Why Tesla's China PR Crisis Is Worth Watching Very Closely

Sometimes it can be hard to get your head around how a company like Tesla (NASDAQ: TSLA) can grow vehicle production 50% per year while the rest of the auto industry struggles to grow at all. It helps that Tesla is smaller than most of its established rivals, but the company has been able to leverage its popularity around the world to grow over the past few years to become the hottest electric vehicle (EV) stock on the market.

And that brings us to the current crisis Tesla is facing in China. Authorities in China are investigating a braking malfunction, and that's led to protests at the Shanghai auto show, negative press in state media, and viral images and videos that are less than flattering for Tesla. I'm not going to get into the validity of those accusations here, which are still being investigated. But investors should understand why this saga -- and China specifically -- are so important to Tesla. To do that, we need to look at where Tesla's growth is coming from.

Image source: Tesla.

Source Fool.com