It is the second time Tesla has announced an end to the dispute with Chinese businessman Zhan Baosheng, who registered the "Tesla" trademark before the Palo Alto, California-based carmaker came to China.
Tesla said in January that the issue had been resolved, but last month, Zhan moved to bring Tesla to court.
A complete solution to the long-standing trademark dispute would remove an obstacle to Tesla's growth plan in China, which billionaire cofounder Musk expects to become the company's biggest global market next year.
Beijing has unveiled a slew of incentives, including purchase subsidies and tax cuts, to accelerate sales of electric cars, a market also targeted by Volkswagen <> and BMW < >.
"Mr. Zhan has agreed to have the Chinese authorities complete the process of canceling the Tesla trademarks that he had registered or applied for, at no cost to Tesla," Tesla said in an emailed statement on Wednesday.
Separately, Tesla and Zhan have also reached commercial terms for the transfer to Tesla of certain domain names, includingand , the company said, declining to give financial details.