China’s prominent LiDAR company has strongly refuted claims of having connections to the Chinese military, as a major U.S. court decision looms regarding its inclusion on a Defense Department list linked to military suppliers. Hesai, the global leader in LiDAR sensor technology sales, is also a significant supplier for Chinese electric car manufacturers. Recently, its shares, traded on Nasdaq, experienced a sharp decline following a report by Blue Orca Capital, which accused Hesai of misleading investors. The claims caused a near 10% decrease in stock value.
In response to Blue Orca Capital’s assertions, Hesai firmly stated, “We are aware of the report published by short-seller Blue Orca Capital. Hesai is committed to stringent standards of business ethics and regulatory compliance. We strongly disagree with the allegations in the Blue Orca report and are of the view that they are without merit.” The company is actively disputing its addition to a U.S. Defense Department registry that lists companies with alleged military ties, maintaining its independence from such connections.
Court documents reveal that a decisive hearing is slated for Thursday in Washington D.C. to resolve Hesai’s legal challenge against the Department of Defense. LiDAR technology, an acronym standing for “light detection and ranging,” leverages lasers for remote sensing, crucial for applications in autonomous vehicles and other fields like consumer robotics and industrial automation. Hesai is notably a primary LiDAR supplier to Chinese auto giants, including BYD. Previously collaborating with GM’s Cruise venture, the focus shifted in favor of semi-automated driving technologies after massive investments fell through last year.
Additionally, Hesai also provides LiDAR technology to Amazon’s Zoox for its anticipated driverless taxi service set to roll out in Las Vegas, with plans for expansion into San Francisco. During a recent earnings call, Hesai’s CEO, David Li, addressed the U.S. government’s persistent accusations, stating, “We can state definitely that DOD has not accused Hesai of being owned or controlled by any military bodies, selling products to any military bodies or otherwise directly supporting any military bodies.” The Defense Department, however, maintains its stance related to the Chinese “military-civil fusion” policy.
The controversy spikes particularly due to the Blue Orca report, which highlights visual evidence of Chinese tanks in media reports equipped with what appears to be Hesai’s LiDAR systems, sparking security concerns. This scrutiny has heightened following former President Donald Trump’s remarks regarding potential national security threats posed by Chinese tech firms with military affiliations. Hesai’s future in U.S. markets hinges on whether authorities deem these alleged military ties a significant security risk.
Despite these ongoing disputes, Hesai has shown robust financial performance, posting a notable profit of 14 million yuan ($1.9 million USD) last year, which marks a significant upturn from the prior year’s substantial losses. As legal proceedings continue, the company remains staunch in its efforts to clear its name and safeguard its burgeoning business interests in the U.S.