Tesla Has A Potentially Huge Problem In China

Electric Vehicles / Comments

Being questioned by a Communist government is never good.

Over the past several months, there have been reports regarding quality issues originating at Tesla's Shanghai Gigafactory. Charged with building the Model 3 and Model Y, this facility has been accused of using defective parts and even "sweatshop" working conditions. But apparently, there have been even more significant issues owners have complained about and now Chinese government regulators are getting involved.

The country's State Administration for Market Regulation has announced its representatives, along with colleagues from the Ministry of Industry and Information Technology, Emergency Management, Transportation, and even the Cyberspace Administration, have recently met with Tesla officials over the matter. Tesla owners there have claimed there are acceleration irregularities, software upgrade failures, and even battery fires.

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Tesla said it will fully investigate these problems and further improve quality control inspections. "We will strictly abide by Chinese laws and regulations and always respect consumer rights," the automaker said on Weibo, a Chinese microblogging website. It appears some of these complaints date back to last March when we first heard of reports claiming Chinese-built Model 3s lacked the build quality of their California counterparts. At the time, the Chinese industry ministry asked Tesla to ensure its locally-made vehicles have equal quality, but apparently, the problem persisted.

But it's also important to remember US-built Teslas haven't exactly been shining examples of outstanding quality. Just last week, the National Highway Traffic Safety Administration and Tesla issued a recall for almost 135,000 Model S and Model X vehicles built from 2012-2018 because of defective touchscreens.

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In fact, just before Tesla representatives met with Chinese officials, the government recalled over 20,000 and 15,000 Model S and Model Xs for the same touchscreen issue. China has become a vital market for Tesla. Last year, the world's largest automotive market provided $6.6 billion in revenue for Tesla - more than double what it brought in the year prior.

To give you a better idea of just how vital China has become for Tesla, 2020's revenue accounted for more than 20 percent of the automaker's total revenues. When the Chinese government demands a response to customer complaints, it's very much in Tesla's best interest to comply.

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