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Technology

Tesla builds Chinese data center as cyber crackdown looms

EV maker prepares for anticipated ban on overseas transfer of road data

Tesla sedans at a showroom in Shanghai: The electric vehicle maker nearly quadrupled sales in China for the first quarter.   © Reuters

PALO ALTO, U.S. -- Tesla has built a new data storage center in mainland China, the American electric vehicle maker said Tuesday, a move made in response to Beijing's forthcoming rules preventing overseas transfers of sensitive information.

The company will expand the center in phases so that the site stores all data generated by its vehicles sold on the Chinese mainland, according to Tesla's release on microblogging platform Weibo.

Chinese authorities released a draft this month for rules concerning the safeguarding of data from vehicles. The proposed codes are based on China's internet security law.

The proposal would heavily restrict the overseas transfer of data such as traffic volume, vehicle tracking and images taken by cameras. It is suspected that the measures were written with Tesla in mind, as the U.S. company has made major inroads in the Chinese EV market.

In the Weibo post, Tesla touched on the draft regulations by saying the company "strongly supports" the introduction of industry standards.

Tesla chose Shanghai for its first offshore assembly plant, which began operation at the end of 2019. Localizing production let Tesla rein in costs, which provided room to steadily lower the sticker prices on EVs.

As a result, Tesla's Chinese sales have flourished. The automaker sold roughly 69,000 EVs in the first quarter, market researcher MarkLines said, nearly quadruple the volume from a year earlier. The Chinese sales numbers are roughly equivalent to those in the U.S.

But as Tesla becomes more embedded in the Chinese market in terms of manufacturing and sales, tensions between the two nations have cast a shadow over the company's prospects.

Tesla has been suspected of transferring vehicle data from China to the U.S., Chinese media report. In March, it became public that units in the People's Liberation Army have essentially banned service members from using Tesla vehicles.

The 2017 internet security law orders personal and other sensitive data collected within China to be safeguarded in servers within the border. Apple is building a facility in the country that will support cloud computing services for iPhones and other devices, according to reports.

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