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China approves two Tesla models on privacy and data protection compliance

China approves two Tesla models on privacy and data protection compliance
 

Tesla’s handling of personal biometric data is good enough for China, according to a report from the South China Morning Post. The electric car company’s Model 3 and Model Y have been cleared by the China Association of Automobile Manufacturers (CAAM), a government-backed industry consortium, in a test of compliance with Beijing’s data security rules.

The assessment essentially confirms that the company has demonstrated acceptable privacy protection in handling personal data, including facial recognition imagery and cockpit data. But its implications for the Chinese market go beyond biometrics. Tesla vehicles are banned from accessing certain state properties, including airports and motorways. With the Model 3 and the Model Y – both built in the company’s Gigafactory near Shanghai – getting the green light from CAAM, some of these restrictions may no longer apply, opening the way for Tesla to establish a much larger footprint in mainland China.

That it hopes to do so is underlined by CEO Elon Musk’s trip to Beijing to meet Chinese Premier Li Qiang. Coinciding with the release of the CAAM results, Musk’s visit was focused on Tesla’s operations, including the pending approval of its autonomous driving platform in China. The company has been not-so-subtly lobbying Beijing on its Full Self Driving (FSD) system, arguing that autonomous driving is a key growth driver for the country’s EV sector. It has also indicated that it is strengthening its partnership with the Chinese AI and search firm Baidu for work on “lane-level navigation” and mapping for FSD.

China’s electric vehicle market is the world’s largest, accounting for about 60 percent of global sales. In addition to Tesla, CAAM has given its approval stamp to BYD, Li Auto, Nio, Hozon and Lotus. China remains the second-largest market for Tesla, behind only the U.S. But competition is heating up, and Musk’s EVs have already stirred a few controversies in China over safety and security. Furthermore, recent statements from U.S. officials suggesting China’s VR production rate is outpacing demand could ruffle nationalist feathers and further rally the country’s market around domestic automakers.

Germany and China want more cooperation on EVs, but data concerns hover

Like Elon Musk, German Chancellor Olaf Scholz also paid a recent visit to China to discuss EVs. Rebecca Arcesati reports in The Diplomat that an April meeting with President Xi Jinping confirmed the two nations’ interest in deepening cooperation in autonomous and connected vehicles (AVs). Part of that is a conversation about “reciprocal data transfer.” Arcesati notes that “the U.S. Commerce Department has launched an investigation into potential national security risks of AVs sold by firms headquartered in ‘countries of concern’ – essentially, China.”

While Arcesati notes China’s efforts to minimize data risk in the AV sector, she says that the country has also expressed a desire to disrupt competing economies, and believes “Chinese companies like BYD or Huawei would likely have a hard time refusing a government request to share data or leave a backdoor for access.”

Where will these data-hungry cars go, and where will their data be stored? China has relatively strict data localization requirements, meaning foreign automakers must house their data storage within the country. The country also pools data for mandatory government access. Meanwhile, its manufacturers continue to pump out AVs at a remarkable clip, some of which end up in foreign nations.

What if your car is a foreign spy?

The implications of cars that are also data collection centers are massive enough. Research from McKinsey predicts 95 percent of cars sold in 2030 will be so-called smart cars. Most brands have thus far proven to be poor on privacy, at best; a Mozilla study found connected cars to be the worst product they had ever reviewed on data privacy. Throw a potentially hostile foreign actor into this mix, and the road gets very bumpy, indeed.

An article in the Financial Review quotes Carly Kind, Privacy Commissioner of Australia, which is also looking to tighten data privacy practices and codes with regard to AVs. “Cars are now kind of computers on wheels,” says Kind. “There’s a lot of data being collected there, and not a lot of transparency or understanding about how that data is being used.”

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