Tesla put on China government procurement list for first time

Jiangsu’s provincial government included Tesla’s Model Y on a government procurement list published June 6.

It’s the first time the U.S. EV maker’s models have been made available for government purchase, according to The Paper, a Chinese media outlet. Chinese governments generally do not purchase imported cars without special approval, but luckily Tesla’s Model Y’s count as a domestically produced car, likely due to the company’s Gigafactory in Shanghai.

The list includes one other non-Chinese carmaker, Volvo. Yet, like Tesla, that inclusion may be a special case: Volvo is owned by China’s Geely and operates production plants in three Chinese cities.

The Paper noted the Jiangsu procurement center said Tesla signaled its interest to officials to join the purchase list.

The Jiangsu government has not publicly committed to purchasing any Model Y’s from Tesla.

Jiangsu’s decision to accept a foreign-branded EV—albeit one likely made in China—comes against the backdrop of a protectionist backlash against Chinese EVs. Both the U.S. and the European Union have recently announced steep tariffs on electric cars made in China. The EU’s tariffs go into effect on Friday.

The government’s willingness to buy Teslas “shows that we are making a fair and diverse choice instead of only listing Chinese new energy vehicle brands,” Cui Dongshu, the secretary-general of the China Passenger Car Association, told state media outlet Global Times.

Shares in Tesla are up after the EV maker posted better-than-expected deliveries for its second quarter. Sales of the companies sometimes-derided Cybertruck are also reportedly picking up.

Tesla in China

Tesla is the only significant non-Chinese player in China’s fiercely competitive EV market, though a years-long price war with domestic manufacturers is pressuring its sales numbers and margins.

China’s government celebrated Tesla’s Chinese investments as an endorsement of its auto industry, and analysts credit the U.S. company with helping to jumpstart China’s EV sector. Yet officials at times have shown distrust of the foreign carmaker. Concerns over data traveling overseas led to officials blocking Teslas from some government and military compounds.

But recently, Tesla has notched several policy wins in China. In April, China’s auto industry association stated that two China-made Tesla models complied with the country’s data security requirements. That decision could pave the way for Tesla to launch its assisted-driving technology in China.

Deliveries of Tesla’s China-made cars fell 24.2% year-on-year in June, totalling 71,007 cars, according to data from the China Passenger Car Association. The association’s data does not distinguish between cars made for the domestic market and those bound overseas, but Bloomberg notes that Tesla typically focuses on the local market in the last month of each quarter.

Tesla will report its second-quarter earnings on July 23.