The Chinese military has banned Tesla cars from entering its housing complexes, citing security concerns over the cameras installed on the vehicles, according to two people who saw notices of the directive.

The order issued by the military advises Tesla owners to park their cars outside military property, they said, declining to be named due to the sensitivity of the issue.

Residents of military housing were notified of the ban this week, they added. Bloomberg News had earlier reported the move.

Separately, the Wall Street Journal reported that China's government was restricting the use of Tesla cars by personnel at military, state-owned enterprises in sensitive industries and key agencies, as they could be a source of national security leaks.

It was not immediately clear whether the measure applied to all such facilities. Tesla shares, which rose more than eight-fold in 2020, fell nearly 2% in early New York trade.

China's State Council Information Office and Tesla did not immediately respond to Reuters requests for comment on Friday evening. China's defence ministry could not immediately be reached for comment.

Tesla cars, which are popular in China and made at a factory in Shanghai, have several small external cameras to assist with parking and self-driving. Its Model 3 and Model Y also have cameras embedded in the rear view mirror for driver safety that are disabled by default.

The Chinese military's restrictions on Tesla surfaced as senior Chinese and U.S. officials held a contentious meeting in Alaska, the first such face-to-face interaction since U.S. President Joe Biden took office.

They come after a government security review of Tesla's vehicles, the Wall Street Journal reported, citing people familiar with the effort. Chinese officials found that Tesla car sensors could record visual images of surrounding locations, it added.

It was not clear whether the decision was related to heightened U.S.-China tensions. But the military's apparent concerns underscore a broader challenge for automakers.

Cars & Cameras

Vehicles of all kinds are being equipped with cameras, radar sensors and image-capturing lidar sensors that can assemble and transmit detailed information about what is around a vehicle and who is inside it.

Who controls how those images are used and where they are sent and stored is a fast-emerging challenge for the auto industry and regulators around the world.

Tesla boss Elon Musk has been open about the internal camera, taking to Twitter in 2019 to say: "It's there for when we start competing with Uber/Lyft & people allow their car to earn money for them as part of the Tesla shared autonomy fleet. In case someone messes up your car, you can check the video."

Musk has often spoken about the value of data Tesla vehicles can capture that can be used to develop autonomous driving functions. Other automakers, including Chinese manufacturers, are also equipping vehicles with cameras and other sensors that can capture images of objects around the car.

China, the centre of the global EV market, is strategic for Tesla. Its Shanghai Gigafactory was Musk's first production plant outside the United States. The factory currently manufactures the Model 3 sedan and the Model Y compact sport-utility vehicle.

A Chinese state regulator said in February that government officials had met representatives from Tesla Inc over reports from consumers about battery fires, unexpected acceleration and failures in over-the-air software updates.

Tesla sold 147,445 vehicles in China last year. It faces growing competition from domestic rivals such as Nio Inc and Geely.

In 2017, the U.S. Army ordered its members to stop using drones made by Chinese manufacturer SZ DJI Technology Co Ltd because of "cyber vulnerabilities" in the products.