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Tesla Cars Now Part of Chinese Government Purchases

For the first time, Tesla cars have been added to a Chinese government purchase list, according to state media outlet

Tesla is the only foreign-owned EV brand on the catalog from Jiangsu province’s government in eastern China. Other brands include Volvo, owned by China’s Geely, and state-owned SAIC.

Read more: Tesla Issues Recall for Cybertruck Citing Wiper and Trim Concerns

This allows government agencies and public groups in the province to procure Tesla vehicles as service cars, reflecting the favorable relationship between China and Elon Musk’s company.

The news has gone viral on Chinese social media, with some users questioning whether foreign cars should be used by the government.

To address these concerns, the Jiangsu government stated that the Tesla model is considered “a domestic car, not imported,” according to a report by state-owned National Business Daily, citing a government employee.

Tesla, with a large gigafactory in Shanghai, produced about 947,000 cars in China in 2023, most of which were used domestically.

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

China has become an essential market for Tesla, accounting for more than half of the world’s total EV sales. Last year, Tesla earned nearly a quarter of its total revenue from China.

However, Tesla faces increasing competition from Chinese rivals. BYD surpassed Tesla in the last quarter of 2023 as the largest EV seller worldwide. Tesla regained its position in the first half of this year, but the competition remains close.

Tesla cars were previously barred from some government and military complexes in China due to spying and data security concerns. These restrictions were lifted in April when a top auto association announced that Tesla’s cars had passed China’s data security requirements, coinciding with Musk’s visit to Beijing and meeting with Premier Li Qiang, who praised Tesla as a “successful model” for US-China collaboration.

Despite the easing of restrictions, tensions between China and the West are rising. Chinese state-owned carmaker SAIC faces 38.1% additional tariffs on its EV exports to the European Union.

The European Commission confirmed Thursday that it would impose additional tariffs of up to 37.6% on imports of Chinese-made electric vehicles, effective Friday.

These tariffs, first announced in early June, aim to deter an influx of cheap Chinese cars benefiting from “unfair” government support.

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