China Said to Restrict Tesla Usage by Military PersonnelChina restricts the use of Tesla vehicles for some personnel due to security concerns.

China is reportedly restricting usage of Tesla Inc (NASDAQ:TSLA) vehicles by military and state personnel, citing national security issues. China has proven to be animportant marketfor the automaker as it ramps up sales.

National security concerns in China

Citing sources familiar with the matter,The Wall Street Journalreports that the Asian nation is keeping personnel from sensitive agencies and the military from using Tesla cars. Chinese officials are concerned that the information gathered by the automaker's vehicles could be sent back to the U.S. government, becoming a source of national security leaks.

Beijing ordered a security review ofTesla's cars recently. Officials said they discovered that the vehicles' sensors could take pictures of the areas around them and that Tesla had access to various data points like when, where and how they are being used. The officials also said Tesla had access to the drivers' personal information and contact list when their mobile phone synced to the vehicles.

The Journal's sources said Beijing is concerned that Tesla could send some of the data to the U.S. government. TheChinese governmenttold some agencies to tell their employees to stop driving Tesla vehicles to work.

China restricts Tesla vehicles for some personnel

Some sources also said the government banned Teslas from being driven into housing compounds where the families of people working in sensitive state agencies and industries live. Officials told employees that one of their concerns is that Teslacarscould always be recording and using sensors and cameras to collect information and even short videos.

Citing other sources,Bloombergreports that military employees were told to park their Tesla vehicles outside of the military property. A notice supposedly about the Tesla ban shared on Chinese social media states multi-direction cameras, and ultrasonic sensors could "expose locations."

The State Council Information office didn't respond to The Wall Street Journal's request for comment. Tesla didn't comment on Beijing's move but did refer to a statement it had previously made. The automaker said its "privacy protection policy complies with Chinese laws and regulations" and that it "attaches great importance to the protection of users' privacy." Tesla also said its in-vehicle cameras aren't turned on for all of its vehicles in China.

Defending the internal cameras

Tesla is part of theEntrepreneur Index, which tracks 60 of the largest publicly traded companies managed by their founders or their founders' families. CEOElon Muskhas defended the cameras inside Tesla vehicles, saying that they will be there "for when we start competing with Uber/ Lyft, and people allow their car to earn money for them as part of the Tesla shared autonomy fleet."

For now, the cameras are being used to monitor drivers taking part in beta tests of the full self-driving feature and ensure they are paying attention to the road.