China has imposed further restrictions on Tesla Inc. TSLA by banning the electric vehicle maker’s cars inside government compounds, Reuters reported Thursday, citing two people with knowledge of the matter.
What Happened: Officials of at least two government agencies in Beijing and Shanghai have been instructed verbally not to park their Tesla cars at work due to security concerns over cameras installed on the vehicles, according to the report.
It isn't clear whether the measure was a formal government order that applied to state agencies nationwide or just a step adopted by agency officials, the report added. However, the restrictions apply to only Tesla cars.
Why It Matters: Of late, Tesla has been facing rough weather in China due to safety issues, military spy noise and a protest at the Shanghai Auto Expo last month. China is the automaker’s second-largest market after the U.S.
It was reported in March that the Chinese government banned Tesla vehicles access to military and state-owned enterprises, citing national security concerns over vehicle cameras. Musk responded to the news by saying Tesla would be shut down if its cars were found involved in spying.
To allay fears about Tesla’s data collection, the Palo Alto-based company will later this year launch a platform for customers in China that will allow them access to data generated by their vehicles.
Tesla has also halted plans to expand its Gigafactory in Shanghai and make it a global export hub due to the strained U.S.-China relations, it was reported earlier this month.
Price Action: Tesla shares closed 4.1% higher in Thursday’s trading at $586.78.
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