Elon Musk said his company would be closed if its cars were used for espionage purposes.
Tesla’s chief executive was responding to news that China’s military has banned Tesla cars from its facilities.
Speaking to a Chinese forum in a virtual discussion, Musk said: “There is a strong incentive for us to be very confidential with any information.
“If Tesla used cars to spy on China or anywhere, we would be closed.”
According to a report by Reuters on Friday, the Chinese army cited security concerns with the cameras installed in Tesla vehicles.
The cameras are used to assist drivers in parking and driving alone, while some models also have cameras in the rear view mirror for driver safety.
Musk previously spoke about the value of the data that Tesla vehicles can capture, saying that they can be used to develop autonomous driving functions.
Reports said Chinese officials found that cars could record visual images of their surroundings.
The military responded by telling Tesla owners to park their cars outside military property.
It came when diplomats from the United States and China were criticizing each other during a two-day meeting in Alaska, the first face-to-face conversations between the two countries since Joe Biden took office in the United States in January.
China is the largest automobile market in the world and an especially critical market for electric vehicles.
Tesla sold about 30% of its vehicles in China last year, but is facing stiff competition from domestic rivals.