China Restricts Military, State Personnel Use Of Teslas Over National Security Concerns: Report

The Chinese government has restricted Tesla Inc TSLA vehicle access to military, state-owned enterprises in sensitive industries, and critical agencies over national security concerns, the Wall Street Journal reports.

What Happened: Tesla vehicles had eight surround cameras, 12 ultrasonic sensors, and radar for their autopilot system. The Chinese bestselling Model 3 and Model Y vehicles had a camera installed above the rear-view mirror.

Suspicions were raised over the car sensors’ ability to record visual images of surrounding locations and Tesla’s indiscriminate data collection over car usage, including drivers’ personal information and mobile phones’ contact list synced to the cars.

WSJ notes that the restriction comes as President Xi Jinping moves China away from foreign technology in a tit-for-tat battle with the U.S. over technology.

Global automakers collected massive data from moving cars via cameras, sensors, and computers loaded onto the vehicles to detect safety features stored in the automakers’ cloud-based servers.

The government forbade some of its agencies from driving Tesla cars to work, which extended to the families of personnel working in sensitive industries and state agencies suspecting the vehicle’s record mode, using cameras and other sensors to log various details, including short videos.

Why It Matters: Tesla has reiterated its previous assurance over user privacy protection in China.

Previously, Tesla received considerable Chinese support to build the factory near Shanghai, notes Bloomberg. However, the automaker recently faced flak from China over vehicle quality and safety issues, including battery fires and abnormal acceleration, leading to a forced public apology to China in early February.

Last week, a group of hackers admittedly breached a trove of security-camera data gaining access to footage, including the Tesla warehouse in Shanghai. Tesla assured the safety of the Chinese Gigafactory data.

Price action: TSLA shares are trading lower by 0.94% at $647 on the last check Friday.

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