CNBC Special: How a Blacklisted Chinese Tech Firm Is Expanding in the U.S. 7/7/26

Summary

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CNBC Special: How a Blacklisted Chinese Tech Firm Is Expanding in the U.S.

Date: July 7, 2026
Podcast: Fast Money (CNBC)
Theme: Examining the rise of Hesai Technology—a Chinese LiDAR company blacklisted by the U.S. Department of Defense—and the broader implications for national security, U.S. business, and the future of autonomous vehicle technology.

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Episode Overview

This episode of CNBC's "Fast Money" investigates Hesai Technology, a major Chinese manufacturer of LiDAR sensors that has been blacklisted by the U.S. government over national security concerns. Despite these restrictions, Hesai's products are rapidly being integrated into American industries—from autonomous vehicles and robots to airport operations. The roundtable delves into potential cybersecurity risks, the company's ties to the Chinese government, technological vulnerabilities, and the geopolitical and policy challenges posed by foreign tech dominance in strategic sectors.

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Key Discussion Points & Insights

1. What Is LiDAR and Why Does It Matter?

• LiDAR is a laser-based system crucial for autonomous vehicles and robotics to "see" and map their surroundings (01:02–02:41).
• Hesai Technology is a Shanghai-based manufacturer with a third of the global automotive LiDAR market and ambitious U.S. expansion plans (01:29, 04:55).
• The U.S. Department of Defense blacklisted Hesai, designating it as a “Chinese military company,” primarily restricting military contracts but not commercial uses (01:29).

2. National Security Concerns

• U.S. officials argue that Chinese-made sensors could be hacked or manipulated, posing grave risks if installed near sensitive infrastructure (01:29, 03:16–03:39).
  • Craig Singleton (Foundation for Defense of Democracies):
    “The data is so, so sensitive and it's so precise that it could be weaponized by a hostile foreign power if they ever wanted to target our infrastructure.” (03:39)
• Hesai sensors are already in wide commercial use in the U.S.—from JFK Airport to lawnmowers to humanoid robots—even appearing in Amazon’s Zoox robo-taxis (01:29, 10:06).

3. Is There a Real Risk of Hacking or Sabotage?

• Professor Miroslav Pajik (Duke University) demonstrates how LiDAR can be hacked:
  • Malware can make a sensor "see" nonexistent threats, cause accidents, or become disabled by remote triggers such as a drone (05:39–07:47).
  • “It's easy to physically spoof LiDAR.” (05:40)
  • “We can do that in a month.” (07:46)
• Hesai claims its products are secure and certified by independent testers (07:51).
• Industry Example:
  In 2024, a faulty Hesai firmware update due to a leap year bug disabled every Hesai LiDAR worldwide on February 29—demonstrating the potential for either accidental or deliberate mass shutdowns (08:48–09:31).

4. Hesai’s Defense and Limitations

• David Lee, CEO of Hesai:
  • Insists there's no government influence beyond local regulations and no ability for the company or others to access or retrieve data from the sensors (01:25, 04:19, 17:48).
  • “It's a piece of hardware, a pure piece of hardware that the moment you ship, you actually don't get to fully control.” (11:03)
  • Admits inability to control “aftermarket” uses, including potential military applications without their knowledge (11:03, 14:26).
• Hesai’s rationale for lower costs: denies direct subsidies tied to unfair competition, but SEC filings reveal preferential rates and government incentives (25:25–25:45).

5. U.S. Responses and Legislative Action

• Craig Singleton:
  Warns against repeating the Huawei saga where surveillance and national security threats were discovered only after widespread adoption (19:40–20:27).
• Congressional proposals would ban Chinese LiDAR in the U.S. (21:30–21:46).
  • Rep. John Moolenar:
    “These sensors and the ability to transmit information is a huge concern.” (21:46) “We've seen backdoors in robots that would transmit information back to Chinese communist interests.” (22:23)
• Despite blacklisting, Chinese tech firms can still be listed on U.S. stock markets, and there’s no law prohibiting U.S. investment in them (23:49).

6. Barriers to Security

• Hidden "backdoors" or malware are very hard to detect due to proprietary controls over sensors’ source code (24:13).
• Market share hinges on price: Hesai sensors can cost less than $200, undercutting American competitors (24:41).

