Tesla’s brand image is synonymous with innovation, luxury, and reliability. However, a recent incident involving unhappy employees in China is threatening to tarnish the company’s sterling reputation.

Over the weekend, Chinese employees at Tesla’s Shanghai factory took to social media to voice their dissatisfaction with the reduction of their performance bonuses. They called on CEO Elon Musk to intervene in the matter, claiming that the local management had arbitrarily cut their bonuses due to a safety incident that occurred in February.

The incident in question led to the death of an employee, with local authorities placing responsibility on the deceased worker. While Musk acknowledged that he was aware of the issue and looking into it, he has not provided any additional comments.

The timing of the bonus reduction is particularly noteworthy, as Tesla recently initiated a price war in China by significantly lowering the prices of its Model 3 and Model Y vehicles. Analysts are concerned that these price cuts, which have also been implemented in the United States, could negatively impact the company’s profit margins.

In the past, Tesla has offered competitive salaries to its Chinese employees, comparable to those provided by local car manufacturers and other multinational corporations in the region. The Shanghai factory, responsible for producing Tesla’s most popular models, has a production capacity of over 750,000 vehicles per year and serves the Asian and European markets.

The Chinese market is crucial for Tesla, as it represents the company’s second-largest market in terms of sales. Elon Musk even visited China during Easter weekend, accompanied by Tom Zhu, the former head of China operations who was promoted to Tesla’s manufacturing leader last year.

In addition to its current factory, Tesla recently announced plans to build a second plant in Shanghai, focused on producing its Megapack energy storage system. Construction is set to begin in the third quarter of this year, with production commencing in the second quarter of 2024.

As Tesla prepares to release its first-quarter earnings this Wednesday, investors and stakeholders will be eager to hear any updates regarding the situation in Shanghai. It remains to be seen how the company will address the employee unrest and whether this incident will have any lasting impact on Tesla’s reputation and performance.