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Angry Chinese Customers Threaten To Boycott Tesla

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Tesla Inc.’s (NASDAQ: TSLA) China-made Tesla's Model 3 cars have been shipped with older and slower chips, the carmaker admitted on Tuesday.

What Happened

Customers who bought Tesla's Model 3 cars shipped out of the company’s Shanghai factory are threatening litigation, accusing Tesla of replacing the new control processors with older versions, according to the Nikkei Asian Review.

Owners of the new cars discovered the issue as the part numbers printed on the control units differed from the ones given in the cars’ information sheets.

Analysts suggest that thousands of customers may be affected, and the move by Tesla to use older chips has angered Chinese internet users as well as Tesla owners. The Review noted that some in China are calling for a boycott of Tesla, and others are accusing the company of “deceiving consumers.” 

Tesla has said that it was deeply sorry for the confusion and that it did not mean to mislead customers but wanted to “complete” order deliveries “as soon as it could.” Tesla claimed there was “almost no difference” in driver experience or user safety between the standard Model 3 and the ones made in China. 

The company said it used the previous version of the chip in its new Model 3 cars due to the ongoing disruption of its supply chain caused by the Covid-19 epidemic.

Why It Matters

Tesla made 112,000 vehicle deliveries in Q4 2019, with 367,500 vehicles delivered over the entire year.

The company has promised free upgrades as and when the newer Model 3 chips become available.

Owners of imported Tesla cars in China are finding hardware inconsistencies as well. The free chip change will only apply to Chinese made Model 3 cars. 

Price Action

Tesla shares traded 0.69% lower at $744.30 in the after-hours session on Wednesday. The shares had closed the regular session 0.54% higher at $749.50.

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