Tesla, Inc.'s (TSLA) Model Y vehicles have officially been approved for use as government vehicles in China. This milestone marks the first time a non-Chinese automaker has been included in a government purchase list within Jiangsu province, as reported by state-owned media outlet Paper.cn.
The Shanghai-produced Model Y is listed at 249,900 yuan ($34,377) on the government's procurement catalog, making it accessible to government agencies and public entities in the province for use as service vehicles. This development has incited some resistance in China, prompting the Jiangsu government to clarify that the Tesla Model Y is categorized as "domestic" due to its local manufacture, rather than being considered an imported vehicle.
Previously, Tesla faced restrictions from accessing certain government and military facilities in China due to concerns about espionage and data security. However, these restrictions were lifted in April following a visit by Elon Musk to Beijing, where he met with Premier Li Qiang. During the meeting, Premier Li praised Tesla as a model of successful U.S.-China cooperation.
The inclusion of Tesla in the government procurement process indicates China's support for the advancement of intelligent connected vehicles, irrespective of their origin, noted Sun Xiaohong, General Secretary of the car unit of the China Chamber of Commerce for Import and Export of Machinery and Electronic Products.
Tesla has also been affected by substantial tariffs imposed by both the U.S. and the European Union on electric cars manufactured in China. With the EU's tariffs expected to take effect soon, Tesla is seeking a distinct tariff rate assessment from the European Commission. Currently, the company faces an average additional tariff of 20.8% as part of cooperative group inquiries under the EU's investigation.