{"id":112632,"date":"2021-04-22T14:33:52","date_gmt":"2021-04-22T14:33:52","guid":{"rendered":"https:\/\/fin2me.com\/?p=112632"},"modified":"2021-04-22T14:33:52","modified_gmt":"2021-04-22T14:33:52","slug":"analysis-teslas-bad-week-in-china-was-months-in-the-making","status":"publish","type":"post","link":"https:\/\/fin2me.com\/markets\/analysis-teslas-bad-week-in-china-was-months-in-the-making\/","title":{"rendered":"Analysis: Tesla's bad week in China was months in the making"},"content":{"rendered":"

BEIJING (Reuters) – Tesla Inc has had a terrible week in China, but sentiment against the U.S. electric car company in its second-biggest market had been building as it struggled to keep pace with rapid growth.<\/p>

FILE PHOTO: Staff members stand at the Tesla booth during a media day for the Auto Shanghai show in Shanghai, China April 19, 2021. REUTERS\/Aly Song<\/figcaption>

The pile-on by media and scolding by regulators show how precarious China can be for big foreign brands, and how a company\u2019s handling of an incident can turn into a crisis if the country\u2019s tightly-controlled news outlets turn against it.<\/p>\n

Tesla\u2019s defiance of industry convention, embodied by founder Elon Musk and a corporate culture that rarely admits mistakes, has won fans in the United States, but has backfired in China. Musk had such cachet that China\u2019s government allowed Tesla to be the first foreign carmaker not forced to team up with a partner to make cars locally. Now, Tesla is learning lessons its longer-established rivals got years ago.<\/p>\n

Tesla\u2019s troubles in China also underscore a problem Musk and senior Tesla executives have acknowledged, though mainly in relation to the company\u2019s North American business. Tesla\u2019s rapid sales growth has outrun its capacity to repair vehicles when hardware goes bad.<\/p>\n

\u201cService expansion is really important to the future strategy of the company,\u201d Tesla Chief Financial Officer Zach Kirkhorn told investors in January.<\/p>\n

When a Tesla customer, angry over the handling of her complaint about malfunctioning brakes, climbed on top of a Tesla in protest on Monday at the Shanghai auto show, videos of the incident went viral.<\/p>\n

The incident escalated after Grace Tao, Tesla\u2019s vice president for external relations – a former anchor at state broadcaster CCTV – questioned whether the angry customer, surnamed Zhang, was acting on her own.<\/p>\n

In an interview with a local news outlet, Tao said, \u201cmaybe she … I don\u2019t know, I think she is quite professional, there should be (someone) behind her.\u201d<\/p>\n

\u201cWe have no means to compromise, it\u2019s just a process in the development of a new product,\u201d she added.<\/p>

Slideshow ( 3 images )<\/span><\/figcaption>

Tesla scrambled into damage-control mode, asking the online news outlet to withdraw the report, the outlet said on Tuesday on WeChat.<\/p>\n

\u2018INSINCERE\u2019 APOLOGY<\/p>\n

Tesla issued a series of increasingly contrite late-night statements, from Monday\u2019s \u201cno compromise\u201d to Tuesday\u2019s \u201capology and self-inspection.\u201d By Wednesday night, Tesla said it was \u201cworking with regulators for investigation.\u201d<\/p>\n

The official Xinhua news agency said Tesla\u2019s apology was \u201cinsincere\u201d and called for removal of a \u201cproblematic senior executive,\u201d while the Global Times cited Tao\u2019s comments in calling Tesla\u2019s \u201cblunder\u201d a lesson for foreign firms in China.<\/p>\n

Tao, who joined Tesla in 2014, could not be reached for comment. Tesla did not reply to a request for further comment.<\/p>\n

\u201cThere have been consistent complaints on social media with Tesla in China regarding its quality and service issues, which seem to have been largely ignored by the local team until Tuesday,\u201d said Tu Le, analyst at research firm Sino Auto Insights.<\/p>\n

\u201cIt\u2019s a delicate dance, though, since Tesla helps highlight the entire EV sector helping ALL companies grow their sales and raise their profiles,\u201d he said.<\/p>\n

Tesla cars, made at its own Shanghai factory, are highly popular in China, which is by far the world\u2019s biggest EV market and accounts for 30% of Tesla\u2019s sales.<\/p>\n

Investors have not shown worry. Tesla shares rose this week.<\/p>\n

PRECARIOUS POSITION<\/h2>\n

Pressure on Tesla had been building.<\/p>\n

Last month, it came under scrutiny when the military banned Teslas from entering its complexes, citing security concerns over vehicle cameras, sources told Reuters. Days later, Musk appeared by video at a high-level forum, saying that if Tesla used cars to spy in China or anywhere, it would be shut down.<\/p>\n

Tesla appeared to have scrapped much of its public relations team in the United States last year, although it has been hiring public relations staff in China.<\/p>\n

For communications, it relies heavily on Musk\u2019s Twitter feed, which has over 50 million followers. As of Thursday, he had been silent on the China situation, which remained a hot topic, as Tesla owners took to Weibo to complain about quality issues such as sudden acceleration or steering failure.<\/p>\n

On Thursday, Global Times Editor-in-Chief Hu Xijin said the intent is not to force Tesla from China.<\/p>\n

\u201cOur ultimate goal is to make foreign companies adapt to the Chinese market, seriously abide by Chinese laws and regulations, respect Chinese culture and consumers, and become a positive element in the Chinese economy. Whether it is a lesson or help, it all points to the same goal.\u201d<\/p>\n

Source: Read Full Article<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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