Tesla Gives In To Chinese State-Run Media Pressure, Apologizes To Aggrieved Customer

Tesla, Inc. TSLA suffered a backlash at the Shanghai Auto show Monday, with protestors alleging their vehicles were plagued by malfunctioning brakes.

Tesla's response to the demonstrators, especially to a female customer, did not go down well with the state media.

What Happened: The Tesla customer who participated in the protes, alleged that her car ran into an accident in February due to brake failure. She demanded a refund from the company.

The negotiations between the company and the customer ended in a stalemate, as Tesla wanted an independent inquiry into the accident to ascertain whether the accident was due to brake failure or speeding.

With the customer refusing to agree to the proposal, Tesla stated that, though it is more than willing to address any problem that may have to do with its cars, it will not compromise with unreasonable complaints.

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State-run media, including China's Central Commission for Political and Legal Affairs and Xinhua, questioned Tesla's stance, terming it as arrogance and betraying the faith placed in Tesla by Chinese consumers.

Tesla issued an apology on its Weibo account.

"We apologise deeply for having not resolved the problem with the car owner in a timely manner," the company said.

Why It's Important: Tesla has been facing issues in China of late. In March, China denied access for Tesla vehicles to military and state-owned facilities on the grounds that cameras installed in the vehicles will collect sensitive information.

Tesla cannot afford to have any missteps in the Chinese market, as several homegrown EV players, new entrants and legacy automakers are vying for a piece of the country's lucrative EV opportunity.

Tesla's capitulation may have to do with the intention of minimizing the damage caused by the whole episode.

Photo courtesy of Tesla.