At Shanghai’s auto show, Tesla faces a woman’s viral protest—and Chinese rivals

April 20, 2021, 12:00 PM UTC

This is the web version of Eastworld, Fortune’s newsletter focused on business and technology in Asia. Subscribe here to get future editions in your inbox.

On Monday, an angry protestor in a white t-shirt stole the limelight at opening day of the Shanghai International Automobile Industry Exhibition by scampering atop a Tesla Model 3 and shouting “Tesla brakes fail!” to a crowd of onlookers.

She was dragged away by security guards. But video of the incident, uploaded by visitors attending the event, spread quickly on Chinese social media—calling unwanted attention to allegations of quality defects at the American electric vehicle maker in a market vital to the company’s future growth. The Wall Street Journal reports that within hours, more than 150 million people had viewed a hashtag of the incident on China’s Twitter-like Weibo platform.

Tesla later said, via Weibo, that the protester was a disgruntled customer, surnamed Zhang from Henan province, and that her father had been injured in a February accident in which his Model 3 crashed into another vehicle. The Journal reports that Ms. Zhang, in her own Weibo post, claims her father and mother were hospitalized after the collision.

Chinese authorities don’t generally countenance acts of civil disobedience. Ms. Zhang, whose claims could not be immediately verified, remains for now in Shanghai police custody. But her antics gained wide coverage in China’s state-owned press. On Tuesday, China’s Xinhua News Agency slammed Tesla in a commentary for being “arrogant” in responding to customer concerns about vehicle quality and safety. The China Global Times reported on Tuesday that vendors on Chinese e-commerce platforms are selling white t-shirts emblazoned with the word’s “Tesla brakes fail!” next to the Tesla logo.

As Eamon has reported, until early this year, Tesla was on a roll in China. The company was the first foreign automaker to win 100% control of its China operations. The completion of Tesla’s Shanghai Gigafactory in September 2019 allowed it to avoid import taxes and shipping delays on cars sold in China—which is the world’s largest market for electric vehicles by far with 1.2 million sold in 2020, more than 40% the global total.

Tesla carved out 21% of that pie, making it the market leader. CNBC reports that Tesla’s China sales in 2020 reached $6.6 billion, double the previous year and 21% of the company’s global revenue. The Model 3, the best-selling electric car in China in 2020, sold more than 137,000 vehicles.

But over the past three months, the Palo Alto, California-based company has seemed to lose its China mojo. A clear trouble sign came in February when officials from China’s State Administration for Market Regulation and four other regulators summoned Tesla executives to a meeting and admonished them to “abide by Chinese laws” and “strengthen internal management systems” to protect Chinese consumers. The dressing-down followed a series of complaints from Chinese customers including reports of car explosions and faulty auto-braking technology.

At a meeting of the China Development Forum in Beijing last month, Tesla CEO Elon Musk was obliged to fend off allegations that cameras from Tesla vehicles could be used for espionage by the U.S. government after it was reported that the cars had been banned from entering Chinese military facilities.

In Shanghai this week, Tesla’s rivals in China—among them leading electric vehicle makers such as Geely Automotive Holdings, Nio Inc., and Xpeng Inc.—are scrambling to capitalize on the American company’s travails. Electric vehicles dominate the event with homegrown challengers stressing technology and Internet connectivity to woo younger Chinese drivers who seem increasingly drawn to local brands. (Bloomberg offers a handy visual guide to some of the competing models on display.)

Shanghai-based Nio, whose share price is up four-fold since its rocky 2018 debut on the New York Stock Exchange, announced plans Monday to expand its network of battery-swapping and charging stations into underserved regions of northern China. The company has inked a deal with Sinopec, the state-owned oil group, to roll out 5,000 swapping and charging stations over the next several years.

Xpeng, a Nasdaq-listed startup based in Guangzhou, has unveiled a lidar-powered autonomous driving features and will introduce a new family sedan later this year. Geely, the owner of Volvo, is targeting tech-savvy younger customers with a premium electric car brand called Zeekr.

Meanwhile, Chinese manufacturers from other industries are piling into the electronic vehicle sector.

Shenzhen-based telecommunications giant Huawei Technologies has teamed with a subsidiary of state-run Baic Motor to create a new luxury EV brand called Arcfox. The Arcfox Alpha-S, unveiled in Shanghai on Saturday, will run on Huawei’s Harmony operating system and come equipped with a lidar chip and 5G connectivity. Lei Jun, founder of Xiaomi Corp., announced last month that the giant smartphone maker is joining the EV fray with an initial investment of $1.5 billion that will grow to $10 billion over the next ten years.

To keep its lead in China, Tesla must do more than reassure consumers and regulators about the quality of its cars; it will have to out-innovate its up-and-coming rivals.

More Eastworld news below.

Clay Chandler

This edition of Eastworld was curated and produced by Eamon Barrett. Reach him at


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