Tesla Reaches Agreement To End Trademark Dispute In China

By Ghous Zaman on Aug 6, 2014 at 7:01 am EST

Tesla Reaches Agreement To End Trademark Dispute In China
Tesla Reaches Agreement To End Trademark Dispute In China

Tesla’s trademark headaches have subsided as it has resolved a dispute with a Chinese businessman. It is welcomed as a boost for the company’s expansion plans in China

Tesla Motors Inc. (TSLA), the US electric carmaker, announced that it has resolved a trademark dispute in China, which had threatened to derail its expansion plan in the world’s largest auto market.

It is the second time that Tesla has made an announcement of ending a trademark dispute with Zhan Baosheng, who had already registered the “Tesla” trademark before the California-based automaker’s arrival in China. He had intended to use the Tesla name for vehicles utilized by his skin-care company, Cengceng Inc.

Tesla stated in January, that the trademark issue had been resolved but Zhan moved to bring the company back to court last month.

With this resolution, Tesla has overcome a big hurdle in the growth plans of CEO and co-founder, Elon Musk, who expects China to become the company’s biggest global market in terms of sales revenue by next year.

Moreover, the Chinese government is introducing favorable policies to boost electric car sales in the country. Last month, it waived off 10% purchase tax on electric cars followed by the announcement that 30% of government vehicle purchases will be electric cars by 2016.

Tesla and Zhan have also agreed to the commercial terms for transfer of specific domain names such as teslamotors.cn and tesla.cn.

The company’s spokesperson, Liz Jarvis-Shean, refused to reveal exact financial details of this agreement. “Mr. Zhan has agreed to have the Chinese authorities complete the process of canceling the Tesla trademarks that he had registered or applied for, at no cost to Tesla”, the company revealed in an emailed statement before further adding “These actions remove any doubt with respect to Tesla's undisputed rights to its trademarks in China”.

Tesla‘s shares closed at $238.49 yesterday, and its year-to-date (YTD) return is 56.45%. The share price was not significantly impacted by this development in the aftermarket hours.

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