After the incident at the Shanghai Auto Show, Tesla apologized to Chinese consumers but has yet to escape criticism from the media.
As soon as Tesla announced its revenue last quarter, the Global Times did not miss the headline opportunity: “Tesla ‘brakes’ in China over image crisis, despite record Q1 earnings.”
The article states: “Tesla is still betting big on the Chinese market. But its sales in China are doomed to experience a sharp fall in the second quarter and its global sales could also be affected.”
Last year, Tesla led the electric vehicle market in terms of sales in China. This year, Tesla was beaten by the Hongguang Mini of the SAIC-GM-Wuling Automobile joint venture. This model is priced from 4,000 – 4,500 USD.
Business Insider quoted Anne Stevenson-Yang – founder of investment company J Capital Research: “Xinhua and People’s Daily have been publishing opinion pieces regularly saying that Tesla ignores the rights of consumers,” specifically is the right to transparent pricing and data about accidents.
According to TechNode, Chinese users have conflicting views about Tesla. Middle-class people see Elon Musk as an icon, a visionary innovator. He has 1.7 million followers on Weibo social network.
William Hu, a human resources expert in Shanghai, said he and his colleagues saw Tesla cars as symbols of fashion and social status. Others are inspired by the transport revolution and the mission to combat climate change that Tesla is pursuing.
However, many people expressed disappointment about the price and quality of Tesla cars not as promised by the company. In 2019, many customers were angry because Tesla reduced prices as soon as they first bought a car, or the service was not up to standard. In October 2020, Tesla had to issue two recalls in China, affecting nearly 85,000 cars.
When the recall took place, the Global Times noted: “Tesla has shown respect for the potential of the Chinese market, but not the same level of respect is given to Chinese consumers.”
Since then, a series of videos recording the Tesla car accident and risk have been spreading strongly throughout the Chinese social network, typically a video showing the Tesla braking system malfunctioning.
When a technician arrived at the scene, they noticed the same error occurred on another Model 3. In April this year, netizens continued to spread videos of the Tesla that caught fire after a fatal accident. Until now, Tesla has remained silent about these incidents or blamed careless drivers.
That led the state media to criticize Tesla as “arrogant.” On Weibo, netizens asked Tesla to provide data on the vehicle to prove the problem was caused by the driver’s fault or the vehicle problem.
In a sense, Tesla and Beijing are working together, according to Business Insider. On the other hand, they are very contradictory. Beijing welcomes Tesla’s attention to the Chinese market but also wants local brands to overtake Tesla. “If an electric car competitor gets into the game, I think the situation will change for certain parties,” said founder Sino Auto Insights.
As such, Tesla needs to learn how to react more quickly to Chinese consumers. The company is known for its “grow at all costs” culture in Silicon Valley. In the US, this culture has caused Tesla to receive complaints about urgent sales, service centers rarely respond to customers, not to mention many unsolved quality problems. In 2020, the company analyzes J.D. data. Power says Tesla has more problems than any other car brand. Tesla will have to find ways to fix those problems in China.
“We’re entering a new era in terms of corporate risk in China,” said Lee Miller, founder of survey company China Beige Book. In the old days, the state media or the Communist Youth League would hold an outrageous campaign – boycott or attack on social media – forcing a company to apologize. But we are in a new era where they have a completely different approach.
In this era, just apologizing is not enough. Miller argues that the only way to survive such an attack is for your brand to have a strong foothold in China, like Nike or Adidas. Less popular brands like Sweden’s H&M could stand on the brink of “extinction” if they offend Chinese customers.
According to him, Tesla continued to receive the favor of the Chinese government until it was no longer useful and was crushed by China. The best Tesla can do now is grab as much market share as possible before Beijing does. It is hard to know when that time will come, but Beijing will take the decision, not Tesla.
Tesla changed its approach, increasing interaction with Chinese regulators
After the troubles, Tesla is changing course in its dealings with Chinese regulators as the electric automaker faces safety concerns and customer complaints in this market.
Industry sources say Tesla is increasing interaction with Beijing regulators and strengthening the government relations team, a major change from its previous approach. This movement comes after Tesla’s recent failures in its second most important market, which brings in almost a third of global sales.
In February, Chinese authorities questioned after many customer complaints about Tesla such as the car’s battery exploded, the car suddenly accelerated and software update failed online. By March, Tesla vehicles were banned from entering military complexes due to security concerns that the cameras in the vehicle could be used for spying.
China often discusses industry policies and standards with domestic and foreign companies, industry associations, and consulting organizations. Sources say that Tesla rarely participates in these caucuses, however, that has changed in recent weeks.
Win Tesla at home, the Chinese automaker plans to go out into the world
Over the past two years, Wuling, a joint venture of SAIC-GM-Wuling, has made great strides to become the “umbrella horse” in the Chinese electric car market.
The low-cost electric car Wuling Hongguang Mini EV to the market has helped to win Wuling’s business success. In a short time, Wuling Hongguang Mini EV’s sales surpassed the Tesla Model 3, which has dominated the Chinese electric vehicle market for many years.
According to Car News China, Wuling EV Mini shocked in the first month of 2021 with sales of more than 36,000 units, more than the Tesla Model 3 (reaching 21,000 units). Even if you look at the global market during this time, the total sales of Tesla cars in the world including Model S, Model 3, Model X, and Model Y are only 33,000 units. That is less than the sales of Wuling Hongguang Mini EV in the Chinese market.
At the end of the first quarter of 2021, Wuling Hongguang Mini EV continued to surpass Model 3 to rise to the top of the ranking in the Top-selling electric car in China market. Sales of Wuling Mini EV after the first quarter of 2011 reached nearly 100,000 units, while Tesla Model 3 only stood at nearly 53,000 units.
“Breakthrough,” the joint venture SAIC-GM-Wuling is gradually developing a new product under the name Xingchen under the Wuling brand to realize its ambitions to reach out to the world. Xingchen is considered to be the first SUV of the company ever debuted at the 2021 Shanghai Auto Show with the price of 100,000 yuan, equivalent to about 15,398 USD.