Hesai Technology Co., a developer of autonomous vehicle sensor technology, is suing the U.S. Department of Defense for including it on a list of "Chinese military-related companies."

01 Hesai inclusion

The Shanghai-based company's inclusion on the so-called 1260H list caused "reputational damage, a significant decline in stock price and the loss of business opportunities," according to a complaint filed in federal court in Washington on Monday. Nasdaq-listed Hesai Technology urged the court to order the department to remove it from the list or declare the provision unconstitutional.

The lawsuit follows other legal challenges during Trump's tenure as the U.S. government sought to warn companies that appeared to help boost China's military capabilities. In 2021, the Biden administration agreed to remove Chinese smartphone giant Xiaomi from the list after a U.S. court sided with it and temporarily halted the ban.

Other companies have also tried to overturn the designation without going to court. IDG Capital, a venture capital firm with offices in Beijing and Hong Kong, said in February that it was working to clarify the "confusion" surrounding its inclusion on the list.

While the list carries no sanctions or other direct penalties, it is expected to restrict access to certain defense contracts.

Hesai Technology provides lidar technology for autonomous vehicles to help avoid collisions. In April this year, U.S. lawmakers urged the Pentagon to ban cars containing Chinese-produced technology, such as lidar, from entering U.S. military bases.

Hesai insists that it only designs and manufactures products for commercial and civilian use. "No Chinese government or military entity seeks to exert influence or control over Hesai Group's management, strategy or research and development operations," the company's lawyers wrote in a filing.

02 Discussions among companies

Hesai also said its appearance on the list disrupted its plans to build a manufacturing plant in the United States and that advanced discussions have been put on hold.

Hesai requested the federal court to require the U.S. Department of Defense to provide reasons for including the company on the list of "Chinese military-related enterprises." The lawsuit states that the U.S. Department of Defense "did not give any warning, explanation, or opportunity to defend before including Hesai on the list."

The U.S. Department of Defense did not immediately respond to a request for comment.

In February this year, Hesai Technology announced on the company's official website that the U.S. Department of Defense issued an updated list of "Chinese military-related enterprises" on January 31, 2024 (Eastern Time) and included Hesai in the list. The company believes that this decision It is wrong, unfair and unfounded. In order to safeguard the company's reputation, Hesai decided to sue the U.S. Department of Defense to defend the company's legitimate rights and interests. Hesai always adheres to compliance, adheres to the principles of integrity and legal operation, and is committed to reducing accidents, saving lives, and making global travel safer.

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