© Reuters. File photo: Tesla Inc CEO Elon Musk dances onstage during the handover ceremony of Chinese-made Tesla Model 3 cars in Shanghai.
Written by: Yiley Sun and Tony Monroe
BEIJING (Reuters) – Electric vehicle industry sources said Tesla, which is facing scrutiny in China over safety and customer service complaints, is strengthening its engagement with mainland regulators and strengthening its government relations team.
Tesla’s change of strategy that has led to more behind-the-scenes interaction with policymakers in Beijing than previously comparatively little shows the seriousness with which the US automaker views 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 technology sector, over concerns about its market dominance.
Tesla did not immediately respond to a request for comment on Monday, a public holiday in China.
As they do elsewhere, regulators in China, the world’s largest auto market, are discussing industry policies and standards with global and domestic firms, industry associations and think tanks.
Usually manufacturers join such meetings in China, but unlike competitors including Toyota Motor (NYSE 🙂 and General Motors Co (NYSE :), Tesla officials have been largely absent from the closed rallies, according to four people familiar with the matter.
Instead, Tesla officials speak regularly at high-level industry conferences. Outside of China, Elon Musk, the outspoken CEO of Tesla, regularly takes to Twitter to comment or criticize the regulators or the rules.
But in recent weeks, Tesla executives have attended at least four policy discussions, on topics including vehicle data storage, vehicle-to-infrastructure communication technologies, vehicle recycling and carbon emissions.
They said the California-based Tesla Corporation, which manufactures the Model 3 electric sedans and Model Y SUVs at its own factory in Shanghai, had not made big commitments at the meetings, but had participated in some discussions.
One source said that Tesla is also expanding its government relations team in China.
According to two employment announcements in April on its WeChat account, Tesla is appointing managers to update the policy database and maintain relationships with government and industry associations “to build a harmonious external environment to support the development of Tesla’s business in the regional market.”
It was not immediately clear how many managers Tesla was planning to employ in government relations.
China accounts for nearly 30% of Tesla’s global sales, it is the automaker’s second largest market after the United States and helped it set record first-quarter sales of cars.
Over the past few months, pressure has been mounting on Tesla’s often excellent relationship with Beijing.
In February, Chinese regulators summoned him over consumer reports on battery fires, unexpected acceleration and failure in software updates over the air.
Sources told Reuters at the time that Tesla came under scrutiny in March when the military banned its cars from entering its compounds due to security concerns with vehicle cameras. Days later, Musk appeared in a video at a high-profile forum, saying that if Tesla used cars to spy in China or anywhere, they would be shut down.
Last month, state media and regulators targeted Tesla after a customer, angry over the handling of her complaint about a brake malfunction, stepped on a Tesla car in protest at the Shanghai Auto Show. Videos of the incident spread.
Grace Tao, Tesla’s vice president who leads the government relations effort in China, was criticized in state media last month after she was quoted in a media interview questioning whether the aggrieved customer is acting alone.
In response to various complaints, Tesla said it will set up a data center in China, launch self-inspection to improve services and work with regulators.