- Tesla's best-selling Model Y has been added to a list of electric and plug-in hybrid models that local governments in China can purchase as service cars. This marks the first time Tesla's vehicles have been deemed eligible for government procurement in China. The Jiangsu provincial government published a list on June 6 that included 56 batches of new energy vehicle procurements for party, government, and public organizations. Alongside the Model Y made in Tesla's Shanghai factory and Volvo Cars' XC40, the other vehicles listed were Chinese-branded EVs and hybrids. Volvo Cars is owned by Chinese automaker Zhejiang Geely Holding Group.
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Previously, Tesla's cars were banned from entering certain government and military compounds in China. These restrictions were lifted following an endorsement from the country's top auto industry association, which confirmed in April that Tesla's data collection practices in China were compliant. Despite the domestic competition and potential tariffs affecting demand for Chinese cars abroad, Tesla's deliveries of China-made vehicles fell by 9% in the first half of the year compared to the same period in 2023. However, support for Tesla has increased, with plans to build a data training center and introduce its Full Self Driving software in China this year.
Why it matters
This development underscores the strengthening ties between Tesla and the Chinese government, potentially bolstering Tesla's market position in the country.
