Elon Musk tells China that Tesla does not share data

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News that

Tesla

may have a Chinese problem slightly upset the shares on Friday.

After all, China is very important to all electric vehicle manufacturers, and Tesla is the most valuable EV manufacturer of all. Now CEO Elon Musk has addressed the problem. And he doesn’t seem too concerned.

On Friday, The Wall Street Journal reported that the Chinese government may stop driving Tesla vehicles (ticker: TSLA) because of national security concerns. The timing coincided with the US-China talks in Alaska, which have evolved into a conflict between human rights and democracy.

Tesla’s shares fell in Friday’s trading, but ended the day up 0.3%, while the

Nasdaq Compound

gained 0.8% and the

S&P 500

dropped a little bit.

Reuters reported on Saturday that Musk told Chinese listeners that his company has a strong incentive to be very careful about any information that may be collected by the company or by sensors and cameras in its cars.

“If Tesla used cars to spy on China or anywhere, we will be closed,” said Musk, according to Reuters.

For the shares, the problem with the Chinese government appears to be small, but investors have to keep up with why China is central to the company’s success. China is the largest market for new cars and new EVs. Wedbush analyst Dan Ives considers China the basis for the company’s future growth. He classifies Tesla’s shares as Hold and has a target price of $ 950 for the shares.

“In a time of tension between the United States and China, Musk & Co. are in a unique position – together with

Apple

– to be caught in the crossfire, ”wrote Ives in a report on Friday. He added that while he did not expect the situation to get out of hand, he was watching developments closely.

Tesla’s shares have fallen in recent weeks, but not because of geopolitical tensions.

Higher interest rates hurt Tesla’s stock. High rates hurt high-growth stocks like Tesla more than others. For a start, higher interest rates make it more expensive to finance growth. Second, high-growth companies generate most of their cash flow in the distant future. Higher rates make the promise of future cash a little less attractive, relatively speaking, than the higher yield on bonds these days.

Tesla shares have fallen about 7% in the year to date, lagging comparable returns on the S&P 500 and

Dow Jones Industrial Average.

The shares fell about 27% from the 52-week high in January. The yield on the 10-year Treasury bill has recently increased beyond 1.7%, about 0.5% in recent weeks.

Write to Al Root at [email protected]