New Street Research managing partner, Pierre Ferragu, shares his expectations for Tesla’s production and inventory in the coming years.
China has banned the country’s military and employees of state-owned companies from buying Tesla vehicles, according to new reports.
The ban comes amid rising tensions between the U.S. and China and the security concerns that accompany the technology products that the two countries buy and sell to each other.
| Ticker | Safety | Last | Change | Change % |
|---|---|---|---|---|
| TSLA | TESLA, INC. | 654.87 | +1.71 | + 0.26% |
Chinese officials are concerned about the potential data collection using camera technology in Tesla vehicles, which could lead to national intelligence leaks after a review, people familiar with the matter told The Wall Street Journal.
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“China led a security review of Tesla’s EVs and reportedly discovered that Tesla sensors could record images [sic] neighboring locations, “according to Dan Ives and Strecker Backe, analysts at Wedbush Securities.
Shanghai, China – August 1, 2020: Exterior view of the Tesla Gigafactory car factory 3 located in Pudong district, Shanghai, China.
They said that while China’s findings are “consistent with Tesla’s footprint … fears surrounding location monitoring and surveillance with Tesla being a US company clearly sent some fears to the Chinese government and military that led to this unexpected action. “
After receiving permission from China to build a factory in 2018, Shanghai Gigafactory started operations in late 2019. The factory increased Tesla’s production in China by more than 20%, helping the company to reduce manufacturing costs. Unlike other companies based in the country that need to have Chinese partners to operate, Tesla is the sole owner and operator of the facility.
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The Chinese Communist Party reportedly asked the country’s military and some agencies to tell its members and officials not to buy Teslas, the Journal reported, citing people familiar with the change.
Demand for Tesla’s electric vehicles is soaring in the country, according to Ives and Backe, and China’s move could represent a show of authority.
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“Tesla’s huge Giga footprint remains a major strategic advantage over other EV players (domestic and foreign), as we believe Tesla has the potential to [300,000] growth rate of demand in China in the second half of this year, “analysts wrote.
The United States has also cracked down on Chinese technology, such as Huawei and TikTok’s parent company, ByteDance, in recent years for surveillance and security reasons.