Tesla Inc (NASDAQ: TSLA) appears to be a step closer to bringing a more affordably-priced car to the Chinese market.

What Happened: Chinese outlet Sina recently reported that a required Environmental Impact Assessment is underway for Tesla's Model 2 EV. 

According to Sina, the battery life of the Model 2 is estimated to be between 350-450 kilometers, or around 220-280 miles. The Model 2’s smaller battery and reduced platform will allow for lower prices. The report indicated a $25,000-$35,000 price range for the vehicle. 

The report goes on to say the budget Model 2 could be revealed at the Guangzhou Auto Show, usually held in November or December.

Three main takeaways from the Sina report:

• Tesla's internal EIA process has begun for the Model 2. 
• It is estimated that the first batch of cars will be tested on the road soon.
• The Model 2 is expected to be unveiled in the second half of this year.

Why It Matters: China is a hot market for Tesla and a big driver of the company's share price, and a cheaper model has been rumored for a while.

The company started production of the Model Y at Gigafactory Shanghai in December. It currently sells Model 3 vehicles in China and production has been ramped up to 5,000 Model 3 cars per week in the country.

Tesla delivered nearly 500,000 vehicles worldwide in fiscal 2020. Revenue increased 46% year-over-year to $10.74 billion for Tesla in the fourth quarter. That beat the consensus of $10.32 billion and was the highest in company history. Full fiscal 2020 revenue of $31.54 billion was up 28% year-over-year. 

Price Action: Shares of the EV giant rose 4.69% last week, to finish at $852.23.