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Tesla is considered “arrogant” in China as pressure builds on the automaker

BEIJING and GUANGZHOU, China – Tesla faces growing pressure in China as state media and regulators criticize the electric carmaker after an alleged customer’s protest at a major auto show this week.

Tesla may be facing one of its worst public relations crises in China, a market that investors consider critical for its future growth.

On Monday, a woman who claimed to be a Tesla customer was on top of one of the company’s cars in the Shanghai auto show with a T-shirt that said “brakes don’t work” in Chinese. She was protesting an alleged failure of her car’s brake – a problem that other users of Chinese social media who claim to be Tesla drivers have complained about in recent months. A video of the incident went viral on Chinese social media and was released by state media.

BEIJING and GUANGZHOU, China – Tesla faces growing pressure in China as state media and regulators criticize the automaker after a supposed customer’s protest at a major auto show this week.

Tesla may be facing one of its worst public relations crises in China, a market that investors consider critical for its future growth.

On Monday, a woman who claimed to be a Tesla customer was on top of one of the company’s cars in the Shanghai auto show with a T-shirt that said “brakes don’t work” in Chinese. She was protesting an alleged failure of her car’s brake – a problem that other Chinese social media users who claim to be Tesla drivers have complained about in recent months. A video of the incident went viral on Chinese social media and was released by state media.

On Tuesday, Shanghai police identified the protester by the surname Zhang and said she was sentenced to five days in prison for disturbing public order.

Tesla claimed that the woman was involved in a collision in February due to “speed violations” and that in her two months of negotiations, she would not allow a third party inspection, but insisted on a car refund.

Reviews for being “arrogant”

Tesla’s vice president for China, Tao Lin, said in an interview on Monday with Chinese financial news publication Caijing that the woman expected a high level of compensation, and the company has no reason to give it to her.

In a post on the Twitter-like service, Weibo, Tesla said he would not commit to “irrational demands”.

Both state media and government agencies were quick to scold Tesla. The state-run media published a number of editorials, while the Chinese government’s central disciplinary commission issued a warning statement.

The arrogant and overbearing stance the company exhibited in front of the public is repugnant and unacceptable, which could inflict serious damage on its reputation and customer base in the Chinese market.

A state-run media article entitled “Three Lessons Tesla Should Learn” advised the US-based electric carmaker not to be “arrogant” and to “respect” the Chinese consumer market. This is in line with a CNBC translation of the Chinese text.

“The arrogant and authoritarian stance that the company displayed to the public is disgusting and unacceptable, which could inflict serious damage on its reputation and customer base in the Chinese market,” said the state tabloid Global Times in a separate opinion article published Wednesday. -fair.

Tesla apologized in a statement for failing to resolve the car owner’s problems in a timely manner.

In two Weibo posts on Monday and Tuesday, Tesla said it is willing to cooperate with authorities. The company said it will do a “self-examination and self-correction” to “rectify” problems with its customer service process.

On Thursday, Tesla said it delivered the vehicle’s raw data to Zhang 30 minutes before the accident in question occurred. The company is also communicating with two regulators in the market.

Tesla’s rise in China

Tesla has been the poster child for Beijing’s efforts to demonstrate that China is allowing more foreign companies to enter its relatively closed market.

Tesla has intensified its focus on China over the past two years. With government support, Tesla opened a large Shanghai plant in 2019 and last year started delivering Model 3 vehicles made there to customers in China.

Letting the market leader in was very much in China’s interest, but letting the market leader dominate the market is not in China’s interest.

Tesla’s sales in China more than doubled in 2020, and the Model 3 was the best-selling electric car in the country.

CEO Elon Musk even met Premier Li Keqiang in 2019. But with success comes scrutiny, especially as local Chinese companies are looking for a bigger share of the growing electric vehicle market.

China’s favorable policies on electric cars have spurred the creation of a series of start-ups that hope to compete with Tesla, such as Nio and Xpeng Motors, although their sales are still far behind those of Tesla.

“Letting the market leader in was very much in China’s interest, but letting the market leader dominate the market is not in China’s interest,” said Bill Russo, founder and CEO of the consulting and investment firm Automobility Limited.

Russo noted that companies like Daimler’s Mercedes unit and Volkswagen have gone through similar periods of analysis in the past.

Increasing Tesla scrutiny

The negative press about Tesla in China has increased in recent months. Earlier this year, a Tesla Model 3 exploded in a Shanghai parking lot, while a state media article said there were at least 10 reports in 2020 of Tesla drivers losing control of their cars in the country.

China has also restricted the use of Tesla cars between the state and military personnel due to concerns that the vehicle’s sensors could record images of its surroundings. Musk said his company would be closed if its cars could be used for spying.

Meanwhile, China’s market regulator, the State Administration of Market Regulation, met with local Tesla subsidiaries in February about increasing consumer reports of vehicle problems. On Wednesday, the regulator issued a statement saying it attaches great importance to the Shanghai auto show incident. The authority said it instructed local regulators to protect consumer interests.

Musk sought to avoid scrutiny. In March, he gave an interview to state television station CCTV saying that China’s future “is going to be great” and that the country will be Tesla’s “biggest market”.

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