Tesla cars put on local Chinese government’s purchase list for first time

Tesla cars have been included on a Chinese local government’s list of electric vehicles that can be bought by public, party and government groups for the first time.

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 alongside Geely-owned Volvo Cars, SAIC-owned MG and state-owned Changan.

Jiangsu’s announcement comes at a critical point for Tesla in China, which accounts for 60 per cent of global EV sales. The country is becoming increasingly important as the appetite for battery-run cars has been on the wane in the US and Europe.

Tesla is also facing rising competition from local brands in China, its single-largest market outside of the US. In May, Tesla’s market share of China’s new energy car sales slid to 6.4 per cent, down from 6.9 per cent a year earlier, according to data from the China Passenger Car Association. 

In the first five months of 2024, 20 per cent of Tesla’s sales volume has been in China while 50 per cent of its production has taken place in the country, according to analysts at Jefferies. “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 comes in spite of 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 EU on Thursday confirmed it would impose provisional tariffs on Chinese EV imports after Beijing and Brussels failed to find a solution ahead of a deadline, following an investigation on Chinese subsidies for its carmakers.

Beijing earlier this year endorsed Tesla, helping dispel Chinese concerns about the vehicles’ data security.

During Elon Musk’s unexpected visit to Beijing in April, where the billionaire founder met Chinese Premier Li Qiang, the China Association of Automobile Manufacturers included Tesla on its list of carmakers that meet the country’s data security requirements.

Shortly after, Tesla struck a deal with Chinese tech giant Baidu to use its mapping and navigation systems, paving the way for the launch of its partially autonomous driving technology.

The government of Shanghai, where Tesla’s gigafactory is located, is testing 10 Tesla cars equipped with the autonomous driving software on some streets in the city, state media reported last month.

Additional reporting by Mari Novik in London