A Model Y vehicle on display at a Tesla flagship store in Shanghai, China on Jan. 4, 2021.

Gao Yuwen | Visual China Group | Getty Images

Citing national security concerns, China is restricting the use of Tesla’s electric vehicles by some government and military workers, according to a report in the Wall Street Journal on Friday. A separate report from Bloomberg said the cars were banned in certain areas.

Tesla’s shares fell more than 2.6% on Friday morning.

It came after the country conducted a vehicle security check which reportedly found that Tesla’s sensors were able to record images of their surrounding locations. The Wall Street Journal quoted people familiar with the matter, adding that Tesla could get important data, such as when and where the cars were being used. According to the report, more personal information, such as a cell phone’s contact list, could also be captured when it is connected to the car.

China is ultimately concerned that the information could be sent back to the US, according to the report.

Tesla didn’t immediately respond to a request for comment.

Tesla’s Chinese market has played an increasing role in the company’s supply and manufacturing. The company’s sales in China more than doubled last year to $ 6.66 billion, representing 21% of total sales of $ 31.54 billion. In 2019, Tesla had sales of $ 2.98 billion in China, which is only 12% of its total sales of $ 24.58 billion.

Read the full Wall Street Journal report here.