On Tuesday, Tesla (NASDAQ: TSLA) said that its new data center will be used to store information generated from vehicles sold in China. The EV maker hopes that the decision will please Chinese government officials after the company has been criticized heavily in the country.
Why is Tesla in trouble in China?
According to a Bloomberg report last month, Chinese officials banned Tesla cars from entering military bases and housing compounds. The government feared that sensitive data from Tesla’s onboard cameras could be collected and stored on the company’s servers, which could potentially cause a safety risk if the data ended up in the wrong hands. With the new data center, these worries should be eased, which should help the company sell more vehicles in China.
Amid a wider crackdown on tech companies in the region, CEO Elon Musk said Tesla will attempt to secure the locally collected data safely from China-sold cars only. The move comes as no surprise though as it aligns with the automaker’s renewed promise to authorities in Beijing to improve their practices of collecting customer data.
Tesla’s Chinese sales
According to figures posted by the China Passenger Car Association, Tesla sold fewer than 26,000 cars in China in April, down 27% from March, proving that the recent controversies and military ban may be impacting sales. The news came as domestic manufacturers such as NIO (NYSE: NIO), Xpeng, and Li Auto all posted improved sales numbers. The California-based company has recently been the subject of protests from disgruntled owners in China who said Tesla’s brakes don’t work, while no fewer than five Chinese regulatory agencies have questioned the quality of its Shanghai-made cars.
In even more negative news for Tesla bulls, a Reuters report also said that one of Tesla’s biggest China-grown rivals, Geely, is getting ready to launch a range of EV’s.
Due to the recent market volatility, Tesla stock is down more than 18% over the last six months. However, considering the stock has jumped a staggering 268% over the past 12 months, many believe the company is still a good investment. Tesla backers expect the electric vehicle manufacturer to keep growing as it expands its international footprint and continues being the dominant player in the EV market.
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Financial Writer at MyWallSt
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