Elon Musk has done a better job at selling and making cars in China in just two years than he has in the US over the past decade. As a foreign business, he’s also had a smooth ride with the authorities — until recently.
Last Month, a Tesla Inc owner at the Shanghai Auto Show protested the company by jumping onto the roof of a Model 3 and alleging faulty brakes had landed her father in hospital. Footage of the incident pitched the company into the centre of a Chinese social media storm. That came just as the company announced blowout earnings in the country, with China contributing around 30% of revenues in the March quarter. It’s become an ongoing saga, and regulators have now stepped in.
That’s a big deal for Tesla. A company that often treats the state with insolence is getting some of its own medicine. How Musk handles the issue will determine his success, not just in China but around the world.
Tesla has long followed a strategy of keeping its head down in China, shying away from making big proclamations about its operations and regulators. On a first-quarter earnings call last week, executives barely mentioned the country and its Shanghai factory.
That strategy hasn’t worked this time. After an initially dismissive response to the woman’s complaint and rebuke from state media, Tesla’s local unit went into overdrive — apologising, handing over driving data from the incident to regulators, and trying to win public support. “When the pressure was greatest, we felt the care and support of our drivers,” the company said in a statement quoted by local media outlet Caixin last week.
Symbols of support sent into dealerships — including bubble tea, desserts, and heartwarming words from fans — made their troubles “disappear,” Caixin paraphrased the statement as saying.
This emollient approach is in stark contrast to Tesla’s stance in the US.
A Wall Street Journal article last week recorded a litany of high-handed and dismissive behaviour in dealing with US regulators. When one called Musk over a 2018 crash investigation, the billionaire hung up on him and said the company had withdrawn from the inquiry, the paper reported. Tesla has prevented health and safety officials from carrying out a full inspection of its Nevada battery plant for more than two years, according to the article.
When the paper asked Musk to comment on its report, he replied with a “poop” emoji and declined to elaborate further.
That wouldn’t fly in China. But then again, Tesla’s born-again softer approach isn’t going down too well either.