Feb 09, 2021 04:52 AM

Chinese Regulators Tell Tesla to Improve Internal Management

China is Tesla’s largest market after the U.S. with sales in Asia’s biggest economy topping 137,000 units in 2020.
China is Tesla’s largest market after the U.S. with sales in Asia’s biggest economy topping 137,000 units in 2020.

Chinese regulators summoned Tesla Inc. representatives over safety issues with its vehicles in the world’s biggest auto market and told the electric-car maker to improve internal management and comply with Chinese law and regulations.

Authorities including the State Administration for Market Regulation, the Office of the Central Cyberspace Affairs Commission, the Ministry of Industry and Information Technology, the Ministry of Transport and the Emergency Management Department held talks with Tesla’s China unit after customers complained of problems including abnormal acceleration and battery fires, the market regulation agency said Monday in a statement.

The regulators didn’t disclose details of the talks or specific cases involving Tesla.

A Tesla representative said the company accepted the government departments’ guidance, reflected on shortcomings in its business processes and strengthened self-inspection and internal-management practices.

Chinese Tesla owners reported several cases of sudden, intended acceleration. A Tesla Model 3 crashed into a hotel in Hangzhou Dec. 30 as it pulled out of the hotel parking lot, a local newspaper reported. Earlier that month, a Tesla Model S suddenly accelerated and crashed into a residential building in Beijing. In August, a Tesla Model 3 suddenly accelerated and crashed into a parking lot in Wenzhou at high speed.

Tesla denied that all the incidents were caused by defects in the vehicles.

The automaker faces other complaints in China and the U.S. Earlier this month, Tesla agreed to recall nearly 135,000 Model S and Model X vehicles in the U.S. and more than 36,000 cars in China at the request of the U.S. National Highway Traffic Safety Administration (NHTSA). The recall has to do with touchscreen display issues that could fail and raise the risk of a crash.

But the NHTSA denied a petition for the agency to launch a review of 662,000 Tesla vehicles for unintended sudden acceleration, citing a lack of evidence to support the claim that a technical defect existed. NHTSA said it determined that driver error in the form of pedal misapplication was to blame in all of the cases it examined.

The petition was submitted in 2019 by investor Brian Sparks, who at the time held a short position in Tesla stock, meaning he sold borrowed shares betting that their value would drop and he could replace them at a lower price and pocket the difference.

Tesla CEO Elon Musk recently acknowledged quality issues and advised against buying certain Tesla models made while the company was rapidly scaling up production. In an interview Feb. 2, Musk said Tesla was making cars so fast near the end of 2020 that it wasn’t letting the paint dry thoroughly enough.

Tesla also acknowledged using older computer chips on China-made Model 3 vehicles to meet delivery goals, though it later offered free upgrades once supplies became available.

Tesla recently had a spat with State Grid Corp. of China over an owner’s complaint of car failure while charging. The owner in Nanchang in southeast China’s Jiangxi Province told local press that his new Model 3 wouldn’t run after charging the battery at a supercharger station. A Tesla employee told the vehicle owner that a current overload in the national grid damaged the vehicle’s inverter, a claim denied by the State Grid. Tesla later apologized to the state-owned utility, citing a misunderstanding in the exchange with the Tesla owner.

Tesla delivered 137,500 Tesla Model 3s in 2020, making it the top-selling electric car in China, according to the China Passenger Car Association. It started delivering its first Shanghai-assembled Model Y sport utility vehicles to customers in China last month, the latest milestone in the company’s drive to deepen its localization efforts in the world’s largest auto market.

Contact reporter Denise Jia ( and Bob Simison (

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