7. The Broader “Tech Cold War” Dynamic

• U.S. transparency vs. China’s legal requirements for military/civil fusion and data sharing (16:42–17:31).
  • Craig Singleton:
    “Whether they want to transmit that information or not isn't a question. It's mandated by law.” (17:31)
• Debate over whether adopting cutting-edge tech quickly is worth the security risk (19:33–20:27).

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Notable Quotes & Memorable Moments

• Craig Singleton:
  • “It's a tale as old as time with Chinese tech. We told ourselves the same thing on Huawei.” (19:40)
  • “I've seen that movie once. I don't know why we would need to repeat it again on LiDAR.” (20:09)
• David Lee (Hesai CEO):
  • “If it's by the law required, we'll follow the rules … but we won't be able to respond to something that never happened.” (04:40)
  • “I just wanted to make it very clear that we, we, we did buy from [CETC], but it was ... some very fundamental electronics stuff that has nothing to do with the military, nothing to do with communication, nothing to do with data.” (12:40)
  • “You can legally control, but you couldn't physically control where they end up.” (11:03)
• Miroslav Pajik (Duke University):
  • “We can do that in a month.” (07:46)
• Rep. John Moolenar:
  • “America has been in a leadership role in this … but if you're abiding by the rule that says it's whatever the interest of the Chinese Communist Party, that's a very different partner relationship.” (22:53)

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Important Timestamps

• 01:02: LiDAR and Hesai’s U.S. footprint introduction
• 01:29: Blacklisting rationale and government warnings
• 03:16: National security assessment from Craig Singleton
• 05:39–07:47: Duke University’s LiDAR hacking demonstration
• 08:48–09:31: 2024 firmware bug halts all Hesai LiDARs
• 10:06: Hesai partners in autonomous vehicles (Zoox, Kodiak, etc.)
• 11:03: Hesai CEO: limits to post-sale control
• 12:01–13:47: Debate over ties to Chinese military suppliers and location in “military-civil fusion” zone
• 14:15–16:42: Aftermarket military use; CEO unable to guarantee non-military application
• 17:31: Chinese law mandates disclosure to the state
• 19:33–20:27: “Huawei moment” warnings and calls for security reviews
• 21:46–22:53: Congressional concern and response

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Conclusion: Critical Takeaways

• Security vs. Innovation: U.S. businesses face tension between deploying affordable, cutting-edge technology and protecting national security.
• Technological Reality: LiDAR’s vulnerabilities are real and have been demonstrated, raising valid concerns about systemic risk if deployed at scale.
• Policy Gaps: Current U.S. regulations do not fully address the risks of foreign tech components in critical infrastructure; targeted legislation is emerging but may lag behind market adoption.
• Geopolitical Stakes: The story of Hesai Technology is part of a larger “tech cold war,” with strategic implications for AI, robotics, and autonomous systems.

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This episode delivers a comprehensive and nuanced investigation, blending technical insights with policy debate—an essential listen for investors, technologists, and policymakers navigating the future of autonomous innovation and national security.

Transcript

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[CNBC Reporter]

Lidar, the technology autonomous systems like self driving cars use to see their surroundings and one of the world's biggest makers of LiDAR, is at the center of a growing national security debate in the U.S. david Lee is a founder and the CEO of Shanghai based Hesai Technology.

[Interviewer / Journalist]

Does the Chinese government have any influence over the operations of your company?

[David Lee (Founder and CEO of Hesai Technology)]

There is no additional influence other than following the local rules.

[CNBC Reporter]

Hesai is on what's known as the blacklist. According to the Department of Defense, HESAI is a Chinese military company. While the blacklist is designed to protect against national security threats, it only bans Hesai and other companies on the list from securing DoD contracts. There's nothing illegal about using Hesai sensors in non military applications, potentially exposing the public to those risks. The danger? Government officials and security experts say the Chinese Communist Party could access, hack or manipulate with malware the sensitive data collected by the lidar, with potentially serious consequences. And yet HESAI sensors are all over the country in autonomous lawnmowers, in airports including New York's JFK International, and even in humanoid robots like the one for sale in the U.S. made by Unitree, another Chinese company on the blacklist. And now hesai's reach is expanding, announcing earlier this year at the Consumer Electronics

[Event Host / Moderator]

Show Good morning everyone.

[CNBC Reporter]

That its lidar is one of the sensors automakers can choose to integrate into Nvidia's latest self driving systems, a system Nvidia hopes will power this technological wave sweeping cities across the country.

