Has Elon Musk's Tesla run aground in China?

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Has Elon Musk's Tesla run aground in China?

Elon Musk’s Tesla had been quite popular in China, despite the numerous business and trade problems it has ongoing with the United States. However, the honeymoon period seems to have finally ended for Tesla and Musk as the latter has been asked to meet with regulatory authorities regarding the qualitative standards of the Model 3.

Tesla’s Model 3 cars have been made locally in China and according to the authorities, the vehicles have had problems with their battery and the accelerator. The announcement that Musk has been asked to meet with the authorities was made by the governmental organisation: State Administration for Market Regulation (SAMR).

Tesla responded to this summons through a post on its official account on the Chinese microblogging website Weibo. Its post said, “(We will) deeply reflect on the company's operational shortcomings and comprehensively strengthen self-inspection.

We will strictly abide by Chinese laws and regulations and always respect consumer rights… (We will) better contribute to the healthy development of China's new energy vehicle market”.

The cresting of Elon Musk's plans for Tesla in China

Musk’s company found a deeper foothold in the Chinese market in 2019, despite entering the Chinese market in 2013.

Back then, Musk had made a lot of overtures to the Chinese government in an attempt to embed Tesla’s presence in the country further. Thanks to Musk’s efforts, the Chinese government turned into a patron of the company and Tesla enjoyed considerable favour with the authorities.

In terms of market share, China accounts for about 21% of Tesla’s sales revenue. In 2020 alone, Tesla sold units totalling to about $6.66 billion in value. In fact, Tesla’s factory in Shanghai also began quite an early resumption of production despite the pandemic after getting the necessary support from the regional governmental authorities.

However, while the company had been riding these highs, 2020 also brought a change in the relationship between Musk and the Chinese authorities. According to reports, the government found Tesla’s handling of certain incidents and mishaps involving the conduct of Tesla’s employees and the cars themselves a tad high-handed and unconforming towards the country’s requirements.

In light of these developments, it remains to be seen how Elon Musk and his Tesla extricate themselves from these less-than-anticipated developments.