Local Chinese authorities have lifted restrictions on Tesla cars after the company’s China-made vehicles successfully passed the country’s stringent data security requirements, Tesla announced on Sunday.
The breakthrough coincided with Tesla CEO Elon Musk’s unexpected visit to Beijing, where he held a meeting with Chinese Premier Li Qiang amidst the backdrop of the city’s first major auto show in four years.
Despite Tesla’s widespread popularity in China, concerns had previously surfaced regarding the potential data collection capabilities of the U.S.-based automaker. Reports had circulated about Tesla vehicles being banned from certain government-related properties due to these concerns. However, Tesla’s press release on Sunday did not specify which specific local authorities had removed the restrictions, leaving room for speculation.
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The Biden administration had initiated a probe earlier into whether imported cars from China posed national security risks due to their potential data collection capabilities. However, Tesla was not the only manufacturer to meet China’s stringent data security rules. Other manufacturers, including BYD, Lotus, Nezha, Li Auto, and Nio, also announced compliance with the requirements, as revealed by the China Association of Automobile Manufacturers and the National Computer Network Emergency Response Technical Team/Coordination Center of China.
The newly introduced data security requirements for “connected vehicles,” released in November, cover cars released in 2022 and 2023. Automakers voluntarily submit their vehicles for inspection, with the rules encompassing various aspects such as the anonymization of facial recognition data outside the vehicle, the default setting of not collecting cockpit data, processing data inside the car, and prominently informing users about personal information processing.
Tesla, being among the first batch of automakers to meet the compliance requirements, emphasized its commitment to data localization and security. The company revealed that it had localized data storage at its Shanghai data center in 2021 and had subsequently passed the ISO 27001 international standard for information security following a review by third-party auditors.
Musk’s visit to China has ignited speculation regarding the availability of Tesla’s highly anticipated driver-assist software, Full Self Driving, in the country. However, JL Warren Capital CEO and Head of Research Junheng Li expressed skepticism about the immediate rollout of a “supervised” version of FSD in China. Li cited challenges for Tesla, a foreign entity, to support the local operation of the software in China, particularly in the presence of high-quality local alternatives such as Xpeng’s driver-assist software.
Notably, Tesla’s absence from this year’s auto show marks a departure from previous years, following an incident during the Shanghai auto show in 2021 when a protester stood on one of its cars.
However, this development stems from the broader growing tech war between the United States and China. The Biden administration’s probe into the national security risks posed by imported cars from China reflects escalating tensions between the two global powers.
Concerns over data security have become a focal point in this geopolitical rivalry, with both countries vying for dominance in emerging technologies such as artificial intelligence, electric vehicles and autonomous driving systems.
For companies like Tesla caught in the rivalry, their ability to comply with regulatory requirements and maintain market access will continue to shape their growth across the two countries.