The Tesla Model S electric luxury sedan has now been on sale in China for six months, but it recently received a major sales incentive from local officials in Shanghai.

That city's municipal government has ruled that Tesla buyers will be exempted from paying the $12,000 registration fee required to obtain license plates.

DON'T MISS: Tesla In China: Promised Land, Huge Risks...Or Both? (Jul 2013)

According to Bloomberg, a Shanghai city official said that 400 Tesla buyers have already received the free plates.

A number of large and fast-growing Chinese cities have severely restricted the number of new cars that may be registered each year to cut back on pervasive and hazardous air pollution.

2014 Tesla Model S

2014 Tesla Model S

Beijing limited new registrations to 20,000 a month starting in 2011, for instance, which cut additional vehicles added to its streets by 70 percent at one fell swoop.

Zero-emission vehicles are generally exempted from such rules or, in some cases, a set proportion of the restricted number of plates are specifically set aside for those cars that emit nothing.

ALSO SEE: Tesla Model S China Sales 'Robust', Electric Car Waiting List Long: Analyst

Interestingly, the Model S receives this incentive despite not being nationally designated as what the Chinese government calls a "New Energy Vehicle," the category of electric cars and plug-in hybrids that gives major buyer incentives.

By definition, a New Energy Vehicle has to be built in China.

2014 Tesla Model S

2014 Tesla Model S

And while CEO Elon Musk has said that the company intends to open a manufacturing plant in that country sometime in the future, all Model S cars sold in China today are built at the company's sole assembly plant in Fremont, California.

Tesla's sales in China are the subject of much debate among auto-industry analysts, as Musk has said the country could be the company's single largest market.

MORE: Tesla Will Build Electric Cars In China; Model S On Sale There This Week (Apr 2014)

Among other obstacles local Tesla staff had to overcome was getting the company's brand and trademark back from an entrepreneur who had registered it himself in 2007.

The company may well selectively disclose more about its progress in China on its third-quarter earnings call, scheduled for November 5, one week from today.


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