[Nvidia Representative]

Our vision is that someday every single car, every single truck, every single will be autonomous. And we've been working towards that future.

[CNBC Reporter]

In the global race to dominate artificial intelligence, the next Frontier is physical AI and all of it depends on high tech, low cost sensors like lidar to collect the spatial awareness information necessary for the systems to work.

[Craig Singleton (Senior Fellow, Foundation for Defense of Democracies)]

I don't think there's any doubt that HESAI is a Chinese military company with ties to the Chinese government.

[CNBC Reporter]

Craig Singleton is a senior fellow for China at the foundation for Defense of Democracies, a conservative D.C. based think tank known for being critical of the Chinese government. His research has focused on the security risks of Chinese made sensors operating in US systems.

[Interviewer / Journalist]

What kind of data are we talking about?

[Craig Singleton (Senior Fellow, Foundation for Defense of Democracies)]

As Chinese lidar sensors become more prolific across the United States, they're going to operate ever closer to our defense nodes, our utility grids and our transportation hubs. The data is so, so sensitive and it's so precise that it could be weaponized by a hostile foreign power if they ever wanted to target our infrastructure.

[CNBC Reporter]

We sat down with Lee in his first extended interview about the company's blacklist designation and whether his LIDAR is a security risk.

[Interviewer / Journalist]

So you're not in the data business at all. There's no way of getting the data, there's no way of sending it back. Even if the Chinese government asks you for it, you would have to say no, it's impossible.

[David Lee (Founder and CEO of Hesai Technology)]

Exactly that.

[Interviewer / Journalist]

And in the future, if the Chinese government said to you, we want you to manufacture your LIDAR sensors in a different way, would you have to comply?

[David Lee (Founder and CEO of Hesai Technology)]

They've never done that. I won't be able to answer a hypothetical case that don't exist.

[Interviewer / Journalist]

You can't answer whether or not you'd have to comply with the Chinese government request.

[David Lee (Founder and CEO of Hesai Technology)]

If it's by the law required, we'll follow the rules. Right, but we won't be able to respond to something that never happened. As a hypothetical case, that is not something we do.

[CNBC Reporter]

That doesn't allay concerns over his eye, which has a third of the global automotive lidar market, now estimated to be a 300-400 billion dollars market by 2035, government officials and security experts say lidar sensors can can be compromised with potentially dangerous consequences. Lidar sensors work by firing laser pulses and measuring how long it takes for them to bounce off an object and back to the sensor. The sensor combines thousands of these measurements to create a point cloud or 3D map of the world, allowing machines like this robotic dog to see and navigate their surroundings. Miroslav Pajik is a professor at Duke University who studies vulnerabilities in these sensors.

[Interviewer / Journalist]

How vulnerable is LiDAR?

[Miroslav Pajik (Professor at Duke University)]

It's easy to physically spoof LiDAR, he

[CNBC Reporter]

says any lidar sensor can be compromised with malware inserted at the factory during production or through firmware updates. Malware can be difficult to detect since companies deploying the LIDAR usually cannot access a sensor's proprietary source code. And malware can remain dormant until triggered. If that happens, the the malware can trick the sensors into creating a false picture of a vehicle's surroundings. He demonstrated this in real time at Duke's lab.

[Interviewer / Journalist]

So we have in front of us a lidar. Yeah.

[Miroslav Pajik (Professor at Duke University)]

Off the shelf, state of the art device. It is transmitting laser pulses, and those pulses are used to map the world around us. So pretty much it's building a 3D point cloud. And as you can see, there are two of us in the scene.

[Interviewer / Journalist]

So we're here, we are here, nobody else.

[Event Host / Moderator]

Okay.

[Miroslav Pajik (Professor at Duke University)]

What we have here is a triggering device. It is sending a similar laser pulse. It just has an encoded a secret key command that triggers the malware that is deployed on that particular device on that lidar. So when I press this button, it triggers this malware. It will generate the third fake person. You see, there is no one here, but we see in the point cloud that there is another person that is joining us.

[CNBC Reporter]

Other demos from Pajic's lab show how objects can be removed from the sensor's data, causing a vehicle to crash.

[Miroslav Pajik (Professor at Duke University)]

We are preparing now a demo where you fly a drone over it and you can then, like I know, all the vehicles in the area that have that kind of sensor will be triggered immediately. So think of it from DoD applications. You have deployed like a swarm of ground vehicles or drones, and then all of a sudden everything has been disabled or even worse, attacking their own forces.

