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Chinese regulators this week dressed down Tesla over safety concerns and mounting customer complaints, a worrying sign for the electric-vehicle maker that until now has had a symbiotic relationship with Beijing.
On Monday, China’s State Administration for Market Regulation (SAMR) said that it and four other regulators had summoned executives from Tesla’s Chinese operations and ordered them to “abide by Chinese laws” and “strengthen internal management systems” to ensure the quality of its products in China and protect Chinese consumer rights.
The stern talking-to follows a series of customer complaints about Tesla vehicles in China, including reports of car explosions and failed auto-braking technology. In one instance, video shows a Model S spontaneously combust while parked in a parking lot, and another time a Tesla’s auto-braking system failed during a demonstration for the media. Rather than stopping to avoid a mannequin that maneuvered in front of the speeding car, the Tesla smashed the dummy to pieces.
In a statement published on Tesla’s official Weibo page on Monday, the company said it “sincerely accepted the guidance of government departments” and was “deeply reflecting on shortcomings” in its operations.
China is a vital market for Tesla, and the automaker has—until now—been welcomed with open arms. In 2018, Tesla became the first foreign automaker permitted to operate a wholly owned factory in China. Usually, foreign carmakers have to form joint ventures with local firms to operate in China—sharing profits and technology with the domestic partner.
The China factory—Tesla’s first Gigafactory outside the U.S.—was built in Shanghai with the help of low-cost loans and tax breaks from the municipal government. The factory broke ground in January 2019 and delivered its first China-made vehicle in December the same year.
Tesla has also proven very popular with Chinese consumers. In the first half of 2020, Tesla raced ahead of local competition to become the leading electric-vehicle manufacturer in China, selling some 50,000 units and occupying 21% of the market. Tesla produced roughly 150,000 cars in China by the end of the year.
But Tesla’s issues in China are building.
A recall on over 130,000 U.S.-made Model S and Model X vehicles initiated earlier this month because of faulty touch screens has expanded to China, where Tesla is recalling more than 36,000 units of the vehicles. The affected cars were made between 2013 and 2018 and exported to China—before Tesla opened its Gigafactory in Shanghai.
The recall this month is the third issued by Tesla in China since the fourth quarter of last year. Tesla recalled close to 50,000 imports in China in October because of potentially faulty suspension systems, then recalled 870 vehicles in November due to defective roofs.
Tesla’s summons from the SAMR also comes a week after Tesla had to apologize to China’s state-owned electric utility, State Grid, after a Tesla employee seemed to blame a faulty vehicle on State Grid’s power supply.
In a video that circulated online, a customer complained to a Tesla employee that his Model 3 no longer worked after it was plugged into a Tesla charging point. The employee said that an overload in the national grid damaged the car’s inverter, which converts the battery’s DC charge to AC in order to power the vehicle’s motor.
After the video went viral on Chinese social media, State Grid denied there had been a power surge in the area and said that Tesla vehicles are charged by Tesla equipment, so the issue would be on Tesla’s end. In response, Tesla apologized to State Grid for the “misunderstanding” and said the original video had been edited to make it look like the employee was blaming State Grid.
Authorities in Beijing are currently cracking down on domestic tech giants, after Alibaba founder Jack Ma publicly criticized state regulators at a forum last October. No doubt foreign tech firms like Tesla will quickly learn not to find fault with China’s state apparatus too.
