Tesla cars banned from China’s military complexes on security concerns

The Chinese military has banned Tesla (TSLA.O) cars from entering its complexes, citing security concerns over cameras installed on the vehicles, two people who have seen notices of the directive told Reuters.

Tesla Inc chief executive Elon Musk said on Saturday his company would be shut down if its cars were used to spy, his first comments on news that China’s military has banned Teslas from its facilities.

The move is the latest sign of China’s growing scrutiny of the US electric carmaker amid tensions with Washington. Analysts said it resembled Washington’s measures against Chinese telecoms firm Huawei citing national security.

Chinese military restrictions on Tesla surfaced as senior Chinese and US officials held a contentious meeting in Alaska, the first such interaction since US President Joe Biden took office.

“I presume the timing of the announcement surely linked to the fireworks planned for Anchorage,” said Ian Bremmer, president at Eurasia Group consulting firm.

Tesla shares ended up 0.3% after falling as much as 4.4% during trade.

The U.S. electric car maker won strong backing from Shanghai when it built its first overseas factory there in 2019. Tesla’s sleek Model 3 sedans were the best-selling electric vehicle in the country before being overtaken by a much cheaper micro EV.

The directive advises owners to park Teslas outside military property, and residents were notified this week, the two sources said, declining to be named due to the sensitivity of the issue.

Bloomberg News earlier reported the move.

Pavel Molchanov, an analyst at Raymond James & Associates, said the latest restrictions on Tesla were a close parallel to the U.S. government’s hostility toward Huawei on concerns Beijing could have access to U.S. telecoms infrastructure.

“Even if such concern is exaggerated, it can create dislocation for the companies directly affected,” he said.

Separately, the Wall Street Journal reported that China’s government was restricting use of Tesla cars by personnel at military, state-owned enterprises in sensitive industries and key agencies.

It was not immediately clear whether the measure applied to all such facilities. The move came after a government security review of Tesla’s vehicles, the report said, citing people familiar with the effort.

Tesla sold 147,445 cars in China last year, or 30% of its total deliveries, though competition is growing from domestic rivals such as Nio Inc and Geely.

China’s State Council Information Office and Tesla did not immediately respond to requests for comment. China’s defence ministry could not immediately be reached for comment. Courtesy Reuters

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