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Tesla China will build a data center in Shanghai by the end of June to process data collected from its electric vehicles. This is taking place against the backdrop of increased attention from the state and the public as to how personal information is processed on smart cars in the country.

The news that Tesla will build its own data center in China has been confirmed by Grace Tao, Tesla's China head of communications and government affairs, according to the Chinese newspaper 21st Century Business Herald. Tao previously confirmed that all data collected from Tesla's electric vehicles in China is stored in the country. The announcement follows the Chinese military banning the use of Tesla vehicles at their facilities over concerns about cameras mounted on vehicles.

Earlier, at the China Development Forum 2021, Tesla CEO Elon Musk also made a statement that Tesla cars are not used for espionage in China. “There’s a very strong incentive for us to be very confidential with any information,” Musk explained, during the virtual discussion. "If Tesla used cars to spy in China or anywhere, we will get shut down."

Foreign companies in China must comply with regulations if they want to access Chinese consumers. While user privacy is important, data is also critical to driver safety and national security. “It’s crucial to ensure appropriate local storage for vehicle data, as this will further drive ecosystem collaboration between international manufacturers and local partners,” said Charlie Dai, principal analyst at Forrester, according to the South China Morning Post. Thus, a data center built in China should solve a number of difficulties.

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