Tesla cars have been included by the China on their list of electric vehicles that public, party and government groups can purchase. This Chinese government approval has happened for the first time. Tesla’s best-selling Model Y was included in a list of electric and plug-in hybrid models that a local government in China can purchase as a service car. This was as per the official Chinese media outlet the Paper on Thursday.
It was the first time Tesla’s cars have been made eligible for government purchases in China, the Paper added.
China government purchases Tesla car
China’s eastern Jiangsu provincial government published 56 batches of new energy vehicle procurements for use as service cars by party, government and public organizations in a government statement on June 6.
Elon Musk’s EV group is the only foreign-owned car manufacturer on the list published by the eastern province of Jiangsu. The company was among the 10 brands on the approved procurement list. The list included Geely-owned Volvo Cars, SAIC-owned MG and state-owned Changan.
Apart from the Model Y made in Tesla’s Shanghai factory and Volvo Cars’ XC40, the other 54 batches were all Chinese-branded EVs and hybrids. Volvo Cars is owned by Chinese automaker Zhejiang Geely Holding Group.
Removal of restriction for Tesla cars
Neither the government of China nor the media specified the number of Model Y cars of Tesla that the Jiangsu provincial government could purchase. Tesla’s cars were banned from entering some government and military compounds in China.
The restrictions were removed after it won an endorsement from the country’s top auto industry association that said in April the data collection by Tesla fleets in China was compliant.
Elon Musk’s intervention
The demand for Chinese cars abroad is overshadowed by the prospect of tariffs and intense domestic competition. Tesla’s deliveries of China-made vehicles fell 9% in the first half compared to the same time in 2023.
Tesla CEO Elon Musk’s trip to China in late April to meet Premier Li Qiang, appears to have paid off.
China has increased its support for Tesla, which plans to build a data training center and roll out its Full Self Driving software in the country this year. This despite ongoing tensions with the U.S. over tech rivalry.
Importance of approval for Tesla
Jiangsu’s announcement to include Tesla for Chinese government comes at a critical point for Tesla in China. As this accounts for 60% of global EV sales. China is becoming increasingly important as the appetite for battery-run cars has been on the wane in the U.S. and Europe.
Tesla is facing rising competition from local brands in China, its single-largest market outside of the US.
“China is hugely important for Tesla and has been for a long time, so this is just another positive,” said Philippe Houchois, an analyst with the bank.
The announcement to include Tesla’s Model Y SUV is despite heightening trade tensions between China and the west. “[Our] product quality has been acknowledged by the local government,” Tesla China said in a statement.
The government where Tesla’s gigafactory is located in Shanghai, is testing 10 Tesla cars. They are equipped with the autonomous driving software on some streets in the city, as per state media.
Tesla share price
Tesla share price today at closing was $246.39 up by 6.54%
