Hesai returned to US list of firms alleged to help Beijing’s military

By David Shepardson

WASHINGTON (Reuters) -The U.S. Defense Department removed lidar maker Hesai Group from a list of companies allegedly working with Beijing’s military, but will immediately relist the China-based firm, according to a court filing and two letters sent to Congress.

Hesai, whose lidars help self-driving cars and driver-assistance systems gain a three-dimensional map of the road, was added to the list by the U.S. Department of Defense in January along with over a dozen other companies.

Hesai filed suit in May challenging the designation, saying “no Chinese governmental or military entity has sought to exert influence or control over the Hesai Group’s management, strategy, or research-and-development operation.”

Hesai said it was majority owned by shareholders outside China.

The Justice Department said late Wednesday in a court filing the Pentagon had delisted Hesai on the basis of the original grounds and now plans to relist the Chinese company “based on the latest information available.”

The Pentagon, which notified Congress of its decision in a pair of letters, will formally publish notice of the return to the list in the coming days.

While being placed on the list doesn’t involve immediate bans, it represents a warning to U.S. entities and companies about the risks of conducting business with them.

Addition to the so-called 1260H list caused “serious reputational injury, a significant drop in stock price, and lost business opportunities,” Hesai said, asking a U.S. district court to order the government to remove it from the list.

A lawyer for Hesai and the Pentagon did not immediately comment.

Some U.S. lawmakers previously raised concerns about the use of AV technology such as lidar, radar and semiconductors when made by Chinese firms, citing alleged risks of data on American people collected and potentially shared with China.

The Biden administration last month proposed effectively banning Chinese vehicles over concerns about connected vehicle software and hardware.

U.S. Transportation Secretary Pete Buttigieg told Reuters last year his agency had national security concerns about such technologies and that there was a need to better understand “the true ownership of the different enterprises that are supplying different elements of our transportation systems.”