Musk Says Tesla Would Be 'Shut Down' If Its Cars Were Used To Spy In China

Tesla CEO Elon Musk has responded to news reports that its vehicles have been banned from locations in China considered sensitive by the government.

What Happened: Tesla Inc TSLA CEO Elon Musk said Saturday that his company would be "shut down" if its car were involved in spying, Reuters has reported. 

“There’s a very strong incentive for us to be very confidential with any information. ... If Tesla used cars to spy in China or anywhere, we will get shut down," he said by video link at the China Development Forum.

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This comes after Reuters and the Wall Street Journal separately reported on Friday, citing unnamed sources, that Chinese officials have banned Tesla vehicles at military locations and sensitive state-owned companies, and possibly also at housing compunds where workers at sensitive locations live. This over concerns that cameras and data gathered in the vehicle could be used to leak national security information, including to the U.S.

"Whether it's Chinese or U.S., the negative effects if a commercial company did engage in spying — the negative effects for that company would be extremely bad," the Wall Street Journal quoted Musk as saying. "Even if there was spying, what would the other country learn, and would it actually matter? If it doesn't matter, it's not worth thinking about that much." 

Why It Matters: In February, Chinese officials raised concerns about safety issues with Tesla related to rapid acceleration and battery fires after it investigated two Tesla subsidiaries. Along with that, officials sought information from Tesla over how user data is taken out of the country. Nikkei Asia reported.

The move comes amid newly increased tension between China and the U.S. Top Chinese and U.S. diplomats had a heated exchange on Thursday in Anchorage, Alaska, to kick off their first meeting since Joe Biden became U.S. president. 

China is the largest electric vehicle market in the world. Tesla sold almost 147,445 vehicles in China in 2020 — 30% of its total. Last year was the company's first profitable year in China. 

Price Action: Tesla's share price did not appear to suffer from news of the supposed Chinese ban, which came out early in the day on Friday in the U.S. Prices rose by 1.71, or 0.26%, to $654.87.

Photo courtesy Steve Jurvetson on Flickr.