Tesla CEO Elon Musk speaks at an opening ceremony of the China-made Tesla Model Y program in Shanghai in January. 7.
Aly Song | Reuters
BEIJING and GUANGZHOU, China – Tesla faces mounting pressure in China as state media and regulators criticize the electric carmaker following an alleged customer protest at a major auto show this week.
Tesla may be facing one of its worst PR crises in China, a market that investors see as critical to its future growth.
On Monday, a woman who claimed to be a Tesla customer stood atop one of the company’s cars at the Shanghai auto show wearing a T-shirt that said “brakes don’t work” in Chinese. He was complaining about an alleged brake failure in his car, 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 networks and was picked up by state media.
On Tuesday, Shanghai police identified the protest with her surname Zhang and said she was sentenced to five days in prison for disturbing public order.
Tesla said the woman was involved in a collision in February due to “speed violations” and that in their two months of negotiations, she would not allow a third party inspection but insisted on a refund for the car.
Criticism for being ‘arrogant’
Tesla Vice President for China Tao Lin said in an interview Monday with Chinese financial news release Caijing that the woman was hoping for a high level of compensation and that the company has no reason to give it to her.
In a post on Twitter-like service Weibo, Tesla said he would not compromise with “unreasonable requests”.
Both state media and government agencies were quick to berate Tesla. State news outlets ran a number of editorials, while the Chinese government’s central disciplinary commission issued a warning statement.
A state media article titled “Three Lessons Tesla Should Learn” advised the US electric carmaker not to be “arrogant” and to “respect” the Chinese consumer market. This is according to a CNBC translation of the Chinese-language text.
“The arrogant and domineering attitude the company has shown in front of the public is repugnant and unacceptable, which could inflict serious damage on its reputation and customer base in the Chinese market,” the state-backed tabloid Global Times said in an opinion piece published Wednesday.
Tesla apologized in a statement for not fixing the car owner’s problems in a timely manner.
In two Weibo posts on Monday and Tuesday, Tesla said he was willing to cooperate with the authorities. The company said it will conduct a “self-examination and self-correction” to “correct” problems with the customer service process.
On Thursday, Tesla said it handed Zhang raw vehicle data from 30 minutes before the incident in question occurred. The company has also been in communication with two market regulators.
Read more from the Shanghai Auto Show
“Allowing the market leader to enter has been 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 investment and consulting firm. Automobility Limited.
Russo noted that companies, including Daimler’s Mercedes unit and Volkswagen, have gone through similar scrutiny periods in the past.
The negative press about Tesla in China has increased in recent months. Earlier this year, a Tesla Model 3 reportedly exploded in a Shanghai parking lot, while a state media article claimed there were at least 10 reports of Tesla drivers losing control of their cars in the country in 2020.
China has also reportedly restricted the use of Tesla cars among state and military personnel out of concern that the vehicle’s sensors may record images of surrounding locations. Musk said his business would be closed if his cars could be used for spying.
Meanwhile, China’s market regulator, the State Market Regulatory Administration, met with local Tesla subsidiaries in February about increasing consumer reporting on vehicle problems. On Wednesday, the regulator released a statement saying it attaches great importance to the Shanghai auto show incident. The authority said it had mandated local regulators to protect consumers’ interests.
Musk tried to push back the check. In March, he gave an interview to state broadcaster CCTV saying that China’s future “will be fantastic” and that the country will be Tesla’s “largest market.”
– CNBC’s Yin Hon contributed to this report.