Tesla is now an official Chinese government car

People look at a Tesla Model Y car at a Tesla showroom in Beijing, China in January 2021. (Wang Zhao / AFP / Getty Images via CNN Newsource)

Hong Kong — For the first time ever, Tesla cars have been placed on a Chinese government purchase list, according to state-owned media outlet Paper.cn.

Tesla is the only foreign-owned EV car brand on the purchase catalog published by the government of Jiangsu province in eastern China. The other brands mentioned include Volvo, owned by China’s Geely, and state-owned SAIC.

That means that government agencies and public groups in the province can procure them as service cars, highlighting the cozy relationship China has with Elon Musk’s company.

The development has gone viral on Chinese social media, with some users questioning if foreign cars should be considered for use by the government.

The Jiangsu government has tried to ease such concerns by saying that the Tesla model is “a domestic car, not imported,” according to a report by state-owned National Business Daily on Thursday, citing a government employee.

Tesla, which has a massive gigafactory in Shanghai, manufactured some 947,000 cars in China in 2023, and most of them were used locally.

The Jiangsu government did not respond to CNN’s phone calls. On the government’s purchase catalog, Tesla’s Shanghai-made Model Y was listed at 249,900 yuan (US$34,377).

China has become an increasingly important market for Tesla, as the country accounts for more than half of the world’s total EV sales. Last year, Tesla derived nearly a quarter of its total revenue from China.

But the U.S. carmaker is also facing rising competition from Chinese rivals. BYD overtook Tesla in the final quarter of 2023 as the biggest seller of EVs on the planet. Tesla regained its position in the first half of this year, but they are neck and neck.

Tesla cars had previously been barred from entering some government and military complexes in China due to spying and data security concerns.

Those restrictions were lifted in April, when a top auto association announced that Tesla’s cars had passed China’s data security requirements. The announcement came on the same day as Musk visited Beijing and met with Premier Li Qiang, who praised Tesla as a “successful model” for US-China collaboration.

EU tariffs

But, on most fronts, tensions between China and the West are increasing.

The European Commission confirmed on Thursday that it would slap additional tariffs of up to 37.6 per cent from Friday on imports of electric vehicles made in China.

The tariffs, which were first announced in early June, are seen as a necessary move by the EU to deter a flood of cheap Chinese cars built with “unfair” support from the government.

Tesla, a major exporter of China-made EVs to Europe, has requested a separate tariff rate calculation, according to the Commission. Currently, the company faces an average 20.8 per cent additional tariff as part of a group of companies cooperating with the EU’s investigation.

Tesla didn’t respond to requests for comment.