China is reportedly barring military and government personnel from using Tesla vehicles, citing a potential data security risk posed by the Elon Musk-run electric carmaker.
According to a report in The Wall Street Journal citing sources, people who work for the "military, state-owned enterprises in sensitive industries, and other government agencies" will be asked not to drive a Tesla vehicle.
"The Chinese government has informed some of its agencies to ask their employees to stop driving Tesla cars to work," the report mentioned.
Tesla cars have also been reportedly banned from driving into housing compounds for families of personnel working in sensitive industries and state agencies.
"They were told by their agencies that among the government's concerns is that Tesla vehicles can be constantly in record mode, using cameras and other sensors to log various details, including short videos".
The Chinese government is concerned that those images can be sent back to the US.
The Chinese regulators are also taking a closer look at Tesla operations in the country after recent videos on social media showed a Model 3 battery fire and malfunctioning vehicles.
Tesla said in a statement that its "privacy protection policy complies with Chinese laws and regulations".
"Tesla attaches great importance to the protection of users' privacy," the electric carmaker added.
The restriction on Tesla comes as Chinese President Xi Jinping "increasingly moves China away from foreign technology as Beijing's technological battle with the US intensifies".
The move comes at a time when the US has labeled smartphone maker Huawei a national security threat, restricting its business activities with the US companies.
Tesla which has its Gigafactory in Shangai is set to enter India this year to tap into the million-dollar opportunity as the country warms up to EVs.
China is the largest market for electric vehicles in the world, and Tesla is the top seller of such vehicles.
The company also plans to build a supercharger manufacturing factory in Shanghai, which is expected to be operational soon.
On January 7, the US electric carmaker launched a project to manufacture Model Y vehicles in the Shanghai Gigafactory, its first overseas plant outside the US.
Tesla has opened its largest supercharger station worldwide, with 72 charging piles set up in the Jing'an District of Shanghai.
As of the end of 2020, the automaker has built more than 600 supercharger stations in China.