Tesla Model Y Approved for Government Purchase in China

Tesla’s best-selling Model Y has been included in a list of electric and plug-in hybrid models that a local government in China can purchase as service cars, according to an official report by Chinese media outlet, The Paper, on Thursday. This marks the first time Tesla’s vehicles have been made eligible for government purchases in China.

Government Procurement Details:

On June 6, the Jiangsu provincial government in eastern China published 56 batches of new energy vehicle procurements intended for use by parties, governments, and public organizations.

The approved vehicles are Tesla’s Model Y, made in the Shanghai factory, and Volvo Cars’ XC40. The remaining 54 batches are all Chinese-branded EVs and hybrids. Notably, Volvo Cars is owned by Chinese automaker Zhejiang Geely Holding Group.

Neither the government nor the Chinese media specified the number of Model Y cars the Jiangsu provincial government might purchase.

Previous Restrictions Lifted:

Previously, Tesla’s cars were banned from entering some government and military compounds in China. These restrictions were lifted following an endorsement from China’s top auto industry association in April, confirming that Tesla’s data collection in China was compliant.

As Chinese car exports face potential tariffs and domestic competition increases, Tesla’s deliveries of China-made vehicles dropped by 9% in the first half of 2024 compared to the same period in 2023.

Strategic Moves by Tesla and Elon Musk:

Tesla CEO Elon Musk’s trip to China in late April, where he met Premier Li Qiang, appears to have strengthened Tesla’s position in the Chinese market.

China has since increased its support for Tesla, which plans to build a data training center and launch its Full Self-Driving software in the country this year despite ongoing tech rivalry tensions between China and the United States.