China Now Has a Trust Issue with Tesla over Spy Concerns

Tesla CEO Elon Musk responded to concerns of Tesla spying for the U.S. government. Speaking publicly in an annual conference on developments in China, the billionaire rejected the claims and said the company would never be used for spying in China.

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

On March 19, Reuters reported that the Chinese military banned Tesla vehicles from entering the military, citing concerns about the cameras deployed on Tesla vehicles. Furthermore, The Wall Street Journal also reported that the Chinese government restricted military personnel and critical state-owned enterprises’ employees from driving Tesla, claiming that the vehicle could gather data and become a national security threat.

Those restrictions surfaced after the Chinese and U.S. officials having clashes over their meetings in Alaska. The Chinese diplomats took unprecedented strong moves to argue with the U.S. officials in front of media cameras, urging the United States to stop lecturing China over human rights concerns in Xinjiang and Hong Kong.

SEE ALSO: Chinese Officials Summon Tesla Over Quality and Safety Complaints

China is the world’s largest market for new vehicles. For Tesla, potential restrictive measures from Chinese authorities could lead to significant harm to its future.

Musk further compared Tesla with TikTok. The Chinese-owned social media application faced a severe risk of getting banned in the United States last year over national security concerns. “The United States wanted to shut down TikTok. Luckily, it did not happen,” Musk said. “Many people were concerned about TikTok. But I think this kind of concern is unnecessary, and we should learn lessons from it.”

Yet, the comparison missed the clear difference between the American and Chinese legislations. While Tesla can claim that it will not spy for the U.S. government, it is more difficult for Bytedance to make the same argument.

CNBC reported that China’s National Intelligence Law from 2017 requires organizations and citizens to “support, assist and cooperate with the state intelligence work.” And for companies like Huawei, Xiaomi, and Alibaba, there are very few clues, if any, indicating they are willing to resist the Chinese government’s orders. On the contrary, American technology companies like Google and Apple both have refused to comply with the FBI and other U.S. government agencies.

In recent years, Tesla made significant investments in China, including establishing an automobile production factory in Shanghai in 2019. Unlike many other U.S. companies, Tesla maintained positive relations with China and enjoyed substantial government supports.

However, Tesla has run into multiple critical issues over its vehicle’s quality and safety measures, including several brake system failure reports. The company’s operation was also reported to have a poor customer service attitude and tended not acknowledging concerns over its products’ quality. Earlier last month, officials from five Chinese government departments summoned Tesla representatives over quality concerns about its China-made cars.

A report from The South China Morning Post cited an unnamed source, saying that Chinese leaders became very concerned about Tesla’s vehicles. The Post also noted that Elon Musk might visit the country next month, a privilege that most foreign nationals do not have amid the COVID-19 travel restriction imposed by China since March 2020.

Chinese state media Global Times also reported the issue and cited the assassination of Iranian brigadier general Mohsen Fakhrizadeh Mahabadi as one of the concerns with Tesla’s latest technologies. The report also claimed that Tesla’s vehicle could record critical information while driving on the road and could expose China’s missile deployment and transfer plans. The state-owned media outlet further called for more legislation to ensure that Tesla only retains any data collected in China within the country’s border, such as utilizing the Guizhou-based Cloud Big Data Industry Development Co.

Apple currently uploads all its China users’ data to the government-supported corporation in Guizhou. The practice started in February 2018 and has continued for more than three years.

In the Chinese market, Tesla also faces competition from domestic fully electric automobile manufacturers like Nio and Xpeng. Earlier in March, Xpeng Motors received a $76.9 million investment from the Chinese government. Tesla also faces more challenges in the global electric automobile sector that the company has dominated in the past years, with a Deutsche Bank report suggesting Volkswagen could surpass Tesla in electric-vehicle sales as soon as 2022.