Tesla stirred up a hornet’s nest in China by promising customers their Model 3 cars built in Shanghai would come with the company’s version 3 self-driving computer chip but then delivering cars that have only the last-generation version 2.5 chip installed. Tesla has apologized profusely for the kerfuffle, claiming the coronavirus delayed the availability of the latest chip.
Chinese customers have not been mollified by Tesla’s explanation, with some accusing the company of being arrogant in the way it is dealing with customers over the issue. A significant number of Model 3 owners in China have banded together and are threatening to sue Tesla for triple damages under China’s consumer protection law, according to a report by Nikkei Asian Review. An internet search using the phrase “Chinese owners prepare to launch class action against Tesla” got 500,000 hits recently.
The Chinese government has called Tesla on the carpet because of the substituted chips. In a statement, the Ministry of Industry and Information Technology said, “The ministry has ordered Tesla to immediately rectify the problem according to related regulations.” It also urged Tesla to fulfill its corporate responsibility and to ensure the consistency of the product, quality, and safety. Tesla insists the substituted chip does not impact the performance or operation of the cars in any way.
The chip issue could be a tremendous public relations black eye for Tesla, which has enjoyed significant support from the Shanghai and national governments in its quest to build its first foreign factory and get production started. Every year at this time, China Central Television broadcasts a consumer rights show famous for naming and shaming companies for allegedly cheating or misleading consumers. Apple and Volkswagen are among those who have been targeted in the past.
The show is widely viewed in China and the companies targeted are often subject to boycotts and reduced sales. Public shaming is big in Chinese culture and Tesla doesn’t need this brouhaha right now as it works to make itself a dominant force in the Chinese EV market.
Volkswagen Gives Credit Where Credit Is Due
Meanwhile, on the other side of the world, Thomas Ulbrich, the Volkswagen board member in charge of electromobility, gave a nice tip of the hat to Tesla. “Tesla is an impressive manufacturer,” Ulbrich said. “It is a motivator for us. Tesla has 10 years more experience. But we are very quick in catching up,” he told the press, according to a report by Reuters.
Things have come a long way since a few years ago when most German manufacturers were taking shots at Tesla and bragging how their electric cars were going to be Tesla killers that would wipe the smirk off of Elon Musk’s face. It seems they have found out since then that making EVs is a much harder task than they ever imagined. Some of them are probably mystified how a company with no manufacturing experience pulled it off. Considering how close Tesla came to failing in the early stages, that is an excellent question.
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