May 7, 2021

Tesla Faces Pressure in China After Shanghai Auto Show Protest

The US-based electric automaker Tesla has come under a humungous pressure in China after state media and regulators backlashes the firm following an alleged woman customer protest against the company at Shanghai auto show. The protest that took place on Monday comes amidst the heated trade war between the US and China.

The Protest and Tesla’s Response

On Monday, a disgruntled customer climbed on a top of the Tesla’s car wearing a customized T-shirt proclaiming “Brakes Lost control,” which caused accident. On the other hand, Tesla’s spokesperson said that the collision was caused due to “speeding violations,” citing a police report. However, her issue went viral on the Internet and was picked up by China-based state media. Meanwhile, the Communist Party of China said on WeChat platform that the company “has to face up to the torment of its Chinese customers.”

Tesla’s Vice President Grace Tao commented on the issue stating that “there is no possibility Tesla will compromise.” Moreover, the company posted a statement on Weibo, a platform similar to Twitter, that Tesla would not compromise with “unreasonable demands.” However, it also apologized on the social media platform for not resolving the protestor’s issue and will cooperate with local authorities regarding the matter.

According to the reports by Reuters, the police identified the unhappy customer with her surname “Zhang.” She was detained for disrupting the police order. As per the reports, she is being held for five days. Meanwhile, the Central Commission for Discipline Inspection said on Tuesday that “Individuals should not take extreme measures, and enterprises should not be arrogant and unreasonable.”

State Media’s Statement on Tesla

“The arrogant and overbearing stance the company exhibited in front of the public is repugnant and unacceptable, which could inflict serious damage on its reputation and customer base in the Chinese market,” state-backed media Global Times published on Wednesday. As per the tabloid, the company has refuted reports on China-based insurer Ping An Co suspending insurance policies for Tesla customers.

Tesla has found itself in hot water for the first time in China. In January 2021, another state media reported that Tesla’s drivers are going “out of control” in the country. Another report from Wall Street Journal said that China is prohibiting the use of Tesla’s cars for military and state personnel. The alleged report came after China reviewed Tesla’s cars and found that its car can record images of the surrounding and keeps track of the personal information. Meanwhile. Tesla’s CEO Elon Musk assured that its cars do not spy on the owners. In February 2021, the State Administration for Market Regulation in China, met with Tesla’s local subsidiaries and discussed the increasing consumer report on vehicles malfunctions.

Tesla’s Growth in China

Tesla laid down its foundation in China in 2019 with its Shanghai’s Gigafactory 3. The company acquired an industrial-use land in Shanghai’s Lingang area for USD 140 Million. The plot is the firm’s first acquired land outside the US for its electric car production. Elon said in a press release that the opening of the factory is “the commitment to the China market.” In 2020, Tesla started to roll out its Model 3 to the China-based consumers.

According to the filing, Tesla’s sales in the year 2020 accounted for USD 31.54 Billion. While in 2019, its sales just reached USD 2.98 Billion. As per the China’s Passenger Car Association, Tesla Model 3 was the bestselling car in the country. As per the data from March 2021, around 34,635 Tesla cars were registered in the country. Growing demand from China has helped the company to beat Bloomberg’s estimates by around 4,000 vehicles.

Currently, NIO, a publicly listed electric car company in China, is its biggest competition in the country. The factor that differentiates NIO with Tesla is that the former company uses battery swap technology, which makes it easy for customers to replace the dead battery or upgrade it.

Tesla Out of China

Apart from the US and China, Tesla entered the Indian market in 2021. Indians have been asking Elon Musk about the company’s progress to enter the Indian market. In 2018, the CEO said that the country’s regulatory challenges had become one of the reasons that were delaying the company’s foray in the country. As per the regulatory filing, the company has registered itself as Tesla Indian Motors and Energy Pvt Ltd. India’s Union Minister Nitin Gadkari said that the firm is going to start its operation in 2021.