Tesla apologized for the recall over the weekend, adding in a statement that it would “strictly follow national regulations and keep improving our safety protection.”
And the setback isn’t as damaging as a conventional recall, since it can be resolved through a software update that doesn’t require customers to return their cars, according to Tu Le, founder of Beijing-based consulting firm Sino Auto Insights.
“It’s just a patch,” he said. “Most [customers] probably will not know anything’s happened to their car.”
“Let’s be clear: this is not the news bulls want to see as it adds to the negative PR issues in China,” Ives wrote in a note to clients Sunday. Musk has predicted that the world’s biggest car market could also eventually become Tesla’s most important.
Need for a ‘smoother road’
But the string of debacles in China isn’t helping. At the Shanghai Auto Show in April, the company’s booth was briefly besieged by protesters, with one woman climbing on top of a Tesla vehicle to allege that her car had defective brakes. The company initially irked customers with its response, which had vowed to address concerns but “not compromise with unreasonable demands.”
After facing criticism, Tesla later apologized to “car owners,” and vowed to “carry out strict self-examination and self-correction, while cooperating with the investigation of relevant government departments.”
That firestorm appeared to put a dent in the company’s sales, albeit briefly.
In April, the electric car leader sold fewer than 26,000 vehicles in China, down 27% from March, according to figures released by the China Passenger Car Association (CPCA).
Last month, however, Tesla’s sales picked back up to more than 33,000 units, according to the CPCA.
Ives said he believes the recall “is a bump in the road and does not derail the near-term or long-term bull thesis for Tesla China.”
“However, going forward it needs to be a smoother road on autopilot safety, otherwise the PR black cloud will continue,” he added.
But some analysts are calling on the company to do more. In his note Sunday, Ives said that the onus was on the CEO and his team to ensure “these issues are in the rear view mirror.”
Le also said that the automaker should focus on building more goodwill in the country by doubling down on customer service and improving ties with authorities.
“If I was hired by Tesla … the first thing I would do is I would say, ‘[Let’s] try to poach somebody from Volkswagen or GM who has the longest tenure in China from the government relations team,'” he said.
— CNN’s Beijing bureau and Philip Wang contributed to this report.