Pressure mounts on carmaker after customer protest

Tesla CEO Elon Musk speaks at an opening ceremony for Tesla China-made Model Y program in Shanghai on Jan. 7.

Aly Song | Reuters

BEIJING and GUANGZHOU, China — Tesla faces mounting pressure in China as state media and regulators criticize the electric carmaker following an alleged customer’s protest at a major auto show this week.

Tesla could be facing one of its worst public relations crises in China, a market investors see as critical for its future growth.

On Monday, a woman who claimed to be a Tesla customer stood atop one of the company’s cars at the Shanghai auto show with a T-shirt that read “brakes don’t work” in Chinese. She was protesting an alleged brake failure in her car — an issue which other Chinese social media users claiming to be Tesla drivers have complained about in the last several months. A video of the incident went viral on Chinese social networks and was picked up by state media.

On Tuesday, Shanghai police identified the protester by her surname Zhang and said she was sentenced to five days detention for disturbing public order.

Tesla alleged the woman was involved in a collision in February due to “speeding violations” and that in their two months of negotiations, she would not allow a third-party inspection but insisted on a refund for the car.

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Tesla’s rise in China

Rising scrutiny of Tesla

Negative press about Tesla in China has increased in the last several months. Earlier this year, a Tesla Model 3 reportedly exploded in a Shanghai parking garage, while a state media article said there were at least 10 reports in 2020 of Tesla drivers losing control of their cars in the country. 

China has also reportedly restricted the use of Tesla cars among state and military personnel over concerns that the vehicle’s sensors could record images of their surrounding locations. Musk said his company would be shut down if its cars could be used to spy.

Meanwhile, China’s market regulator, the State Administration for 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 places high importance on the Shanghai auto show incident. The authority said it has instructed local regulators to protect consumer interests.

Musk has looked to fend off the scrutiny. In March, he gave an interview to state broadcaster CCTV saying that the future of China is “going to be great” and that the country will be Tesla’s “biggest market.”

— CNBC’s Yin Hon contributed to this report.

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