Tesla Opens Data Center in China Amid Spying Concerns

Earlier this year we reported that the Chinese military had banned Tesla vehicles from entering its complexes, and housing compounds because of concerns about sensitive data being collected by cameras built into the vehicles, which Elon Musk, the Chief Executive Officer (CEO) of Tesla downplayed espionage concerns from China, adding that if its vehicles were used for spying, the company would be shut down.

Electric car company Tesla will open a data center in Shanghai, China in order to store data collected from its customers’ cars in the country and stay on the right side of Beijing’s cybersecurity laws, according to a new report from the South China Morning Post. All data that foreign companies collect in China about their customers must be stored in China in order to adhere to a tough data law passed in 2017, and probably this way all spying concerns may be overshadowed.

The Wall Street Journal also reported in March that the government was restricting both “military staff and employees of key state-owned companies” from driving the US automaker’s cars, “citing concerns that data the cars gather could be a source of national security leaks.” The outlets cited anonymous sources over these spying concerns.

Last week, Reuters reported, citing anonymous sources, that staff at some Chinese government offices had been told not to park their Tesla cars inside state compounds because of security concerns. Asked about the issue, Zhao Lijian, a spokesperson for China’s Ministry of Foreign Affairs, said at a press briefing last week that he was “not aware of the situation.” The ministry hasn’t yet responded about the reported security concerns involving Tesla.

But CEO Elon Musk has sought to personally reassure officials in China over the last few months, appearing before the government and rolling out a charm offensive in local media. “There’s a very strong incentive for us to be very confidential with any information,” the billionaire said in March at the China Development Forum, a conference organized by a unit of the government’s State Council. “If Tesla used cars to spy in China or anywhere, we will get shut down.”

Tough times

Tesla has faced a rocky road lately in China, the world’s biggest car market. In February, the company was summoned by regulators to discuss the quality of its vehicles made in Shanghai, where it has a sprawling Gigafactory that produces the Model 3 and the Model Y. Authorities said they were concerned about several problems with the cars, including “abnormal acceleration” and “battery fires.”

The company has also faced criticism from consumers directly. In February, it was forced to apologize after a video showed one of its staff members in the Chinese city of Nanchang telling a customer that a potential overload of the state grid might have caused his electric vehicle to experience problems after charging.

Some of those criticisms came to a head months later at the Shanghai Auto Show, where Tesla’s booth was briefly besieged by protesters complaining about problems with its cars. The company swiftly came under fire from Chinese state media at the time. It later apologized to “car owners,” and vowed to “carry out strict self-examination and self-correction, while cooperating with the investigation of relevant government departments.” Tesla has admitted the stakes are high.

In an interview published last month, Musk told state broadcaster China Central Television (CCTV) that he thought the country could ultimately become Tesla’s “biggest market.” “I’m very confident about Tesla’s future in China,” he told the network. “The Chinese economy, I think, can do extremely well over the next decade and will become the biggest economy in the world.”