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https://scmp.com/business/money/article/3121173/tesla-conduct-complete-self-inspection-after-chinese-regulators
Business/ Money

Tesla to conduct ‘complete self-inspection’ after Chinese regulators chide US carmaker over Model 3 safety, quality

  • Tesla says it will strengthen internal management at its Chinese factory to better safeguard consumer rights
  • In 2020, Tesla reported sales of US$6.66 billion in China, more than double the US$2.98 billion a year earlier
Tesla sold a total of 137,459 Model 3 cars in China last year, according to China Passenger Car Association. Photo: Bloomberg

Tesla pledged to make rectifications to comply with China’s laws and regulations, after its executives were grilled by five ministry-level authorities over the quality of its Shanghai-made Model 3 electric cars.

The global electric vehicle leader said in a statement on Tuesday that it would strengthen internal management at its Chinese factory to better safeguard consumer rights, responding to regulators’ strongly worded statement that required the carmaker to respect the country’s laws and regulations.

“We sincerely accepted the guidance of government departments and deeply reflected on shortcomings in our business operations,” Tesla said. “We will carry out a complete self-inspection.”

It added that consumers’ interests would be fully respected.

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The recent meeting between mainland market regulators and Tesla executives over safety and quality issues, including battery fire, over-the-air updates and unintended acceleration, represented a setback for the world’s most valuable carmaker in China where its Model 3 cars dominated the country’s premium EV segment last year.

The five market regulators – State Administration for Market Regulation, Cyberspace Administration of China, Ministry of Industry and Information Technology, Ministry of Transport and Ministry of Emergency Management, told Tesla executives that they had received complaints about the quality and safety issues from mainland consumers though it did not disclose the exact number.

“The interview [by the authorities] happened at a bad time because Tesla is ramping up production at its Shanghai plant,” said Chen Jinzhu, chief executive of Shanghai Mingliang Auto Service. “It is expected to slow down production a little bit to conduct more inspections into its supply chain and manufacturing facilities in the coming weeks.”

In 2020, Tesla reported sales of US$6.66 billion in China, more than double the US$2.98 billion a year earlier. Revenue from China, its second-largest market after the US, accounted for 21 per cent of the global total.

Tesla began construction of the Gigafactory 3, its first assembly outside the US, at Lingang, Shanghai, in January 2019. It began delivering the Model 3 cars to Chinese customers at the end of that year.

The carmaker’s sales of locally built Model 3s stood at 137,459 units, according to China Passenger Car Association.

On January 1, Tesla launched its second Shanghai-made model – Model Y – pricing it 30 per cent lower than the level in June 2020 when it started taking presale orders for the SUV.

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Model Y has attracted thousands of Chinese buyers, but those who have placed orders recently will have to wait until the second quarter for deliveries.

In December, a war of words ensued between online technology media PingWest and the US carmaker regarding the quality of its locally-made cars. PingWest labelled the Shanghai Gigafactory 3 a “Giga-sweatshop” and accused Tesla of using substandard components in the locally built Model 3s.

Tesla denied the charges and threatened to take the tech news provider to court.

The carmaker said on Monday that it had invested US$1.5 billion in bitcoin and expressed its intention to begin accepting the cryptocurrency as a form of payment.