Will Tesla Shanghai Auto Show Incident Be A 'Watershed Event' For Rise Of Local Rivals Like Nio, Xpeng?

A protest incident related to alleged brake failure in a Tesla Inc TSLA vehicle in China is being seen as synonymous with that of Samsung Galaxy Note 7’s exploding batteries saga and could be a watershed moment for the rise of electric car maker’s Asian rivals, cnEV post reported on Thursday. 

What Happened: The report cited Brian Shen, a former vice president at the Chinese smartphone giant OPPO, who has drawn parallels between the two incidents and sees it as a significant moment for both Tesla and its upcoming rivals in China such as Nio Inc NIO Xpeng Inc XPEV, and Li Auto Inc. LI.

“When we look at the Tesla brake incident in a few years, will it be as significant as the Samsung Note 7 battery incident and become a watershed event for the rise of local new energy brands,” Shen wrote on Weibo, a Chinese microblogging site.

Samsung Group’s Galaxy Note 7 that was launched in 2016 came under the global spotlight after incidents of battery overheating and explosion turned into a safety risk and also a logistics nightmare for airlines and airports across the world. 

See Also: Tesla China Registrations Tripled YoY In March, Doubled Sequentially: CAIN Data

Why It Matters: Earlier this week, a woman climbed on a red Model 3 at the Shanghai Auto Show wearing a white T-shirt with a message written in Chinese that read “Brake Lost Control.”

The incident captured Chinese media and authorities' attention who questioned Tesla’s stand, eventually forcing the Elon Musk-led company to issue an apology. 

State-run media, including China's Central Commission for Political and Legal Affairs and Xinhua, questioned Tesla's stance, terming it as arrogance and betraying the faith placed in Tesla by Chinese consumers.

See Also: Warren Buffett-Backed BYD Outdoes Nio, Xpeng, Li In Q1 EV Deliveries

Tesla continues to have a dominant position in the electric vehicle category but several Chinese players are closing in fast as newer entrants eye the lucrative EV opportunity.

Tesla has run into other troubles with authorities in China as well, with vehicles made by it being denied access to military-owned facilities on grounds that cameras installed in the vehicles could collect sensitive information.

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Price Action: Tesla shares closed 3.28% lower at $719.69 on Thursday.