Hesai Group Statement on the U.S. Department of Defense "Chinese Military Companies" List

Rhea-AI Summary

Hesai (Nasdaq: HSAI) expresses disappointment over being added to the U.S. Department of Defense's list of 'Chinese Military Companies.' They assert that their lidar products are for civilian use only, not designed for military applications. Despite the unjust inclusion, they do not anticipate significant business disruption, as they have not sold products to the U.S. Department of Defense or any other military parties in the past. Hesai attributes their addition to the list to a media smear campaign and lobbying efforts by competitors. They remain committed to developing market-leading lidar technologies for global transportation safety.

Insights

Market Research Analyst

The inclusion of Hesai on the U.S. Department of Defense's list of 'Chinese Military Companies' could potentially affect investor sentiment and market perception, especially given the current geopolitical tensions between the U.S. and China. Investors often react to such listings with caution, considering the possibility of future sanctions or restrictions that could impact a company's operations, particularly in terms of international sales and supply chain logistics.

Despite Hesai's clarification that its business will not be significantly disrupted, as it does not engage with the U.S. Department of Defense, the broader implications could include increased scrutiny from other U.S. regulatory bodies, potential hesitancy from global partners and a reevaluation of risk by shareholders. The long-term effects on Hesai's stock performance will largely depend on the company's ability to maintain its customer base and manage its reputation amidst this controversy.

Legal Expert

The legal ramifications of being listed as a 'Chinese Military Company' by the U.S. Department of Defense extend beyond immediate business transactions. It subjects Hesai to a heightened level of due diligence from investors and customers who may be concerned with compliance risks. Furthermore, it could lead to increased legal and regulatory costs as the company may need to engage in lobbying and legal battles to clear its name and address the allegations made against it.

Understanding the EAR99 classification is crucial; it indicates that Hesai's products are generally considered commercial items without significant military application. However, the juxtaposition of this classification with the Defense Department's list can create a complex legal scenario that might require Hesai to navigate intricate export control laws and regulations, which could affect its international trade relations.

Financial Analyst

The immediate financial impact on Hesai appears to be minimal, as the company asserts that it does not conduct business with the U.S. Department of Defense or military entities. However, the broader market implications could manifest in the form of stock price volatility, as investors may react to the perceived risks associated with the company's future growth prospects and ability to operate freely within international markets.

It is important to monitor Hesai's quarterly financials for any signs of declining revenue or increased operational costs stemming from this development. Additionally, the situation may lead to a reassessment of Hesai's valuation, considering the potential for reduced market access or retaliatory measures from other governments in response to the U.S. listing.

PALO ALTO, Calif., Jan. 31, 2024 /PRNewswire/ -- We are deeply disappointed to learn that Hesai has been added to the U.S. Department of Defense's list of "Chinese Military Companies." We believe this inclusion is unjust, capricious, and meritless.

Hesai lidars are for civilian use only. We do not sell our products to any military in any country, nor do we have ties of any kind to any military in any country. Hesai is a publicly traded, privately owned company (Nasdaq: HSAI) with an independent corporate governance structure. 

Our lidars have never been designed or validated to military specifications. All Hesai's lidar products are classified as EAR99 by the Bureau of Industry and Security of the U.S. Department of Commerce, which indicates that the products are not suitable for any military application.

While we believe our addition to this list is unjust and was made in error, we do not expect it will cause any significant disruption to our business. The list only prevents the U.S. Department of Defense from purchasing products from included entities. To the best of our knowledge, Hesai has not sold any products to the U.S. Department of Defense or any other military parties in the past, nor will we do so in the future.

Our inclusion on this list follows almost a one-year media smear campaign based on unsubstantiated, baseless and false allegations (it has been alleged that Hesai is owned and controlled by the Chinese military, may be helping China spy on Americans and Hesai poses a national security threat to the U.S.), followed by an intensive lobbying effort on Capitol Hill against us orchestrated by lidar competitors seeking to leverage anti-China sentiment in the U.S. The technological superiority and quality of our products have made us a target by our competitors who are failing to deliver any products suitable for the automotive market. Our competitors that are years behind in product development are desperate and have resorted to political lobbying in attempt to block critical and lifesaving lidar products that will enhance road safety. Our products are preferred and trusted by leading OEMs, manufacturers, autonomous driving companies, and robotics companies in over 40 countries. We remain undaunted in our commitment to developing market leading lidar technologies that reduce accidents, save lives, and make global transportation safer for everyone.

About Hesai Technology
Hesai Technology (Nasdaq: HSAI) is a global leader in lidar solutions. The company's lidar products enable a broad spectrum of applications, including passenger and commercial vehicles with Advanced Driver Assistance Systems (ADAS), autonomous driving vehicles, and robotic applications such as last-mile delivery robots and AGVs. Hesai seamlessly integrates its in-house manufacturing process with lidar R&D and design, enabling rapid product iteration while ensuring high performance, high quality, and affordability. The company has superior R&D capabilities across optics, mechanics, electronics, and software. Hesai has established offices in Shanghai, Palo Alto, and Stuttgart, with customers spanning over 40 countries.

View original content:https://www.prnewswire.com/news-releases/hesai-group-statement-on-the-us-department-of-defense-chinese-military-companies-list-302050140.html

SOURCE Hesai Group

FAQ

Why was Hesai added to the U.S. Department of Defense's list of 'Chinese Military Companies'?

Hesai was added to the list based on allegations that the company is owned and controlled by the Chinese military, may be helping China spy on Americans, and poses a national security threat to the U.S.

What is the ticker symbol for Hesai?

The ticker symbol for Hesai is 'HSAI'.

What is the classification of Hesai's lidar products by the Bureau of Industry and Security of the U.S. Department of Commerce?

Hesai's lidar products are classified as EAR99, indicating that they are not suitable for any military application.

Has Hesai sold any products to the U.S. Department of Defense or any other military parties in the past?

To the best of Hesai's knowledge, they have not sold any products to the U.S. Department of Defense or any other military parties.

How does Hesai describe the allegations against them?

Hesai describes the allegations as unsubstantiated, baseless, and false, attributing them to a media smear campaign and lobbying efforts by competitors.

What is Hesai's commitment despite the challenges they are facing?

Hesai remains committed to developing market-leading lidar technologies that reduce accidents, save lives, and make global transportation safer for everyone.