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Tesla Faces New China Test After Woman's Auto-Show Protest Goes Viral -- Update

04/19/2021 | 10:58pm EDT

By Trefor Moss

SHANGHAI -- A single protester with a disputed claim about the safety of Tesla Inc. electric vehicles has hit a nerve in China, sending complaints about the company ricocheting across the Chinese internet and refocusing attention on alleged quality issues in a critical market for Tesla.

The woman climbed atop a Tesla Model 3 sedan at the Auto Shanghai expo on Monday, shouting allegations about faulty brakes on Tesla vehicles while wearing a T-shirt that read "The Brakes Don't Work" and "Invisible Killer."

Videos uploaded by visitors then showed her being dragged away by security guards, who had previously attempted to use open umbrellas to hide the woman from onlookers. When the Journal visited the Tesla stand later on Monday morning, the company had beefed up security.

The protest at the Tesla booth, a rare public display of defiance in China, was picked up by state media outlets and quickly went viral on the Chinese internet. Within a few hours, more than 150 million people had viewed a hashtag of the incident on China's Twitter-like Weibo platform, remarking on how Tesla's booth had become "a platform for rights defenders."

Many users sympathized with her plight, with one accusing Tesla of "hoodwinking Chinese consumers" and others calling on the public to turn to Chinese competitors. Another user with more than 5 million followers who claims to have purchased three Tesla vehicles said in another widely liked post that he never had any problems with the braking system but offered up his own litany of complaints about other alleged glitches.

A company media representative at the booth said that the protest was a matter for the police and that she couldn't comment on the allegations of quality defects.

Tesla said in a statement on Weibo that the protester was a Tesla customer from Henan province whose father was involved in a February accident in which his Model 3 had crashed into another vehicle.

The woman had demanded a full refund, claiming that a technical problem with the car had caused the crash, according to Tesla. However, the company said that the woman's father had crashed due to excessive speed. The company said it had been in contact with the woman and was willing to help her find a solution.

In an earlier statement concerning the accident, the company identified the woman as a Ms. Zhang, who has staged other protests against the company.

The woman's claims couldn't be independently verified, and she couldn't be reached for comment.

On Tuesday, Shanghai police said Ms. Zhang would be detained for five days after damaging the car onto which she had climbed. Another woman was warned by the police for disrupting public order but wasn't detained, it said in a statement posted on Weibo.

In her own Weibo post following the incident, a woman claiming to be Ms. Zhang said that her father and mother were in the car and were injured and hospitalized. She said that she would seek justice through the legal system and that the incident exposed the true face behind Tesla's vaunted brand. By Monday evening, the post had been shared more than 2,000 times and had garnered more than 17,000 "likes."

Grace Tao, a Tesla vice president and one of the company's top executives in China, in an interview last month with Chinese online automotive news channel Dongchedi, said technical problems were rare and were treated seriously whenever they came to light. "I can say confidently that most [of these customer complaints] are based on a misunderstanding," she said.

On Tuesday, China's state-run Xinhua News Agency said in a commentary that Tesla's response has been "arrogant." It said car makers operating in China must have respect for the market and accept "supervision from customers."

Tesla has maintained a relatively low-key presence at this year's auto show -- which alternates annually between the cities of Beijing and Shanghai -- and held no launch events, in contrast to most of the other auto makers exhibiting here.

Even so, the protest served as the latest publicity setback for Tesla in China, ensuring that the American EV maker became the center of attention for the wrong reasons.

Tesla sales have grown rapidly in China since the company began building cars in Shanghai more than a year ago. March was Tesla's best month in China to date, with 35,478 made-in-China Model 3 and Model Y cars sold, according to the China Passenger Car Association.

As it has grown, though, the company has faced a growing chorus of complaints from disappointed customers, including several allegations of brake failures, prompting regulators in Beijing to summon Tesla for a public dressing-down over quality problems in February. The company responded by vowing to make improvements.

Chief executive Elon Musk spoke last month by video link at the China Development Forum, a high-profile government conference, to deny that Tesla vehicles could be used to spy on Chinese facilities.

The government had earlier banned military personnel and employees at state-owned companies from driving Tesla cars in case they were being used to send sensitive data to the U.S.

--Raffaele Huang and Bingyan Wang contributed to this article.

Write to Trefor Moss at Trefor.Moss@wsj.com

(END) Dow Jones Newswires

04-20-21 0058ET

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TESLA, INC. -2.97% 599.36 Delayed Quote.-15.07%
WEIBO CORPORATION -2.05% 48.27 Delayed Quote.20.20%
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Net income 2021 3 430 M - -
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P/E ratio 2021 191x
Yield 2021 -
Capitalization 577 B 577 B -
EV / Sales 2021 11,5x
EV / Sales 2022 8,43x
Nbr of Employees 70 757
Free-Float 80,4%
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