BMW plans to introduce an electric version of its popular 3-Series line of cars at a German auto show in September, according to German news outlet Handelsblatt Global.
Handelsblatt said sources inside BMW said the company will unveil the car at the Munich Auto Show.
A BMW spokesman told CNBC the company "can't comment on speculation."
BMW is one of several large automakers that have seen their own market values eclipsed by the much smaller Tesla in recent months. Shares of the California company have shot up more than 70 percent since the beginning of the year.
At $35,000, the Model 3 will be priced right in the neighborhood of the current gas-powered BMW 3-Series, whose cheapest model, the 320i, starts at $33,450. Tesla already has a long wait list for the car, with somewhere around 400,000 vehicles pre-ordered. Tesla CEO Elon Musk has said the first year of the car's production is essentially already sold out.
The company will be introducing the sedan around the same time Tesla expects to reach volume production rates on the Model 3.