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China’s Hesai has denied short-seller allegations that the world’s biggest maker of laser sensors for electric vehicles has misled investors over financial reporting and alleged ties to the People’s Liberation Army.
Shares in the Nasdaq-listed group closed 7.8 per cent lower in New York on Tuesday, marking the latest challenge to the Shanghai-based company that is suing the Pentagon over its designation as a military-affiliated company.
The hit to Hesai’s stock came after Blue Orca Capital, a Texas-based short seller, released a report alleging the tech group was “dishonest” in insisting it was not involved with the Chinese military.
The 38-page report also questioned the accuracy of Hesai’s most recent revenue and margin disclosures this month, as well as the veracity of a recent Reuters report that Germany’s Mercedes-Benz planned to develop cars for the global market with Hesai’s lidar sensors.
“We strongly disagree with the allegations in the Blue Orca report and are of the view that they are without merit,” David Li, Hesai’s co-founder and chief executive, told the Financial Times, adding the company was “committed” to business ethics and regulatory compliance.
The FT was unable to verify immediately the Blue Orca claims.
The short-seller report was released a week after Hesai’s share price jumped 50 per cent in one day after the company said it broke even for the first time in 2024 and management released profit forecasts for 2025 that were significantly ahead of market expectations.
Andrew Fan, Hesai’s chief financial officer, told the FT last week that the company would open its first overseas factory next year, in response to rising geopolitical and trade tensions.
Daiwa Securities last week described Hesai as an “innovation leader” and forecast its lidar shipments would rise at a compound annual growth rate of 78 per cent from 2024 to 2027.
The Japanese investment group also forecast Hesai’s market share in China would top 30 per cent from 2025 to 2027 and noted it held the world’s biggest pool of published patent applications among rival lidar makers.
The Blue Orca report has photos purportedly of Hesai sensors on Chinese combat vehicles, including one from state-owned weapons maker Norinco and another from state media showing Hesai kit being used by the National University of Defense Technology.
In response to questions about the images, Hesai said it “does not engage in sales to any military entities”, adding that it had “no relationship” with Norinco.
“We have no knowledge of how our products were acquired by them, and any similar use of our products constitutes unauthorised distribution,” it said.
Norinco did not immediately respond to a request for comment.
Hesai was first placed on the Pentagon’s list of “Chinese military companies” in January last year.
It briefly won a reprieve in August, when the defence department decided the company did not meet the legal criteria for inclusion on the blacklist.
However, the Pentagon relisted the company in October based on new information, prompting the resumption of Hesai’s legal challenge.
The company has consistently said over the past year that it operates independently from the Chinese government and military.