[Interviewer / Journalist]

And in theory, you could apply that to an autonomous vehicle fleet operating on a city street with the drone flying over to trigger the malware.

[Miroslav Pajik (Professor at Duke University)]

Yes, yes, yes, yes.

[Interviewer / Journalist]

It's not science fiction. This can happen.

[Miroslav Pajik (Professor at Duke University)]

No, no. We can do that in a month.

[Everpure Representative]

Yeah.

[CNBC Reporter]

In a statement to cnbc, HESI wrote its lidars are protected against hacking and remain secure at all times. And HESI's LiDAR sensors have met the standards set by TOV, Rheinland and DECRA, independent third party companies that specialize in product testing, safety validation, and cybersecurity assessments.

[Interviewer / Journalist]

We interviewed a professor at Duke University who studies lidar security specifically, and he showed us how LiDAR sensors can be remotely disabled or manipulated.

[David Lee (Founder and CEO of Hesai Technology)]

I don't know the exact setup, but I tend to argue if you do that in a lab setup, obviously you design the system. You can design a system to be vulnerable. That's not very Hard.

[CNBC Reporter]

But Michael Robbins says the risks are not hypothetical. Robbins is president and CEO of the association for Uncrewed Vehicle Systems International, a trade organization that represents companies, including US LiDAR competitors.

[Michael Robbins (President and CEO, Association for Uncrewed Vehicle Systems International)]

So in 2024, Haasai pushed a firmware update to all of their LIDAR sensors in the world, and there was an error in the firmware that didn't take into account the fact that that was a leap year. And on February 29, every LiDAR sensor stopped working, every HISAI LIDAR sensor because they didn't account for the leap year. In that case, it was by error. But that could also be done intentionally, where every LIDAR in use in the United States could be turned off or it could be used against us in a nefarious way.

[Interviewer / Journalist]

So the real world impact could be manifest in a physical accident.

[Michael Robbins (President and CEO, Association for Uncrewed Vehicle Systems International)]

It could manifest in chaos.

[David Lee (Founder and CEO of Hesai Technology)]

It was our fault. We had a bug in the firmware that we overlooked.

[Interviewer / Journalist]

Who's to say if this happens with this simple error not accounting for the leap year, that it couldn't be done deliberately?

[David Lee (Founder and CEO of Hesai Technology)]

This is the same possibility of any technology product having a bug, and that would cause negative impact to the user. And the worst case scenario we can see is that this sensor will have an error signal and then the computer will know.

[CNBC Reporter]

Beyond Nvidia, hesai's US Partners include the autonomous trucking company's Watts and Kodiak, the autonomous vehicle technology company Neuro agtonomy, which builds automation software for agricultural vehicles, and robo taxi developer Zoox, owned by Amazon. With vehicles that are equipped with multiple HESAI lidars. You can find Zoox vehicles on the Las Vegas Strip, San Francisco, and it's coming to Austin and Miami. All of these companies operate commercially and legally. So since the vehicles are not used

[Interviewer / Journalist]

for military purposes, has HESAI technology been used in the military at all?

[David Lee (Founder and CEO of Hesai Technology)]

Our commercial agreement is such that we prohibit our customers to use that in any military application anywhere in the world.

[CNBC Reporter]

But after the LIDAR is shipped, Lee admits there are no guarantees.

[David Lee (Founder and CEO of Hesai Technology)]

It's a piece of hardware, a pure piece of hardware that the moment you ship, you actually don't get to fully control. You can legally control, but you couldn't physically control where they end up.

[Interviewer / Journalist]

The only thing that you could do, you're saying, is to require by contract that your products are not used for military purpose. But beyond that, there's nothing else that you can do.

[David Lee (Founder and CEO of Hesai Technology)]

I. I think this is the nature of any hardware.

[CNBC Reporter]

HESAI has been fighting the DoD over the blacklist designation since it was put on the list in 2024. 188 entities are on the list as of June. In court, Hesi said its sensors are solely for commercial and civilian uses. But the DoD's case tells a different story.

[Interviewer / Journalist]

I want to go through some of the evidence that was presented by the dod.

[CNBC Reporter]

We asked Lee about what the judge deemed to be the DOD's strongest piece of evidence, an article from a national security and defense publication.

