The Chinese government is banning the use of Tesla vehicles by military staff and employees citing national security concerns.
Tesla vehicles operate motion-detecting video cameras on the passenger and driver’s side of the vehicle and an internal dashboard camera geared primarily for the vehicle's autonomous driving capability.
Tesla vehicles can record images continuously, and the fear amongst Chinese officials is that the US-headquartered company's data could be accessed by the American government, giving it access to sensitive military sites in the country.
The data gathered by Tesla vehicles include when, how and where the vehicles are being used by their owners, in addition to the automatic syncing between the mobile phone and the car allowing Tesla access to contacts.
The Chinese government's directive to owners of Tesla vehicles advised them to park their vehicles outside military installations.
Elon Musk, the CEO and face of Tesla, was forced to address security concerns in a Chinese business forum over the weekend. "If Tesla used cars to spy in China or anywhere, we will get shut down," he said, adding that the company had a powerful incentive "to be very confidential with any information."
What may worry regulators in China is that in 2018 the US government passed a law called the Clarifying Lawful Overseas Use of Data Act or the CLOUD Act.
The Trump administration signed into law that the CLOUD Act allows the US government to request user data from US-based companies even when that data is not stored on American soil.
Elon Musk may not want to share user data, but if US national security requires it, his company could have little option but to comply with US laws.
Even the European Union has chafed under the CLOUD Act as potentially undermining its citizens' privacy by prioritising US national interests over the laws of other countries.
In the recent past, the US has criticised the Chinese technology giant Huawei for being compromised because China's National Intelligence Law requires companies based in the country to assist the country’s intelligence agencies when requested by the state. Something the US could also require from its companies under the CLOUD Act.
Therefore, China's announcement regarding Tesla should be seen as part of an intensifying technology battle between the two sides and the growing distrust of how the respective states could weaponise each country's leading companies.
There are also growing fears that as self-driving cars become more widespread, the multitude of sensors could allow manufacturers to amasse enormous amounts of data, raising national security concerns in China and the US.
Restrictions placed on Chinese companies by the US over alleged national security fears could now result in a tit-for-tat with China responding against US companies like Tesla.
After the US, China is Tesla's largest market helping the company turn a rare profit in 2020, largely due to a surge in electric vehicle sales last year.
China has become one of the largest electric vehicle markets in the world, and the technology behind it has become an important part of the country's increasing drive to rely on local companies to innovate as a means of avoiding potential US sanctions.
Recently a local Chinese electric carmaker sold more electric vehicles than Tesla. Meanwhile, the US electric car maker has fallen foul of Chinese regulators over safety concerns, which some see as part of Beijing's concerted effort to fight back against American attempts to stifle locally grown companies that have achieved international standing.
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