Tesla Inc. is coming under increasing pressure in China with two government entities firing off missives about the carmaker's behavior and treatment of customers, eliciting an apology from the company.
The trouble started early Tuesday when China's state-run Xinhua news agency published an article that said the quality of Tesla's electric vehicles must meet market expectations in order to win consumer trust. The Palo Alto, California-based company should address consumer hesitation over buying its cars after issues ranging from malfunctioning brakes to fires during charging emerged, the article said.
A few hours later, the Commission for Political and Legal Affairs of the Communist Party of China Central Committee weighed in, posting a commentary on its WeChat account saying the automaker 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 that, the Communist Party body that oversees China's police, prosecutors and courts said.
The blowback appears to stem from an embarrassing incident Tesla faced Monday at the Shanghai Auto Show, one of the world's premier car events. An angry protester climbed on one of its display vehicles shouting that her car's brakes had lost control. Her protest was captured by scores of onlookers who then uploaded the footage to social media, helping it go viral. Tesla's booth at the show had a noticeably increased security presence Tuesday.
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. In order to make up for the discomfort of the owner as much as possible and the negative impact on her car using experience and life, we are always willing to try our best to actively communicate with her and seek solutions with the most sincere attitude, firmly fulfilling our commitment of being responsible to the end."
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 comes at an uncomfortable time for Tesla, which since breaking ground on its Shanghai Gigafactory in early 2019 has enjoyed a dream run in China, receiving all-important support from the government and appearing to skirt the tensions between Washington and Beijing. The world's biggest maker of EVs has extracted perks other international companies have struggled to obtain in China, the No. 1 global EV market, including 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. After that order, Chief Executive Officer Elon Musk strenuously denied the company would ever use a car's technology for spying, and Tesla's Beijing unit said cameras that are built into its EVs aren't activated outside of North America.
Tesla has been called out by Chinese regulators over quality and safety issues before, including battery fires and abnormal acceleration. In early February, it was forced into issuing 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 at a time the U.S. automaker is facing increasing competition from a slew of younger, cashed up local EV players like the New York-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 their large, shiny booths overshadowing exhibits from some of the more traditional carmakers.
For all the hype over these newer entrants, however, 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, 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 coronavrius lockdowns.
The pushback against Tesla comes as other Western brands also face greater scrutiny and become ensnared in geopolitics. Swedish clothing giant Hennes & Mauritz AB was earlier criticized by state entities for an old statement on its website about forced labor in the contentious Chinese region of Xinjiang, while there has been a marked increase in nationalism among some Chinese consumers, with campaigns to buy local brands gathering pace.