Tesla said it had ‘deeply reflected on shortcomings’ after a meeting with Chinese officials, which followed complaints of battery fires and failed software updates

Tesla China

  • Chinese government officials have urged Tesla to follow China’s laws and protect customer rights.
  • This follows reports about Tesla battery fires, unexpected acceleration, and software update failures.
  • In 2020, around a fifth of Tesla’s total revenues came from China.

Chinese government officials have met representatives from Tesla after reports from consumers about battery fires, unexpected acceleration, and failures in software updates, according to a Chinese regulator.

The scrutiny comes as the country is generating an even bigger chunk of Tesla’s sales. In 2020, around 21% of the electric carmaker’s revenues came from China, according to an SEC filing on Monday, and the company’s sales in China more than doubled to $6.66 billion.

Officials from five Chinese regulators met Tesla “recently” and urged the company to operate according to China’s laws and to protect customer rights, China’s State Administration for Market Regulation said Monday.

The other regulators present were the Ministries of Industry and Information Technology, Emergency Management, and Transportation, as well as the Cyberspace Administration.

Tesla Shanghai said it “sincerely accepted the guidance of government departments” and that it had “deeply reflected on shortcomings” in a statement, per the BBC.

As its sales boom in China, Tesla has also ramped up construction at its Shanghai factory. It started making Model 3 electric sedans at the factory in December 2019, and launched sales of its China-made Model Y sport-utility vehicles in January 2021.

It sold 15,484 vehicles made in its Shanghai factory in the first month of 2021.

News of the regulators’ meeting followed media coverage of a Tesla Model 3 reportedly bursting into flames in a Shanghai parking garage in January. Tesla’s vehicles have been known to catch fire in collisions or after an impact to the underside of the car, where the battery pack is located, Insider’s Tim Levin reported.

In May, regulators urged Tesla to ensure consistency in its China-made vehicles after some Chinese customers complained about less-advanced computer chips in their cars.

China, which has the world’s biggest auto market, is pushing carmakers to make more electric vehicles as it tries to reduce air pollution.

Sales of electric, plug-in hybrid, and hydrogen-powered vehicles in China are forecast to rise to 20% of all new car sales by 2025 from just 5% now, the State Council said last year.

Tesla could deliver 1 million vehicles in 2022 because of “eye popping demand” from China, which could account for 40% of its global sales, Wedbush analyst Daniel Ives said in December. The country is the “heart and lungs” of Tesla’s demand growth story, he added.

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