TSLA Tesla Inc

By Trefor Moss 

SHANGHAI -- Tesla Inc.'s sales in China rebounded in May after a short slump, a boost for the electric-vehicle maker as it looks to overcome its first major stumble in one of its most important markets.

Tesla delivered 21,936 cars to Chinese customers in May, the China Passenger Car Association said Tuesday, almost double the number sold the month before, but still well below the near 36,000 it shipped in March. The company doesn't publish its own monthly sales figures and it didn't respond to questions.

In recent weeks Tesla has endured a run of bad publicity over its handling of customer complaints and perceived quality problems, denting its image among Chinese consumers. In an April post on its Weibo social-media account, Tesla assured customers that it takes quality concerns seriously. "If there is a problem with Tesla products, Tesla will absolutely take responsibility," it said.

While Tesla's reputation has undoubtedly taken a hit, the May sales data suggest many local consumers are sticking with the American EV brand, which started building the Model Y at its Shanghai plant in January and is ramping up deliveries.

However, Cui Dongshu, the association's secretary-general, has warned it may be too early to know how seriously the negative publicity has damaged Tesla since many of the cars being delivered in May would have been ordered before the auto maker's recent setbacks.

Speaking to the state-run Global Times last week, Mr. Cui said it would only be clear in July or August whether orders had significantly declined.

Tesla faced a backlash in April when one of its customers staged a protest at Auto Shanghai, China's premier auto-industry expo. Images of Zhang Yazhou standing atop a Model 3, berating the company for allegedly selling her a vehicle with defective brakes before being dragged away by security guards, went viral on Chinese social media.

Tesla at first attempted to dismiss Ms. Zhang's claims and suggested she was acting on behalf of rivals, leading to widespread criticism of its handling of the incident. The company later apologized for its approach to the complaint and committed to improving its customer service.

Since then, other Tesla owners have backed Ms. Zhang's protest online, praising her for what some perceived as a moral stand against an arrogant foreign enterprise. Accidents involving Tesla cars have also been pored over by the Chinese media, sowing doubts in consumers' minds about the company's safety record.

In a country where hundreds of fatal car crashes happen every day, accidents involving Teslas have been amplified by social media, and the company probably faces a public-relations crisis rather than a safety one, said Jeff Cai, general manager of auto products at J.D. Power China. The company can still win Chinese consumers if it can demonstrate it takes their concerns seriously, he said.

Until its recent difficulties, Tesla had overwhelmingly been seen as a prestigious brand in China, boosted by the popularity of Elon Musk, its chief executive.

Adverse publicity has prompted some Tesla buyers to walk away.

Han Maoyu, who works for a tech company in Suzhou, had ordered a Model Y in February but canceled last month because of the steady stream of news stories questioning the safety of Tesla's cars.

"I didn't expect so many things to happen while I waited to get the car, " Mr. Han said. "I used to really like Tesla and I trusted the brand, but lately whenever I heard that another Tesla had crashed I panicked in case the same thing should happen to me." He said he would now buy a car from NIO Inc., a Chinese EV maker.

Tesla had outpaced its Chinese rivals in the first three months of the year, selling 69,280 vehicles. In comparison, BYD Co. sold 53,380 passenger EVs in the quarter, while the U.S.-listed startup trio of Li Auto Inc., NIO and XPeng Inc. collectively sold 45,979.

But in April and May Tesla fell behind. BYD sold 56,715 EVs during the two-month period, while the three startups sold a combined 34,528 cars -- more than Tesla's 33,607.

Tesla exported 11,527 made-in-China cars last month, the association said, down from 14,174 in April.

--Raffaele Huang contributed to this article.

Write to Trefor Moss at Trefor.Moss@wsj.com

(END) Dow Jones Newswires

June 08, 2021 07:31 ET (11:31 GMT)

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