Tesla’s stock price was basically flat in pre-market trading on Monday morning, after the company faced continuing challenges in China.
Last weekend, the State Administration of Market Supervision and Administration, the Chinese automotive safety authority, announced that Tesla is implementing a voluntary recall through software updates to repair suspected auxiliary system safety issues. 285,520 Model 3 and Model Y cars were driven in the area. country.
The recall involves 249,855 Model 3 sedans and Model Y crossovers produced by Tesla in Shanghai, and 35,665 Model 3 cars produced by Tesla in the United States and imported into China.
Due to the suspected failure of the Tesla system, SAMR stated that in some cases, the driver may mistakenly turn on (or turn off) the active cruise control function of Model 3 or Model Y cars. For example, you can turn this feature on or off when making sharp turns. According to the recall announcement of the General Administration of Market Supervision, if these functions are activated unknowingly, in extreme cases, the driver’s Tesla may suddenly accelerate and cause a collision.
Tesla owners in China won’t have to bring their vehicles into a service center to get the update, but the fix is still deemed a recall. The SAMR site notes that Tesla “decided to take recall measures to eliminate potential safety hazards,” only after regulators “initiated a defect investigation.”
Tesla took the lead in updating car software via the Internet and enjoyed the status of a foreign luxury brand in China. But in recent months, the company has been struggling to deal with the erosion of its brand reputation.
In recent months, a series of high-profile crashes, price swings, quality complaints, and withdrawals from Chinese customers have put pressure on Tesla in China.
If demand from China falls, Tesla can still export its Shanghai-made cars to buyers in Asia or Europe. But the growth of the company depends largely on whether it can win the favor of Chinese consumers and the authorities.
JL Warren Capital, an equity research firm that focuses on Chinese companies and US companies with significant exposure to risk in China, wrote in a report on June 7: “Tesla is fully aware of the severity of public relations crisis”. The automaker has reportedly reached out to influencers on social media to try to get them to remove or remove its top posts, including posts by some famous car experts.