[Interviewer / Journalist]

One piece of evidence that was presented is an article from Defense one which suggests a connection between HESAI and cetc, which is China Electronics Technology Group Corporation, a company founded to supply electronics to the People's Liberation Army. Is there a connection between the two companies?

[David Lee (Founder and CEO of Hesai Technology)]

There isn't a connection.

[Interviewer / Journalist]

In the IPO filing for your Shanghai debut, it lists CETC as the third largest supplier to hesi. So there is a connection between the two companies.

[David Lee (Founder and CEO of Hesai Technology)]

It's a supplier agreement and they supply

[Interviewer / Journalist]

components and that's that.

[David Lee (Founder and CEO of Hesai Technology)]

Yes, that's it.

[Interviewer / Journalist]

It's not the other way around.

[David Lee (Founder and CEO of Hesai Technology)]

Correct. I just wanted to make it very clear that we, we, we did buy from them, but it was the, from the civilian part and it was some very fundamental electronics stuff that has nothing to do with the military, nothing to do with communication, nothing to do with data. Those parts we bought in the past that we no longer do. And just for that reason to consider that us as a military company, I feel like it's not biological.

[Interviewer / Journalist]

One of the arguments is that you have facilities one or more in the military civil fusion zone in Jiading District, Shanghai. That's where you're located.

[David Lee (Founder and CEO of Hesai Technology)]

It turns out a there isn't a clear boundary of that zone. We were like how come we end up in a civil military zone? The answer is we didn't the zone. We have neighbors like American companies, like European companies next to us. So it's almost like for lack of better analogy, just because Pentagon is in Virginia, you think the Virginia is a place full of military. Anybody operating in the state of Virginia becomes military.

[CNBC Reporter]

Last year HESAI lost its lawsuit against the DoD and remains on the blacklist. It's appealing the decision. Beyond the courtroom, the company is also facing scrutiny. In July 2025, the Prague Security Studies Institute, a non profit, non governmental public policy organization, published a white paper on Hesai. Among the findings, Hesai's lidar sensor appeared on a military vehicle during a 2023 Chinese military TV program.

[Interviewer / Journalist]

I want to show you a couple of pictures because security experts will say HESAI lidar has appeared on military vehicles. Let me show you this one. This is from a university competition in

[David Lee (Founder and CEO of Hesai Technology)]

2023 so it says HESAI on it. So I know that is even though we don't have direct involvement with military entities, we shipped probably hundreds of thousands of lidars like this and the millions more that don't look like this. So there is a possibility that they end up somewhere that we are completely unaware of in the aftermarket.

[CNBC Reporter]

Lee says HESAI has no way to communicate with the sensors once they are shipped out. And and the sensors send data directly to the company using them, not to hisai.

[Interviewer / Journalist]

Are you familiar with the Land Unmanned Systems Challenge? That's the competition that this is part

[Craig Singleton (Senior Fellow, Foundation for Defense of Democracies)]

of

[David Lee (Founder and CEO of Hesai Technology)]

this one or I am unfamiliar with that concept and we're not involved in that.

[Interviewer / Journalist]

This is a competition hosted by the Army Equipment Department and organized by the Army Research Institute. Institute. And it involves military players and military research institutes. Would that be a competition in which he lidar would be applied on a vehicle that would not be considered a military application.

[David Lee (Founder and CEO of Hesai Technology)]

You have to refer to the official definition of a event that we are not directly involved off. Right. I understand you see a photo of our product in such a company. But again, I think it's unfair or irresponsible for me to comment on that nature of the competition.

[Interviewer / Journalist]

Sure. You know, we did look at the Ministry of Defense website for the description of this particular competition and they said the goal is quote to thoroughly implement President Xi's strategic thinking on military civilian integration and create a new pattern of deep military civilian integration. Is it? Would it be problematic in your view if you're lidar sensors were used in this sort of competition which clearly promotes military civilian fusion?

[David Lee (Founder and CEO of Hesai Technology)]

I think a better question is that whether we design such a sensor to be of such a purpose, the answer is definitely no. Right. Have we done our part to prevent that from happening? The answer is yes.

[CNBC Reporter]

But questions about how and where Chinese made LIDAR sensors are being used come alongside broader concerns about Beijing's oversight and its potential to access data collected by Chinese companies. The SEC requires China based companies to disclose the risk of Chinese government intervention or control. In its SEC filings, HESAI has disclosed that the Chinese government has significant oversight in regulating our operations and may influence or intervene in our operations at any time. Singleton says that in part that means HESAI can be compelled to share data collected by these LIDAR sensors with the Chinese government.

