Tesla’s troubles in China also underscore a problem Musk and senior Tesla executives have acknowledged, though mainly in relation to the company’s North American business. Tesla’s rapid sales growth has outrun its capacity to repair vehicles when hardware goes bad.
“Service expansion is really important to the future strategy of the company,” Tesla Chief Financial Officer Zach Kirkhorn told investors in January.
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.
The incident escalated after Grace Tao, Tesla’s vice president for external relations – a former anchor at state broadcaster CCTV – questioned whether the angry customer, surnamed Zhang, was acting on her own.
In an interview with a local news outlet, Tao said, “maybe she … I don’t know, I think she is quite professional, there should be (someone) behind her.”
“We have no means to compromise, it’s just a process in the development of a new product,” she added.
Tesla scrambled into damage-control mode, asking the online news outlet to withdraw the report, the outlet said on Tuesday on WeChat.
Tesla issued a series of increasingly contrite late-night statements, from Monday’s “no compromise” to Tuesday’s “apology and self-inspection.” By Wednesday night, Tesla said it was “working with regulators for investigation.”
The official Xinhua news agency said Tesla’s apology was “insincere” and called for removal of a “problematic senior executive,” while the Global Times cited Tao’s comments in calling Tesla’s “blunder” a lesson for foreign firms in China.
Tao, who joined Tesla in 2014, could not be reached for comment. Tesla did not reply to a request for further comment.
“There 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,” said Tu Le, analyst at research firm Sino Auto Insights.
“It’s a delicate dance, though, since Tesla helps highlight the entire EV sector helping ALL companies grow their sales and raise their profiles,” he said.
Tesla cars, made at its own Shanghai factory, are highly popular in China, which is by far the world’s biggest EV market and accounts for 30% of Tesla’s sales.
Investors have not shown worry. Tesla shares rose this week.