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Tesla got hauled in by Chinese government after it quietly downgraded the chips in some of its Model 3 cars

Elon Musk dancing Shanghai

  • Tesla Model 3 owners discovered last week the company had quietly downgraded the computer chip inside their vehicles to an older generation.
  • The discovery sparked outcry and Tesla apologised, saying the outbreak of the coronavirus had slowed its production rate and forced it to ship with the old chip.
  • This week Tesla executives were hauled in to answer to China's Ministry of Industry and Information Technology, Nikkei Asian Review reports.
  • Tesla has offered consumers a free hardware upgrade once production picks back up, but some Model 3 owners say they don't want the upgrade and are considering a class-action lawsuit.
  • Visit Business Insider's homepage for more stories.

Tesla is in big trouble in China.

Model 3 owners in China started to notice two weeks ago that their cars were equipped with an older generation of computer chip, despite being told that the cars would come with the newest chip installed. The news sparked outrage, and Tesla confirmed that it had shipped Model 3s with the old chip.

The company said it had had to ship cars with the outdated chip because the novel coronavirus outbreak had disrupted its supply chain. The company was ordered by the government to shut down its Shanghai Gigafactory at the end of January as part of containment measures, and it re-opened on February 10.

Nikkei Asian Review reports Tesla executives were summoned to explain themselves before China's Ministry of Industry and Information Technology on Tuesday, where they were told to fix the problem.

"The ministry has ordered Tesla to immediately rectify the problem according to related regulations," the ministry said in a statement on Tuesday, per Nikkei.

Tesla was not immediately available for comment on the meeting when contacted by Business Insider.

Tesla already tried to make peace with affected consumers by offering a free hardware upgrade to give them the new chip once production picks back up. According to Nikkei however this olive branch may not be enough, as some Model 3 owners are forming a class action, with some seeking compensation of three times the vehicles' cost.

"Tesla needs to pay for what they have done," one owner told Nikkei.

Tesla's newest chip is purportedly 21 times faster than the older generation that was subbed into the Model 3s, but in a previous statement Tesla also insisted that the swap made "almost no difference" to the driver experience.

SEE ALSO: Elon Musk says college is 'basically for fun' but 'not for learning,' and that a degree isn't 'evidence of exceptional ability'

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