[Interviewer / Journalist]

There is no way in your mind that HESAI could be operating as a respectable dependable company that will not transmit information to the Chinese government.

[Craig Singleton (Senior Fellow, Foundation for Defense of Democracies)]

Whether they want to transmit that information or not isn't a question. It's mandated by law.

[CNBC Reporter]

Still, Li says Hesai has no data to share.

[Interviewer / Journalist]

So where does the data live? Is it on the sensor? It's only on the computer. Does it go anywhere else?

[David Lee (Founder and CEO of Hesai Technology)]

So first, what I do know is it definitely doesn't live in my sensor because we don't have the capability to store that.

[Interviewer / Journalist]

Is it physically impossible?

[David Lee (Founder and CEO of Hesai Technology)]

Even if we wanted to, it's physically impossible to do that because our device just don't have the memory to store that. Of course, again, it's by design because I don't see why we need that.

[Interviewer / Journalist]

Do you have safeguards in place with Nvidia to make sure that all security concerns are addressed?

[David Lee (Founder and CEO of Hesai Technology)]

One part is how they handle their data, which honestly is their safeguard that we don't get to control, or they don't even have to tell us because it's really up to them how to make sure the data is in a safe place.

[CNBC Reporter]

We asked Nvidia more than a dozen questions, including whether it was aware that Hesi had been blacklisted and what safeguards are in place to protect the data the sensors collect. The company did not respond to our questions and instead provided the following Automakers worldwide demand an open vendor agnostic reference architecture so they can select components that are best for the markets they serve to build the safest cars. Our Nvidia Drive Hyperion architecture provides that flexibility in ensuring that American industry competes worldwide consistent with all regulatory and commercial requirements. Neuro Agtonomy, Zoox and Unitree did not respond to CNBC's request for comment. In a statement, Kodiak wrote, hesai does not have access to the data from their sensors or any data produced by Kodiak's autonomous system. A spokesperson for WABI wrote, we have rigorous data security protocols in place and thoroughly vet all third party hardware.

[Interviewer / Journalist]

There is a race right now to get autonomous vehicles on the road. Shouldn't we emphasize speed at this point?

[Craig Singleton (Senior Fellow, Foundation for Defense of Democracies)]

You know, it's a tale as old as time with Chinese tech. We told ourselves the same thing on Huawei.

[CNBC Reporter]

Chinese telecommunications giant Huawei made equipment widely deployed by US Companies until the Federal Communications Commission forced companies to rip and replace the equipment from their networks in 2021. This only after the FCC called Huawei a national security threat because the equipment could potentially be used for surveillance, and the DoD placed it on the blacklist.

[Craig Singleton (Senior Fellow, Foundation for Defense of Democracies)]

It was the cheapest option and those systems operated well. And now the US Government and governments around the world are spending tens of billions of dollars to rip out those compromised Chinese systems and replace them with Western alternatives. I've seen that movie once. I don't know why we would need to repeat it again on LiDAR.

[CNBC Reporter]

Besides Huawei, other Chinese companies have been found to be national security risks only after making their way into US homes and business. Shenzhen based drone maker DJI and the WI fi router maker TP Link both sold popular consumer goods. Both were blacklisted by the Pentagon for their ties to the Chinese government. Like Hisai, DJI sued the DoD, but a federal judge ruled there was substantial evidence that DJI contributes to China's defense industrial base. DJI is appealing the decision. Ultimately, the FCC banned both DJI and TP Link from selling new device models in the US because their products pose a national security risk.

[Craig Singleton (Senior Fellow, Foundation for Defense of Democracies)]

What's really needed are exhaustive national security reviews of Chinese LIDAR systems to determine, frankly, are they safe?

[Interviewer / Journalist]

Has that happened?

[Michael Robbins (President and CEO, Association for Uncrewed Vehicle Systems International)]

No, it hasn't.

[Interviewer / Journalist]

Why not?

[Craig Singleton (Senior Fellow, Foundation for Defense of Democracies)]

I think we're just catching up to the fact that this is one of the latest new emerging technologies that policymakers have to grapple with.

[CNBC Reporter]

On Capitol Hill, lawmakers are pushing to address these risks. Proposed legislation would phase out the use of Chinese made lidar in the United States and prevent the Chinese Communist Party from exploiting a fast growing, strategically critical technology.

