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China strategic ground for Tesla and new restrictions

China bans Tesla owners from driving near the government’s summer retreat, another sign that Beijing sees the vehicles as American spies. Indeed, the Chinese government seems view Tesla as a national security risk for some time now.

What information do we have?

On Tuesday, Reuters reported that local police would ban Tesla vehicles from entering the coastal district of Beidaihe, in Hebei province for two months starting July 1 as the eastern city prepares to host the Chinese Communist Party’s annual summer retreat.

According to Reuters, the local official who provided the information declined to explain why Tesla cars would be banned, saying only that the ban was due to “national affairs”. Tesla did not immediately respond to requests for comment.

The new Tesla ban comes weeks after police in Chengdu, China’s Sichuan province, kept Tesla vehicles away from parts of the city during a visit by Chinese President Xi Jinping. It’s not good for the brand…

Finally, in March last year, the Chinese military banned Tesla cars from entering its compounds, citing security concerns with external cameras fitted to Tesla vehicles. At the same time, the government has reportedly asked some state industries to ban their staff from driving Tesla cars.

Why such suspicion around Tesla vehicles?

Like many modern vehicles, Tesla models are equipped with a multitude of sensory equipment, including on-board cameras that provide drivers with an outside view (often rear-facing) to help them perform maneuvers like parking or changing lanes. The cameras are also essential for Tesla’s Autopilot mode.

Overall, reports on China’s restrictions on Tesla suggest that official agencies are concerned that data captured by vehicle cameras – such as images of buildings or sensitive license plates – could be compromised. transmitted to foreign servers and potentially transmitted to or obtained from the United States.

Last year, after the Chinese military barred the automaker’s cars from entering its bases, Tesla’s CEO, Elon Musk has denied that the company uses its vehicles for espionage purposes. Tesla also claimed that in-vehicle cameras were not turned on outside of North America.

How does China fight (effectively) against alleged espionage?

Later that year, Tesla announced that all data generated by its vehicles in China would be stored on servers located in China, to comply with new rules created by the government to target how vehicles handle and store data in China. China already had a law requiring tech companies to store user data in the country, but lawmakers apparently became concerned that data collected by vehicles presented a loophole in the law, and so introduced this law. new layout.

car manufacturers equip more and more vehicles with cameras and sensors which capture images of the car’s surroundings. Controlling how these images are used and where they are sent and stored is a growing challenge for industry and regulators around the world. Tesla may not be the only auto company bothered about this…

Tension after the “reconciliation” around the Gigafactory

The government’s heightened mistrust of Tesla is a reversal of the red carpet treatment officials rolled out in 2019 when the automaker opened its gigafactory in Shanghai – Tesla’s first production facility outside the United States. China subsidized the construction of the facility and granted Tesla a license to operate as a fully-fledged foreign company in China, rather than forcing the EV maker to partner with a local manufacturer, as foreign automakers are usually forced to do.

The Shanghai gigafactory has become Tesla’s most productive factory in the world, and China is the automaker’s fastest-growing market. In March, Tesla was China’s top EV maker by sales, with 65,184 units shipped, an increase of 15% compared to February. However, the factory was hampered this year by Shanghai’s COVID-induced lockdown, which forced the factory to close for a record 22 days. Sales then fell 98% in April.

Local rivals like NIO and Xpeng are also increasing their local market share. In the face of competition and slowing sales, being treated as a national security threat in China is another headache Tesla doesn’t need. The brand did not immediately respond to a request for comment…



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