Apr 21, 2021 07:38 AM

Tesla Apologizes as China Disquiet Mounts After Owner Protest

A manufacturer's name plate sits on a Tesla Model S electric vehicle during a Tesla Inc. event at the Hornsdale wind farm
A manufacturer's name plate sits on a Tesla Model S electric vehicle during a Tesla Inc. event at the Hornsdale wind farm

(Bloomberg) — Tesla Inc. came under increasing pressure in China as two government entities in a single day blasted the company’s behavior and treatment of customers.

The trouble started early Tuesday when China’s state-run Xinhua News Agency wrote that the quality of Tesla’s electric vehicles must meet market expectations to win consumer trust. The Palo Alto, California-based company should address consumer hesitation over issues ranging from malfunctioning brakes to blazes during vehicle charging, Xinhua said.

A few hours later, the powerful Commission for Political and Legal Affairs of the Communist Party of China Central Committee weighed in. The organization is the Communist Party body that oversees China’s police, prosecutors and courts. It posted a commentary on its WeChat account saying Tesla should respect Chinese consumers and comply with local laws and regulations. Making an effort to find the cause of problems and improve features is something any responsible business should do, and Tesla hasn’t done so, the committee said.

The blowback followed an embarrassing and widely publicized incident Monday at Tesla’s display at the Shanghai Auto Show, one of the world’s premier car events. An angry protester climbed on top of one of the display vehicles shouting that her car’s brakes had failed. Her protest was captured by scores of onlookers who then uploaded the footage to social media, where it went viral. Tesla’s stand at the show Tuesday had a noticeably increased security presence.

After initially pushing back against the woman’s claims on Monday, saying he was “widely known” for protesting against Tesla, and that it would “never compromise against unreasonable demands,” the automaker struck a more conciliatory tone in a statement late Tuesday.

“We apologize for the delay in resolving the car-owner’s problem,” it said. “Tesla appreciates the trust and tolerance given by our car-owners, netizens and media friends, and actively listens to the suggestions and critics."

A special taskforce has been created and Tesla “will strive to do our best to meet the demands of the owner, making the owner satisfied under the condition of compliance and legality.”

It added that it “respects and firmly complies” with decisions of the relevant government departments, respects its consumers, abides by laws and regulations, and actively cooperates with all investigations by government authorities.

The unwanted publicity came at an uncomfortable time for Tesla. Since it broke ground on its auto factory in Shanghai in early 2019, Tesla has enjoyed a dream run in China, receiving all-important support from the government and appearing to skirt the tensions between Washington, D.C., and Beijing.

The world’s biggest maker of electric vehicles (EVs) has extracted perks other international companies have struggled to obtain in China, the No. 1 global EV market. They include tax breaks, cheap loans and permission to wholly own its domestic operations.

But over the past month, Tesla has had to defend the way it handles data in China and had its cars banned from military complexes because of concerns about sensitive information being collected by cameras built into the vehicles. Chief Executive Officer Elon Musk strenuously denied the company would ever use a car’s technology for spying, and Tesla’s Beijing unit said the cameras aren’t activated outside North America.

Chinese regulators have called out Tesla over quality and safety issues before, including battery fires and abnormal acceleration. In early February, it was forced to issue a public apology to China’s state grid after a video purportedly showed staff blaming an overload in the national electricity network for damage to a customer’s vehicle.

Tesla’s China honeymoon appears to be coming to an end as the U.S. automaker faces increasing competition from a slew of younger, cashed-up local EV players including U.S.-listed Nio Inc. and Xpeng Inc., which also enjoy the support of municipal governments. Their presence at this year’s Shanghai Auto Show was telling, with large, shiny booths overshadowing exhibits from some of the more traditional carmakers.

For all the hype over the newer entrants, Teslas remain hugely popular in China, the world’s biggest car market for conventional automobiles as well. A record 34,714 China-built and imported Teslas were registered in the country in March. That was almost double the 18,155 registrations in February, when the week-long Lunar New Year holiday slowed sales, and almost triple the number a year earlier, when the nation was in the grip of coronavirus lockdowns.

Support quality journalism in China. Subscribe to Caixin Global starting at $0.99.

Follow the Chinese markets in real time with Caixin Global’s new stock database.

You've accessed an article available only to subscribers
Share this article
Open WeChat and scan the QR code