Tesla’s rebounding China sales aren’t proof its PR crisis is over

Call me when it’s over.
Call me when it’s over.
Image: REUTERS/Aly Song
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Tesla’s sales in China appear to be rebounding strongly—the company’s vehicle deliveries in May almost doubled from the previous month. But the numbers don’t necessarily signal it’s successfully weathered a spate of bad publicity.

Tesla sold 33,463 made-in-China EVs in May, of which 21,936 were sold in the country and the rest were exported, according to figures released yesterday (June 8) by the China Passenger Car Association. The China retail numbers mark a roughly 88% jump from April, when the company sold 11,671 cars there. But total sales fell short of the 35,478 vehicles the company delivered from its Chinese factory in March (the industry association didn’t break out the export numbers for that month).

The apparent improvement may have been a surprise to many. Tesla’s China sales were expected to take a hit due to a consumer backlash in April, when an angry Tesla owner staged a protest at one of China’s largest auto shows in Shanghai. The owner claimed that faulty brakes on her Model 3 caused a crash in February that injured two of her family members. Tesla was lambasted for what many—including official media—saw as an “arrogant” response to the customer. The company has since said it is in negotiations with the owner, and has handed the concerned car’s data over to Chinese regulators. The company also made repeated apologies to the public for not solving the complaint in a more timely way, and pledged to cooperate with any government investigation into the matter.

But the incident is yet to be settled. Early today, the car owner surnamed Zhang posted on her Weibo page, saying she had demanded that the company provide more comprehensive data to regulators, and warned she would sue the company if it fails to do so. 

As the controversy surrounding Tesla drags on, its potential customers could be scared off by the ongoing bad publicity and turn to other Chinese EV models, including SUVs from Nio or the compact HongGuang Mini, which has been outselling Tesla in China since last year. In May, the mini EV again led EV sales in China with 29,706 cars sold during the period.

There are other signs that it may be too early to say Tesla has emerged unscathed from its public relations crisis.

Cui Dongshu, the secretary general of the CPCA, told state media Global Times last week that the current car sales numbers could be from orders placed from previous months, and therefore people need to wait till July or August to see if the consumer complaints have had any impact on Tesla’s performance in China.

Technology news outlet the Information reported recently that the company’s monthly net orders in China dropped by nearly half in May compared to April, plunging from 18,000 to 9,800 according to internal data. Net orders precede deliveries by several weeks. For example the current sales figures likely reflect orders in March, when the company booked around 21,000 net orders, according to the Information.

The plunge in May could signal slower deliveries ahead in an indication of Chinese consumers’ changing attitudes towards the company, which they regarded not only as a tech champion, but a coveted symbol of social status and wealth.

Tesla didn’t immediately reply to a request for comment.