In Latest Blow to Tesla, China Orders Safety Patch for All Its Cars

In Latest Blow to Tesla, China Orders Safety Patch for All Its Cars

Tesla Inc.’s aspirations in China took a heavy blow over the weekend after the government ordered nearly all cars sold in the country – more than 285,000 of them – to be repaired to fix a problem of security.
The State Administration for Market Regulation said in a statement on Saturday that the action involved 211,256 locally produced Model 3 vehicles and 35,665 imported vehicles, as well as 38,599 Model Y made in China. The California automaker didn’t start shipping the Model Y sport utility vehicle until January, so the recall will affect just about every driver who has purchased one.

The Chinese agency said that vehicles’ autopilot systems can be activated automatically, potentially leading to crashes due to sudden acceleration. In most cases, the fix should be able to be done remotely with an online update of the cars active cruise control function. Tesla will upgrade the software for free.

While Tesla has apologized through its official customer support account on Weibo, saying it will “continue to improve security in strict accordance with national requirements,” the recall tops a series of embarrassing setbacks for the company in China. A protest that went viral at the Shanghai auto show in mid-April and a series of accidents has soured public opinion towards the electric vehicle pioneer and some local governments and official institutions are examining Tesla’s ownership among their staff, citing concerns that the cars pose safety risks.

In March, Teslas were banned from some military complexes and housing complexes over concerns over built-in cameras. Tesla immediately intervened to reassure authorities, saying all data collected in China is stored locally.

That the required software patch has an impact on Tesla’s Model Y is particularly unfortunate. The crossover SUV, which has a range of up to 594 kilometers (369 miles), was seen as allowing Tesla to target a much larger customer base in the world’s largest market for electric vehicles and cars in general.

General Manager Elon Musk said the Model Y has the potential to outperform any other vehicle it makes and this month the China Passenger Car Association is forecasting increased interest in larger, more spacious cars. , especially in the seven-place category, as government rules allow parents to have more children.

Tesla Inc. Model Y electric vehicles outside the automaker’s showroom in Shanghai, China on Friday, January 8, 2021. Tesla customers in China who want to get the new Model Y made locally are faced with a to a longer wait, signaling strong initial demand for the Shanghai-built SUV.
Credit Suisse Group AG said in a note last week that one of the main downside risks to its $ 800 price target for Tesla stock is the difficulties of the Model Y and the lack of demand on the stock. international markets. Tesla’s Nasdaq-traded shares closed at $ 671.87 on Friday and are down about 5% since January. They climbed 743% last year.

Tesla’s delivery times to some locations in China “have dropped from 39 days to 33 days, which may indicate a decrease in orders converted to sales,” wrote Credit Suisse analyst Dan Levy. However, while some customers have rebranded due to recent negative headlines, “there are still many Model Y orders to support continued sales volume,” Levy said.

Foreign brands accounted for around 37% of new energy vehicle sales in China last year and 57% since the start of the year. The nation is Tesla’s second-largest market after the United States, and it now exports Chinese-made cars to Europe from its Gigafactory in Shanghai. But a handful of fast-growing local newcomers are threatening its strong position, particularly Nio Inc. and Xpeng Inc. In the mass market, local buyers are drawn to the cheap and functional electric cars made by SAIC-GM- Wuling Automobile Co.

Sales of Chinese-made Model Ys, which start at around $ 53,000, more than doubled in May from April. April’s figures were down from March as some production lines at the Tesla plant in Shanghai were suspended for two weeks for maintenance and adjustment.

“Once the Model Y hits full production, we’ll likely see a ratio of almost 2 to 1” compared to the Model 3 sedan, said Tu Le, managing director of Beijing-based consulting firm Sino Auto Insights. earlier this month. . “Chinese consumers love SUVs and crossovers. I think the Model Y is going to do very well towards the end of this year.


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