American electric car maker Tesla Motors Inc faces a trademark infringement lawsuit in China, a development that would slow down its expansion plans in the world's largest car market.

In January, Tesla said it has already settled the trademark dispute with Chinese tycoon Zhan Baosheng. Analysts have long seen this trademark dispute as a significant hurdle to Tesla chief Elon Musk's ambition to enter China, Reuters explained.

Like Us on Facebook

The U.S. car maker started shipping its Model S sedans to its Chinese clients in April. However, Zhan had already registered the "Tesla" brand before the American firm entered China. Now, he is suing Tesla in court and demands all the company's sales and marketing campaigns in China be halted.

Zhan is also demanding the shutdown of Tesla's showrooms and charging facilities. On Tuesday, his lawyer Zhu Dongxing said the Chinese businessman is asking for compensation amounting to US$3.85 million (CNY23.9 million).

Based on a statement on the Beijing Third Intermediate Court's website, the first hearing of the case will commence on August 5. Both Tesla China and Zhan declined to comment on the case.

The trademark infringement case shows one of the most difficult problems that international companies have to conquer in China. In the past, global firms such as Apple Inc, Unilever NV and other global firms have been previously involved in trademark disputes in China.

Zhan has been one of the reasons why Tesla arrived late in China. The Guangdong-based businessman registered the English and Chinese versions of the "Tesla" trademark in 2006.

In the past, Zhan had attempted to sell the label to the US-based Tesla but negotiations failed to come through.

In January, Tesla China operations head Veronica Wu told Reuters that it has resolved the trademark problem. The dispute had blocked the firm from using the Chinese name "Te Si La" with which Chinese customers are most familiar.

Tesla had expected China to its biggest market by 2015, but a recent lawsuit has made the company's fate in China more unpredictable.

TagsTrademark dispute, Tesla China, Automobile inudstry, Electric cars