Chinese Regulators Target Tesla Potentially Ending Elon Musk’s Love-In With China

The United States based electric car maker Tesla now risks upsetting Beijing’s powerful regulators after its founder and CEO Elon Musk spent the last two years to win over China – the largest car market of the world.

According to a statement released Monday by the State Administration for Market Regulation (SAMR), five Chinese regulatory agencies have summoned the electric carmaker to seek answers to questions related to the quality of its Model 3 cars that are rolling out of its factory in Shanghai. There were a number of problems with the cars, including “abnormal acceleration” and “battery fires” that had made the regulators concerned about the quality of the vehicles.

This development is being viewed to be troubling for Tesla. Cumbersome restraints imposed on global rivals trying to do business in China have been avoided by Tesla by Musk’s efforts of courting of Chinese officials. In 2019, there was great fanfare when the car maker opened one of its massive car factories in Shanghai. China is now the provider of one fifth of the global revenues of the company.

But a series of problems involving its cars has drawn sharp criticism of the company over the past few weeks which culminated in Monday’s announcement.

“[We will] deeply reflect on the company’s operational shortcomings and comprehensively strengthen self-inspection,” Tesla said in a statement posted on Chinese social media website Weibo in response to SAMR’s remarks.

“We will strictly abide by Chinese laws and regulations and always respect consumer rights,” the carmaker said, adding that it will “better contribute to the healthy development of China’s new energy vehicle market.”

Whether the Chinese regulators intent to punish the company or simply intend to force the company to bring in changes in the manner it operates in the country was unclear. But this move reflects the level of seriousness of regulation that China believes in even for the companies that are apparently in its favour.

“It’s a slippery slope for Musk,” said Dan Ives, a technology analyst at Wedbush Securities. The CEO “had built strong relationships within the country, but he must play nice in the sandbox in China.”

Tesla had entered China in 2013 but has managed to establish a strong relationship with the Chinese government only in the last few years.

But the perception of Tesla within China has started ot turn sour in recent months. There was criticism of the company in the state news agency Xinhua last November over one of the company’s attorneys writing to the US regulator about a recall in China in which the attorney clamed “driver abuse.”

“Tesla passed the buck to the Chinese users’ driving habits and regulatory pressure,” wrote Xinhua’s Nan Chen in an opinion piece published in Liaowang, a magazine run by the news agency. “This kind of ‘Tesla-style arrogance’ can’t be tolerated.”

Following a video that went viral in China last month in which there was apparently a Tesla employee telling a customer that a charging accident that damaged the car because of an overload in the state power grid, attracted severe criticism of the company.

“We are deeply sorry, regarding the misunderstanding caused to netizens and the trouble” caused to power authorities, the company said.

(Adapted from CNN.com)



Categories: Creativity, Economy & Finance, Regulations & Legal, Strategy, Uncategorized

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: