The relationship between American tech giants and the Chinese government has never been an easy one. We reported previously how Apple finds itself in a predicament as it strives to conquer the colossal smartphone market in China, the world’s largest. The tech giant has to balance appeasing both Beijing and Western politicians, which tend to disagree on data regulation and censorship.
Now as Tesla becomes a major electric vehicle player in China, it finds itself in a similar dilemma. A recent, wide-ranging update to Beijing’s anti-espionage legislation is also prompting foreign firms to take a closer look at the risks of operating in the country that has turned national security into a top priority.
Foreign automakers have been in China for decades, but internet-connected vehicles have given rise to a slew of new data-compliance requirements that did not affect traditional carmakers. Tesla has already encountered data security backlashes in the country.
Over the past weekend, local media reported that an airport in a Southern city with a population of 1 million had banned Tesla vehicles from parking due to “confidentiality concerns,” though drop-offs and pick-ups are still allowed. An airport worker told the press that “many places have a similar rule.”
The policy is supposedly a response to Tesla’s “sentry mode.” The feature, which uses a car’s external cameras to detect suspicious activity when the vehicle is left unattended, is designed to guard against break-ins and thefts. And despite similar features in other local EV makers, Tesla’s foreign identity clearly results in more trust issues.
In response to the media attention, Tesla stated in a Weibo post that data generated from Sentry Mode is “only stored offline on the USB device inside the car,” and, unlike some other brands, “neither the owner nor Tesla” can remotely view the vehicle’s surroundings online.
According to Tesla China’s website, Sentry Mode needs to be activated manually in the car’s system setting and the camera will only begin recording when a threat is detected, provided that a USB flash drive is also in place. Users “must review and comply with local laws, regulations, and any applicable rules regarding the use of cameras and assume full responsibility,” the website notes.
This isn’t the first time that Tesla cars have been known to be excluded from public venues. In May 2021, Reuters reported that some government compounds in China had barred Tesla vehicles from entering.
In its Weibo post, Tesla also reminds the public that it had long set up a data localization center in accordance with China’s automobile data protection measures introduced in 2021. The guideline, which aims to “protect drivers’ privacy and safeguard national security,” requires “vital data” to be stored within China if it “involves such things as China’s military, government, traffic, and logistics information, as well as electric vehicles’ charging networks.” Visual information about an airport’s surroundings seems to easily fall into one of these categories.
Apple is among the few remaining American tech giants that maintain a significant presence in China. Like Tesla, it faces data privacy issues in the country, but its challenge is amplified by its colossal app store that requires close and timely oversight to ensure app developers adhere to China’s intricate internet regulations.
Tesla will soon face a new issue around data isolation once it switches Full Self-Driving on for Chinese users. Speculation has been around for months that the advanced driving feature will be available in China in 2023. The situation presents a dilemma similar to that faced by TikTok in the U.S.: How can a company effectively carry out AI training with foreign user data if it is prohibited from exporting that data to its home country on the one hand, while it’s probably reluctant to entrust its foreign staff with its proprietary algorithms to conduct on-the-ground training on the other?
There might be a solution, according to this Twitter user:
One way: Final training doesn’t take as long as dev training (less than 1%). Once they have developed the architecture and methods in US they could replicate in PRC on PRC data to train shipping product. There are other ways too.
— jimmah (@jamesdouma) August 9, 2023
We shall see the technical viability of such a solution or other methods when FSD finally arrives in China. Privacy challenges aside, it will also take Tesla “at least 12 months” to localize FSD for China’s complex road conditions, said the former AI head of Tesla’s Chinese rival, Xpeng. FSD has a long way to go in the world’s largest EV market.
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