Electric car maker Tesla Motors Inc. (NASDAQ: TSLA) has been sued in China for trademark infringement in a move that could at least delay the car company’s expansion in the Chinese market. Tesla began delivering its Model S sedan to customers in China in April.

The dispute with Chinese businessman Zhan Baosheng was said by Tesla to have been settled in January. Zhan claimed that he had registered the Tesla trademark before Tesla arrived in the country. Now he has taken the carmaker to court demanding that Tesla halt all sales and marketing in China, shut down its showrooms and charging stations, and pay him compensation of $3.85 million. According to Reuters, the case will be heard on August 5.

Tesla has high hopes for its Chinese business. The company sells its 85-kWh Model S sedan for $121,000 in China, so there are not likely to be a lot of buyers, but the company looks at China as an important market. Of the 8,500 to 9,000 cars Tesla expected to build in the second quarter, 1,000 to 1,500 were destined for Europe and China.

The threat to Tesla’s sales pushed the shares down by about 2% on Monday, and the stock headed lower early Tuesday, down about 1.2% at $219.90. The stock’s 52-week range is $104.50 to $265.00.

ALSO READ: Ten Cities Where Foreign Companies Create the Most Jobs

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.