[Republican Congressman John Moolenar]

These sensors and the ability to transmit information is a huge concern.

[CNBC Reporter]

Republican Congressman John Moulinar of Michigan is chairman of the House Select Committee on China, which it says is committed to working on a bipartisan basis to build consensus on the threat posed by the Chinese Communist Party. In May, Moulinar introduced legislation to ban Chinese vehicles from US roads.

[Interviewer / Journalist]

We spoke to the CEO and founder of Hessai and he said that his sensors are not capable of storing data. There is no data to transfer back to the Chinese Communist Party. Even if asked. Are you satisfied with that response, I am not.

[Republican Congressman John Moolenar]

When you think of connected vehicles, when you think of all this technology, these back doors, we've seen it in robots. That's another area where China is trying to dominate that technology. And we've seen backdoors and robots that would transmit information back to Chinese communist interests.

[Interviewer / Journalist]

It seems like a daunting task then to keep up with all the Chinese technology that is making it into the United States and trying to assess what the national security threat may or may not be for these technologies.

[Republican Congressman John Moolenar]

It's true because so many of these are developing technologies and, you know, AI is, you know, talked about every day. America has been in a leadership role in this, but we've viewed this as a sort of an open process where technologies are shared and ultimately that works when everybody is abiding by the same rules. But if you're abiding by the rule that says it's whatever the interest of the Chinese Communist Party, that's a very different partner relationship.

[Interviewer / Journalist]

Nvidia's CEO says, I want this system to be in every single car.

[Republican Congressman John Moolenar]

If I'm Nvidia's CEO, my job is to sell technology, make money for my shareholders. I am thinking I've got to operate within the law, but I'm not focused on national security. And so that's something we need to be concerned concerned with. And often legislation takes a while to catch up.

[CNBC Reporter]

And no proposed legislation or existing laws prohibit blacklisted companies from being listed on US Stock markets or prevent US Shareholders from investing in them.

[Interviewer / Journalist]

If a US Company wants to buy and incorporate foreign sensors into their autonomous vehicle platforms, can they check before they

[CNBC Reporter]

are installed to make sure that there

[Interviewer / Journalist]

is no malware on that device?

[Miroslav Pajik (Professor at Duke University)]

If I have my product and the secret sauce is the IP that I really want to protect from you. So I try to protect the IP in a way that you cannot fully figure out what is happening on the device. That also provides me a way to hide some of the things that you should not be potentially aware of.

[CNBC Reporter]

Experts say the decision to use foreign components often comes down to price. HESI's LiDAR sensors can cost less than $200 per unit at scale. By comparison, US LiDAR manufacturer Ava told CNBC that its automotive sensors cost in the few hundreds of dollars per unit. A 2025 automotive LiDAR report by the YOL Group, a market analysis firm, says Chinese firms like SI are dominating due to cost scale and government support.

[Interviewer / Journalist]

Critics will say that you're able to sell your sensors at a low price or a lower price than a lot of the competitors because the Chinese government supports you in some way, whether it be subsidies or preferential treatment, tax breaks, you name it. Is any of that true?

[David Lee (Founder and CEO of Hesai Technology)]

So, see, that's an accusation with no evidence. First, that's just imagination. When you see a player being able to build sensors at a much more affordable level, you just assume that they get help. But why don't you look at the finest, right?

[CNBC Reporter]

So we did. According to Hesai's 2025 annual filing with the SEC, the company received Chinese government subsidies, preferential tax rates of 15% versus the standard 25%, preferential borrowing rates below benchmark, and a tax break which lets it deduct 200% of its research and development costs. In a statement to cnbc, Hesai wrote, governments worldwide commonly offer tax incentives to technology enterprises as a standard measure to stimulate innovation, adding that these incentives are broadly available to all qualifying companies in China, both domestic and foreign. Hesai also wrote, no government organization including including the Chinese government, holds any equity stake in hesai.

[Interviewer / Journalist]

We've spoken to LIDAR experts who say that, you know, the data from a single LIDAR sensor or two LIDAR sensors, it's not enough because usually for an autonomous vehicle, it's a myriad of sensors of cameras that are collecting information and together they make that picture. But the data from one sensor is not that useful.

[Craig Singleton (Senior Fellow, Foundation for Defense of Democracies)]

The technology is evolving so fast that it's difficult to predict what those risks will be in the future.

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