The head of Tesla China urged employees to speak up in defense of the company on social networks amid a public spat with online marketplace Pinduoduo over a discounted Model 3 group-buy purchase.

Why it matters: Tesla’s reputation in China for poor treatment of its customers and arrogant business practices is growing as a result of the public squabble. Pinduoduo’s circumvention of Tesla’s restrictive direct-sales only channel meanwhile threatens to open the door to other third parties looking to gain from the brand’s strong consumer demand.

  • Tesla has a direct sales model in China with a retail network of 58 showrooms across major Chinese cities in addition to its online sales channel. It opened a flagship store on Alibaba’s Tmall marketplace earlier this year, but only for traffic from customers looking to test drive and purchase car accessories.

Details: Zhu Xiaotong, Tesla’s global vice president and the top boss in China, on Monday called for employees to speak up and defend Tesla’s direct sales retail model in cyberspace, Chinese media reported citing persons close to the company. 

  • Zhu urged “every employee to take action” (our translation) on behalf of the company on social media networks. Given the limited manpower and budget in the company’s public relations, Zhu also asked employees to fight back against slander by reporting rumors to internet regulators.
  • Tesla then sent a statement to Chinese media on Wednesday, in which it accused Pinduoduo of twisting the truth and manipulating public opinion for its own benefit.
  • On Tuesday, the e-commerce platform told Chinese media that a Wuhan-based customer who had been refused the Model 3 delivery had placed a new order along with valid auto insurance with the assistance of Pinduoduo and Yiauto, a Chinese car dealer company.
  • Tesla countered, saying that the sedan was not delivered according to its normal procedures. The Model 3 it delivered had been ordered in late July, long before the customer’s later order involving Pinduoduo, which it canceled, according to Tesla’s statement.
  • This contradicts the Wuhan buyer’s story to Chinese media that he placed the new order in a family member’s name after Tesla cancelled his group purchase Model 3 and has blocked him from placing a new order, the electric carmaker said.
  • Pinduoduo said it was “disappointed” that Tesla was making it difficult for some of their fans to get their dream car and “will do everything” to protect consumers’ rights, the company said to TechNode in an emailed statement.
  • The company reiterated to TechNode that the Wuhan buyer, who paid the discount price, has received the car. 
  • Tesla did not immediately respond to a request for comment.

Context: Along with Chinese car dealer Yiauto, Pinduoduo in July began promoting a group buy flash sale, offering five randomly selected buyers the chance to purchase a Tesla Model 3 at a discount of RMB 40,000 ($5,770), if 10,000 people signed up for the campaign.

  • Tesla denied on July 21 via microblogging site Weibo that it was involved in the promotion, saying that it didn’t provide vehicles for the group buy. The campaign meanwhile hit the target number of sign ups, and five selected buyers paid for the vehicles.  
  • A Shanghai-based buyer from the same flash sale has received the vehicle, local media reported.
  • Pinduoduo, the social e-commerce platform known for its steep discounts, has a history of clashing with premium brands when applying its subsidy strategy to drive sales.
  • In addition to Tesla, Pinduoduo’s aggressive discounting tactics has reportedly irked the likes of Apple and Dyson.

Jill Shen

Jill Shen is Shanghai-based technology reporter. She covers Chinese mobility, autonomous vehicles, and electric cars. Connect with her via e-mail: jill.shen@technode.com or Twitter: @yushan_shen

Emma Lee

Emma Lee is Shanghai-based tech writer, covering startups and tech happenings in China and Asia in general. We are looking for stories related to tech and China. Reach her at lixin@technode.com.