Tesla Summoned by Chinese Regulators on Quality Issues -- Update

By Trefor Moss 

SHANGHAI -- Tesla Inc. has been summoned by the Chinese authorities in response to consumer complaints about quality issues with its electric vehicles, a rare official rebuke for Tesla in China, where the company has expanded rapidly with the support of the authorities.

The State Administration for Market Regulation, China's top market regulator, said Monday that it had instructed Tesla to abide by Chinese laws and regulations and strengthen internal management to ensure the quality and safety of its products.

Some of China's biggest state-owned banks have been instrumental in funding Tesla's operations in the country, lending the company roughly $2.36 billion in 2019 and 2020 as it constructed, and then expanded, its Shanghai plant.

The plant was then able to start producing cars within 12 months of breaking ground thanks in part to the speed at which the local authorities issued permits.

Tesla China didn't respond to a request for comment.

Tesla recently recalled 36,126 Model S and Model X vehicles imported from the U.S. because of touch-screen problems, according to a separate SAMR statement issued on Friday. That followed the recall of 48,442 imported Model S and X cars in China in October over concerns about faulty suspension systems.

The Global Times, a state-owned Chinese tabloid, criticized Tesla for the recall on Saturday, claiming it "reflects the brand's ignorance in understanding Chinese consumers."

Quality issues don't appear to have slowed Tesla's sales momentum in China, however. The company sold 15,484 locally built Model 3 sedans and Model Y compact crossover vehicles in January, according to the China Passenger Car Association.

That followed China sales of 135,400 vehicles last year, according to the association, a performance that helped the company post its first yearly profit of $721 million in 2020.

Tesla started delivering the Shanghai-built Model Y last month, having launched the made-in-China Model 3 a year earlier.

The recalls didn't apply to Tesla's locally built models.

Raffaele Huang contributed to this article.

Write to Trefor Moss at [e-mail]

(END) Dow Jones Newswires

February 08, 2021 09:18 ET (14:18 GMT)

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