Tesla Takes Its Critics to Court

Chinese customers and bloggers who complain about its cars are increasingly the targets of lawsuits

Charlie Zhu, Chunying Zhang, and Matthew Campbell

Consumer brands have long used everything from catchy advertising to product placement to burnish their image. But faced with a series of public relations and branding crises in China, Tesla Inc. is resorting to an unconventional strategy: suing its critics.

In the past six months, Elon Musk’s electric vehicle giant has filed defamation claims against at least two Chinese citizens who raised concerns about the safety and quality of its vehicles. Tesla alleges the individuals groundlessly damaged its reputation and is asking for steep compensation. Meanwhile, the company’s in-house lawyers have taken to threatening social media personalities who publish similar views with legal action, demanding they retract the posts and apologize publicly.

Tesla’s legal maneuvers, detailed by people familiar with the situation, who asked not to be identified discussing internal decision-making, and in court documents reviewed by Bloomberg Businessweek, represent a marked escalation of its efforts to combat bad press in the world’s largest automotive market. The company has been the subject of frequent complaints on Chinese social media since the start of 2021, with some customers claiming that faulty brakes had caused accidents. (Tesla denies those claims, insisting there’s nothing wrong with the cars it sells in China or anywhere else.)

It’s a sharp reversal for Tesla. The company appeared until recently to enjoy a uniquely favorable position in China, receiving unprecedented policy concessions and extensive government assistance in building its factory in Shanghai. The legal campaign is part of a wide-ranging effort by Tesla to restore this privileged status, which has included beefing up its PR department, promising to store data collected from Chinese vehicles within the country, and lobbying government officials to use their censorship powers to restrain online criticism.

The aggressive posture is a gamble. Western brands are routinely pilloried in China for perceived slights against local customers, leading to vitriolic social media campaigns—often tolerated or tacitly approved by Beijing—that can lead to slashed sales, closed stores, and regulatory investigations. Most recently, outerwear retailer Canada Goose Holdings Inc. has faced a storm of online criticism for what state media described as a “discriminatory” refund policy, sending its shares plunging.