Over the past two years, Elon Musk has stepped up his efforts to win over China, the world's largest market , but now it looks like the country's regulators may be putting a damper on Tesla's plans.
Five Chinese regulatory agencies have summoned the company to answer questions about the quality of Model 3s . It said regulators were concerned about several problems with the cars, including "abnormal acceleration" and "battery overheating."
The meeting is worrisome for Tesla. Thanks to Musk, the company has managed to avoid restrictions imposed on its global rivals trying to do business in China. The company opened a gigafactory for its cars in Shanghai in 2019 , and the country now accounts for a fifth of its revenue.
However, in recent weeks, Tesla has been heavily criticized in China for a series of problems involving its cars.
“[We will] deeply reflect on the company’s operational weaknesses and thoroughly strengthen self-inspection,” Tesla said on Chinese social media site Weibo, in response to SAMR’s comments.
"We will strictly abide by Chinese laws and regulations and always respect consumer rights," the automaker said , adding that it would "better contribute to the healthy development of China's new energy vehicle market."
It's unclear whether regulators intend to punish Tesla or change anything about how it operates in the country. However, the dispute is a sign of how seriously Beijing regulation, even against companies it appears to favor.
“This is a tough situation for Musk,” said Dan Ives, a technology at Wedbush Securities. The CEO “had built strong relationships within the country, but he needs to play it right in China.”
Tesla has been in China since 2013, but in recent years it has managed to build a stronger relationship with the Chinese government.
