manganese (NMC) cells it used previously.

Tesla did not disclose what batteries the cheaper version uses.

The price for Model 3 vehicles with a longer range is now 309,900 yuan, down from 344,050 yuan.

Tesla started to deliver cars from the Shanghai factory in December, helping it save on shipping costs and tariffs for imported models.

Tesla sold more than 11,000 vehicles, mostly Model 3s, in August in China, the world’s biggest car market.

It is also building new car manufacturing capacity for Model Y sports-utility vehicles in Shanghai and expects to start delivering them from next year.