Tesla CEO Elon Musk speaks at the opening ceremony of the Model Y program, produced in China, in Shanghai, on January 7.
Aly Song | Reuters
Guangzhou, China – Tesla faces increasing pressure in China as state media and regulators criticize electric car makers following a women ‘s protest at a major car show this week.
Tesla could face one of the worst public relations crises in China, a market that investors consider critical to its growth.
On Monday, a woman who claimed a Tesla customer stood on top of one of the company’s cars at the Shanghai Motor Show with a T-shirt that said “brakes don’t work”. She protested the alleged brake malfunction in her car – which has been complained about in recent months by other users of Chinese social networks who claim to be Tesla’s drivers. A recording of the incident went viral on Chinese social networks and she picked it up state media.
On Tuesday, Shanghai police identified a protester under her last name, Zhang, and said she was sentenced to five days in custody for disturbing public order.
Tesla allegedly the woman was involved in a collision in February for a “speeding offense” and would not allow a third-party inspection in their two months of negotiations, but insisted on a refund for the car.
Tesla’s vice president for China, Tao Lin, claimed in an interview with the Chinese newspaper Caijing on Monday that the woman hopes for a high compensation, and the company has no reason to give it to her.
In a post on Weibo like Twitter, Tesla said it would not compromise on “unreasonable demands”.
State media and government agencies quickly rebuked Tesla. State news published a series of editorials, while the central disciplinary commission of the Chinese government issued a warning statement.
An article in the state media entitled “Three Lessons That Tesla Should Learn” advised the American electric car manufacturer to respect the Chinese consumer market, according to CNBC’s translation into Chinese.
“The arrogant and overbearing stance the company has exposed to the public is disgusting and unacceptable, which could seriously damage its reputation and customer base in the Chinese market,” the state-run tabloid Global Times said in a separate article published Wednesday.
Tesla apologized in a statement for not resolving the car owner’s problems in a timely manner.
In Weib announcements Monday and Tuesday, Tesla said he was ready to co-operate with authorities. The company said it would conduct “self-examination and self-correction” to “correct” problems with its customer service process.
On Thursday, Tesla said it handed Zhang unprocessed vehicle data 30 minutes before the crash happened. The company has also been in communication with two market regulators.
Read more from the Shanghai Motor Show
“Allowing a market leader was very much in China’s interest, but allowing a market leader to dominate the market is not in China’s interest,” said Bill Russo, founder and CEO of consulting and investment firm Automobility Limited.
Russo noted that companies, including Volkswagen and Daimler’s Mercedes, have gone through similar testing periods in the past.
The negative press about Tesla in China has increased in recent months. Earlier this year, a The Tesla Model 3 reportedly exploded in a parking lot in Shanghai, while a article in state media he said there were at least 10 reports in 2020 that Tesla drivers in the country had lost control of their cars.
China too allegedly restricted the use of Tesla’s cars among government and military personnel due to concerns that vehicle sensors could capture images of surrounding locations. Musk said his company would be closed if its cars could be used for espionage.
China’s market regulator, the State Administration of Market Regulation, met with Tesla’s local subsidiaries in February over increased consumer reports of vehicle problems. On Wednesday, the regulator issued a statement saying it attaches great importance to the incident at the Shanghai showroom. Authorities said they had instructed local regulators to protect consumer interests.
Musk seems to have refused control. In March, he gave an interview to the state television CCTV, saying that the future of China “will be great” and that that country will be Tesla’s “biggest market”.
– Evelyn Cheng contributed from Beijing; CNIN’s Yin Hon contributed to this report.