(Photo credit: yiche.com)

For the insurance company, these vehicles lost their repair value because of the severe damage, so the full amount of the contract was paid to the owner.

These vehicles can be traded after the insurance company agrees. To dispose of the vehicles, Zhengzhou has held dozens of special auctions with the participation of mostly used car dealers and repair shops.

Tesla's move is not just for China, it has similar measures in overseas markets, according to the report on yiche.com.

Some tech-savvy and mechanically savvy people buy such end-of-life vehicles and dismantle them for parts or restore them to their original state, even allowing them to be able to drive on the road again. After Tesla found out, it banned these vehicles from using the Supercharger network and any third-party fast charging features, the report said.

In the Chinese market, a protest by an owner in Shenyang, northeast China, at a Tesla store on October 11 has put the issue of such vehicles back on the market in the spotlight.

The man claimed that his vehicle had inadvertently gotten into water for personal reasons and that the initial price negotiated with the Tesla store for repairs was RMB 16,000 ($2,500), but after he shipped the vehicle over, Tesla staff said the cost would be RMB 70,000-80,000.

Tesla customer support then released a statement saying that the vehicle was a scrapped one in the Zhengzhou rainstorm and that the insurance company had paid the original owner in full.

The man only mentioned the car computer repair matters during the consultation, and the vehicle was found to be a scrapped one by the Tesla service center staff, so a new repair quote of over 60,000 yuan was provided, Tesla said.

After that Tesla statement was released, the matter was never reported in the media again.