EXCLUSIVE Tesla, under watch in China, steps up engagement with regulators

Electric vehicle maker Tesla Inc (TSLA.O), facing close scrutiny in China over safety and customer service complaints, is stepping up engagement with mainland regulators and strengthening its government relations team, said industry sources.

Tesla’s shift in strategy, which has led to more behind-the-scenes interaction with policymakers in Beijing compared to relatively little previously, shows how seriously the US automaker sees setbacks in its second-largest market.

It also comes at a time when China is trying to regulate large and powerful private companies, especially in the tech sector, due to concerns about their dominant position in the market.

Tesla did not immediately respond to a request for comment on Monday, a public holiday in China.

As elsewhere, regulators in China, the world’s largest auto market, discuss industry policies and standards with global and local companies, industry associations and think tanks.

Manufacturers typically attend such meetings in China, but unlike competitors such as Toyota Motor (7203.T) and General Motors Co (GM.N), Tesla officials were largely absent from closed-door rallies, according to four. people familiar with the matter.

Instead, Tesla officials regularly speak at high-level industry conferences. Outside of China, Tesla’s outspoken CEO Elon Musk regularly takes to Twitter to comment on or criticize regulators or rules.

But in recent weeks, Tesla executives have attended at least four policy talks, on topics such as automatic data storage, vehicle-infrastructure communication technologies, car recycling and carbon emissions, have people said.

California-based Tesla, which makes Model 3 electric sedans and Model Y sport utility vehicles at its own factory in Shanghai, did not make any major commitments in the meetings but did participate in some discussions, they said. .


Tesla is also expanding its government relations team in China, one of the sources said.

According to two recruitment announcements in April on its WeChat account, Tesla is recruiting managers to update a database of policies and maintain relationships with government and industry associations to “create a harmonious external environment to support business development. of Tesla in the regional market ”.

It wasn’t immediately clear how many managers Tesla planned to hire for government relations.

Representing around 30% of Tesla’s global sales, China is the automaker’s second-largest market after the United States and helped it achieve record first-quarter vehicle deliveries.

Pressure has mounted in recent months on Tesla’s excellent relationship with Beijing.

In February, Chinese regulators summoned him on consumer reports of battery fires, unexpected acceleration and failures in over-the-air software updates.

And in March, Tesla came under close scrutiny when the military banned its cars from entering its compounds, citing security concerns over the vehicles’ cameras, sources told Reuters. ‘time. Days later, Musk appeared via video in a high-level forum, saying that if Tesla used cars to spy in China or elsewhere, it would be shut down.

Last month, Tesla was targeted by state media and regulators after a customer, angry over the handling of his brake malfunction complaint, climbed into a Tesla car in protest at the Shanghai auto show. Videos of the incident went viral.

Grace Tao, a Tesla vice president who heads its government relations efforts in China, was criticized in state media last month after being quoted in a media interview asking whether the aggrieved customer was acting on her own. .

Responding to the various complaints, Tesla said it would set up a data center in China, launch a self-inspection to improve services and work with regulators.

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