Tesla boss Elon Musk praises China’s ‘amazing’ prosperity, infrastructure as Communist Party celebrates 100th birthday

·4-min read

Tesla chief executive Elon Musk heaped praise on China’s economic development and infrastructure as the country’s ruling Communist Party celebrated its centenary, in an apparent bid to sooth tensions with officials and customers.

The positive remarks came five days after the US electric carmaker said it would recall all of the vehicles it had manufactured at its Shanghai factory since the beginning of 2020, amid concerns over safety.

“The economic prosperity that China has achieved is truly amazing, especially in infrastructure! I encourage people to visit and see for themselves,” Musk tweeted.

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He was responding to a post on Twitter by China’s state news agency Xinhua that featured a snippet of Chinese President Xi Jinping‘s speech celebrating the Communist Party’s 100th anniversary on Thursday morning.

The billionaire’s statement was also posted on the Chinese microblogging site Weibo.

“China is one of the most important markets for Tesla, and the American company as well as its CEO have some thorny issues to iron out in the market,” said Gao Shen, an independent analyst in Shanghai. “Musk was apparently extending an olive branch to the Chinese regulators and customers amid a run-in with them.”

On Saturday, the global leader in the electric vehicle (EV) industry said it was recalling more than 285,000 cars because of safety concerns about the cruise control function.

China’s State Administration for Market Regulation said the cruise control could be mistakenly switched on when drivers attempted to change gears, potentially causing the car to accelerate unexpectedly.

The recall applies to 249,855 Model 3s and Model Ys, nearly all the cars Tesla assembled since its Shanghai Gigafactory 3 started operations at the beginning of last year. Another 35,665 imported Model 3s were involved in the recall.

The US carmaker apologised on Weibo for causing inconvenience to its customers.

The recall followed a series of incidents that have tainted Tesla’s reputation in China in recent months.

Musk’s company, the only foreign carmaker that has a wholly-owned assembly plant in mainland China, spent less than a year building the Gigafactory 3, its first beachhead outside the US.

Beijing, hoping to become a global powerhouse in the EV segment, had offered strong incentives including easier land approval and cheap loans to lure Tesla’s investment.

Four Chinese state-controlled banks granted Tesla loans worth 11.25 billion yuan (US$1.74 billion) at cheap rates in December 2019 to fund the construction of the Gigafactory 3.

Tesla was the bestselling EV brand in China, the world’s largest new-energy vehicle market.

At the end of 2020, the company got into a war of words with PingWest when the Chinese tech news outlet labelled its Shanghai factory a “Giga-sweatshop” and accused it of using substandard components.

Tesla threatened to sue it for spreading false information.

Tesla’s China executives were grilled by senior regulatory officials about the quality of the company’s Model 3s in February amid a wave of unpleasant social media posts from owners.

In March, the Wall Street Journal reported that Beijing had restricted the use of Tesla vehicles by military staff and employees of key state-owned companies because of security concerns. The company was found to use cameras and ultrasonic sensors inside its cars, the report said.

Musk downplayed the concerns and dismissed speculation that its cars could be used for spying.

Tesla also faced a social-media backlash from Chinese customers. It followed an incident in April when a woman, in a T-shirt emblazoned with the words “brake malfunction” and a Tesla logo, jumped on a Tesla car being displayed at the Shanghai Auto Show, to blame the firm for a crash involving her Model 3.

In late April, Tesla said it would build a data centre in Shanghai by the end of June to handle data collected from its EVs after Beijing pushed for local storage of data gathered by smart vehicles in the country.

Musk has good reason to rely on China as a key market. Tesla’s main Chinese rivals, NIO and Xpeng, reported record monthly sales in June as more mainland motorists made the switch to smart EVs.

NIO’s deliveries climbed 116 per cent on the year to 8,083 units, while Xpeng’s jumped by a massive 617 per cent to 6,565 vehicles, according to statements they published on Thursday.

Tesla’s sales in June are yet to be announced.

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