Tesla on Thursday cut the starting price of its Chinese-made Model 3 sedans by about 8% to CNY249,900 yuan (US$36,805), once Chinese subsidies for electric vehicles are taken into account, Reuters reported, citing the automaker's China website.

The previous starting price with standard driving range was CNY271,550, after state purchase subsidies.

Sources told Reuters 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 news agency said.

The price for Model 3 vehicles with a longer range is now CNY309,900, down from CNY344,050.

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, Reuters said.

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.