Tesla has hit a PR snag in China.
CEO Elon Musk reportedly asked the Chinese government to censor social media posts critical of Tesla, in a move that seems highly incongruous with the tech billionaire's stance on government regulation and censorship in the United States, according to a Bloomberg report that "buried the lede" to bizarre depths.
There remains no evidence that Tesla brakes are inherently faulty. But it's important to remember that supporting censorship in China while also disagreeing with it in the United States are two positions that don't necessarily conflict, so long as the real goal lies elsewhere. IE has reached out to Tesla for comment, and will update as soon as the company replies.
Tesla faces increasing challenges in China
This bombshell of a report suggests that Tesla may have pivoted its focus from state-run media to building new relationships with auto-industry publications and influencers on platforms like WeChat and Weibo, offering factory tours and focus group-like meetings called "discussion sessions" with consumers, policymakers, and major media outlets. And sources familiar with the subject told Bloomberg that Tesla has also told Beijing that criticism of the company on social media is unwarranted, and then asked China's government to exercise its heavy censorship arm to block some of these Tesla-critical posts.
Tesla was initially welcomed to China with red-carpet fervor, as government officials granted the automaker full control of its Shanghai subsidiary, but with mounting criticism of the company from the people of China, Musk's company seems to be changing gears to optimize long-term growth. This pivot in PR strategy comes on the heels of mounting pressure from regulators, in addition to online criticism and negative press coverage.
In June, China's government told Tesla to recall nearly every car sold by the company there, which consists of more than 285,000, to repair a software error. Meanwhile, Tesla's vehicles were banned from some government buildings after concerns were raised about leaking data to the U.S., and auto manufacturers like Xpeng Inc. and Nio Inc. are fighting to overcome Tesla's growing presence in the country. But most businesses have to confront these challenges in China, where consumer approval can fall at breakneck speeds after a single social media controversy.
Tesla may no longer have a 'free hand' in China's auto market
However, this is highlighting what could be the furthest reaches Elon Musk's celebrity can take Tesla in China, where it may no longer experience growth free from public dissent. Consequently, the company's prospects for growth in its second-largest market may hinge on finding a way to improve or circumvent its image with detractors. The company's fraught track record in China is "a warning shot that they need to stay between the lines, and not be so flamboyant in their success," said a former Chrysler executive named Bill Russo, who now works as the Shanghai-based consultant firm Automobility Ltd., in the Bloomberg report. "You can't be so far up front that you become arrogant in the way you conduct yourself."
And Tesla may have to re-evaluate its perspective on China as tensions between the U.S. and China mount, especially surrounding the issue of access to Taiwan's semiconductor supply chains. While China may have given Tesla and Elon Musk free reign over business expansion earlier, this was during the nationwide COVID-19 shutdowns, when the country was determined to display its openness to international trade. With vaccines circulating the world and global economic power shifting in highly complex ways, now may be a good time for Tesla to take a step back, and rethink its commitments from a strategic point of view.