China has added the Tesla Model Y to the list of electric and hybrid vehicle models that local governments can purchase as service cars, reportedly marking a major boost for billionaire CEO Elon Musk as he seeks to increase Tesla’s sales in the country.
Chinese state media outlet The Paper reported that this is the first time a Tesla model has been targeted for purchase by the Chinese government.
Tesla is the only non-Chinese-owned car maker on the list, compiled by the government of eastern China’s Jiangsu province. Volvo Cars, owned by Chinese firm Zhejiang Geely Holding Group, also made the list with its Volvo XC40.
Some Chinese social media users have reacted negatively to Tesla’s move, questioning whether foreign automakers should be eligible for government use, CNN reported.
It has not been disclosed how many Tesla vehicles the government may purchase.
Tesla’s stock price rise may be due in part to Musk’s surprise visit to China’s second-highest ranking politician, Premier Li Qiang, in late April.
Qiang later called Tesla a “successful model” of economic cooperation between the United States and China.
Tesla cars were previously banned from some military and government facilities in China, but the restrictions were lifted after the China Automobile Association announced in April that two China-made Tesla models complied with China’s data security standards.
Meanwhile, tensions between China and Western countries are rising after the European Commission confirmed it would impose additional tariffs on Chinese-made EVs.
Tesla, which exports large numbers of Chinese-made EVs across Europe, has requested a separate calculation of tariffs, CNN reported.
Musk’s electric vehicle maker faces increasing competition as more rivals, including Chinese automakers, enter the EV market and demand slows.
According to a Kelley Blue Book report, Americans bought about 15% fewer EVs in the first quarter of this year compared to the fourth quarter of last year.
This slowdown in purchasing is likely due to cost and infrastructure barriers, with prices remaining high and charging stations in short supply.
Tesla’s sales in the U.S. fell about 13% from a year ago, according to the report.
Musk, who is currently the world’s richest man with a net worth of $249 billion, according to Forbes magazine, visited Beijing in April to seek approval for the rollout of fully self-driving software.
Tesla plans to deploy the software and build data centers in China this year to better manage its self-driving technology across the country, according to Reuters.
Tesla did not respond to a request for comment.
