Tesla Motors Inc (TSLA) Faces Trademark Issue In China

Tesla Motors Inc (TSLA) Faces Trademark Issue In China
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CEO Elon Musk’s much talked about plan for Tesla Motors Inc (NASDAQ:TSLA) venturing into Chinese markets has bumped into the latest hurdle. The electronic vehicle manufacturer has discovered that the name Tesla Motors Inc (NASDAQ:TSLA) is already trademarked in China by someone else. Tesla will have to shell out some dollars to get the Tesla name in China.

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Tesla Motors Inc (TSLA) Faces Trademark Issue In China

Tesla Motors may have to shell out $32 million

In China, Zhan Baosheng took the trademark name Tesla in 2009 for a land, air and marine transportation vehicle registered in twelve different categories, reports Want China Times. Prior to this, Tesla faced a similar problem when Qiao Weiwei in China owned the trademark  ‘Tesla Motors’ but sold the name to Tesla Motors Inc (NASDAQ:TSLA) on May 6 of this year.  The registered websites show the American-owned Tesla emblem.

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According to Want China Times, Musk said in an interview with a magazine that Tesla Motors Inc (NASDAQ:TSLA) has offered to buy the trademark from Zhan Baosheng for around $326,000, but he refused and is requesting over $32 million.

If there is no agreement made with Baosheng, the company can ask China’s Trademark Office to cancel Baosheng’s trademark as it has not been used for three years. Zhan, however, is busy collecting the evidence that he is in the process of research and development for the production of electric cars in China.

More problems to follow

Domain name Tesla.com.cn and Teslamotors.com are both registered in China even before Tesla could take them.

Apart from the trademark hitch, Tesla Motors Inc (NASDAQ:TSLA) is already facing issues in China like a small market for pure electric cars. Tesla will also require a business partner for getting benefits like Chinese EV subsidies and tax breaks. Additionally, it will have to pitch up its Model S price due to high tariffs. Tesla, in China, will also be facing a less advanced infrastructure for the electronic vehicles.

Apple also faced a similar issue

Trademark trolls are those companies or people who register the company name and decide to sell them when the said company plans to enter that country. Apple Inc. (NASDAQ:AAPL) faced a similar situation when it had to buy Chinese computer monitor maker Proview for $60 million in order to buy the iPad trademark.

Tesla Motors Inc (NASDAQ:TSLA) has been talking about entering the lucrative Chinese market, which has a population of over 1.3 billion and is a supreme force in manufacturing.  The Chinese have an insatiable thirst for luxury goods.

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Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at amanjain@valuewalk.com
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