Tesla’s Stellar Q1 Results Eclipsed by Publicity Crisis in China

Despite announcing a strong start to 2021 with record revenues and deliveries, Tesla is still struggling to redeem its reputation amid a publicity crisis in the world’s largest car market.

Tesla China on Wednesday released a correspondence between the company and a customer, surnamed Zhang, who alleged that a malfunction in her Tesla had caused an accident in February.

In a screenshot attached to a statement on Twitter-like Weibo, the US electric vehicle maker affirmed that it has proactively reached out to Zhang and “expressed willingness and sincerity for further communication,” to which Zhang replied she “needs time to adjust” and hoped Tesla “can bring a problem-solving attitude to the table.”

At the same time, the company said it has reached out to relevant government departments to help mediate the situation.

The statement also included a timeline of events leading to the public debacle that took place at the Shanghai Auto Show last Monday when Zhang, wearing a t-shirt with the words “brake malfunction”, climbed atop a Tesla vehicle and protested the car maker’s handling of her complaints. She was later sentenced to a five-day detention by police for “disrupting public order.”

In its newest statement, Tesla stressed that it has been engaged in months-long negotiations with Zhang since the accident but she had rejected all of the company’s proposals for mitigation, also refusing any third-party evaluation of the incident. In the meantime, between Feb. 22 and Apr. 17, she had staged multiple protests at various Tesla sales centers in Zhengzhou, Henan province.

Photos of the protest staged by Zhang at the Shanghai Auto Show last Monday went viral on Chinese social media. (Source: Weibo)

Tesla’s initial response, in which the firm announced they were “not compromising over unreasonable demands” following Zhang’s protest at the auto show, drew heavy criticism from China’s state media and netizens, who accused the company of “being arrogant” and “not sincere”. The company later apologized publicly and said it would conduct a self-inspection of its services and operations in China.

Tesla also released car data related to the accident, which showed that when the driver — Zhang’s father — first stepped on the brakes, the vehicle was traveling at 118.5 kilometers per hour, nearly 40 kmh above the speed limit.

During repeated braking, the vehicle’s ABS (anti-lock braking system) — which prevents the wheels from locking when maximum brake pressure is applied — was operating normally, and the front collision warning and automatic emergency braking function were activated, the company said.

“These features played a role in successfully reducing the vehicle speed to 48.5kmh before the accident. No abnormality in the vehicle’s braking system was seen,” Tesla said.

However, Zhang alleged that the data had been tampered with while her husband said the publishing of the car data without their consent represented a violation of privacy rights.

During late Monday’s quarterly investor call, Tesla said it had built and delivered more vehicles in the first three months of 2021 than in any quarter before, with CEO Elon Musk stating that their Model 3 has become “the best-selling luxury sedan of any kind in the world,” and that he believes its Model Y will become the world’s best-selling car or vehicle of any kind in 2022.

SEE ALSO: Tesla Settles Two-year IP Dispute with Former Engineer Cao Guangzhi, Who Allegedly Brought Tesla Data to XPeng

Revenue reached $10.39 billion during the first quarter of 2021, up 74% from a year ago and beating analyst forecasts of $10.29 billion. The company reported $0.93 in adjusted earnings per share, also beating estimates of $0.79. Tesla earlier this month reported 184,800 vehicle deliveries for the quarter, its highest ever vehicle deliveries in Q1.

Tesla is still the leader in China’s electric vehicle market, with sales in the country doubling to $6.6 billion in 2020, making up a fifth of the company’s global sales. It became the first foreign car maker approved to enter the Chinese market without a local joint venture when it signed a deal with the Shanghai government in 2018, allowing it to build its Gigafactory to produce cars locally. Yet, Tesla faces mounting pressure from domestic challengers including US-listed Xpeng, Nio and Li Auto, as well as tech companies including Baidu, Xiaomi and Huawei.

Regarding the global semiconductor shortage that has plagued the auto industry, Tesla said it has so far been able to “navigate through global chip supply shortage issues in part by pivoting extremely quickly to new microcontrollers, while simultaneously developing firmware for new chips made by new suppliers.”