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A luxury hybrid model from Tesla Motors. (Photo/Xinhua)

Zhan's Tesla website carries a brand logo almost identical to the American Tesla logo, and showcases one product, though the car looks nothing like the Tesla Model S. The website says the firm's "dream is to build China's best electric car."

Legal experts familiar with trademark disputes in China said it might be difficult for Tesla to resolve the trademark issue unless it buys Zhan out.

China has rules that protect globally renowned brands, but that might not apply in the case of relatively new companies such as Tesla.

Apple Inc was embroiled in a similar case for years, before reaching US$60 million deal last year for the rights to use the iPad trademark in China.

Tesla's founder Elon Musk has expressed excitement at entering the Chinese market, pointing to the big demand for luxury cars due to the country's expanding wealthy class.

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