The leader of a US congressional committee on China on Monday said he was concerned about electric automaker Tesla Inc’s dependency on China, a day after the company revealed plans to open a Megapack battery factory in Shanghai.
Tesla on Sunday announced the factory in a Twitter post, and Chinese state media said it would initially produce 10,000 Megapack units a year, equal to about 40 gigawatt hours of energy storage, and complement a huge existing Shanghai plant making electric vehicles.
US Representative Mike Gallagher, chairman of the US House Select Committee on Strategic Competition Between the US and the Chinese Communist Party, said he would like to know how Tesla CEO Elon Musk balances US government support for the company and its operations in China.
Photo: Reuters
“I’m concerned about this,” Gallagher said when asked about the battery factory.
“Tesla seems entirely dependent, A, on the largesse of the federal government via tax breaks, and B, upon access to the Chinese market,” Gallagher said.
“The sort of deals they’ve struck there seem very concerning. I’d just be curious to know how Elon Musk balances both of those,” he said, adding that Musk’s space flight venture, Space Exploration Technologies Corp, was by contrast a “massive success story.”
Tesla did not immediately respond to a request for comment on Gallagher’s remarks.
Musk on Sunday responded to criticism on Twitter, writing in a post that “Tesla is increasing production rapidly in Texas, California & Nevada.”
The company’s Shanghai factory accounted for more than half of the automaker’s global production last year. Tesla generated US$18.15 billion in revenue from China last year, accounting for more than one-fifth of its total revenue.
Tesla’s plans to open the Megapack factory come amid growing tensions between China and the US and a push by Beijing to woo foreign firms back after the country’s extended COVID-19 lockdowns battered its economy.
Gallagher last week met in California with technology and entertainment companies — including Apple Inc, Alphabet Inc’s Google and Walt Disney Co — about their business dealings in China.
His select committee, which US House of Representatives Speaker Kevin McCarthy created in January, has sought to convince Americans of the need to forcefully compete with China and to “selectively decouple” the US and Chinese economies in certain strategic industries.
Gallagher said he hoped to engage with Tesla and other companies going forward, but suggested he could require corporate executives to testify if his investigation into their ties to China were stymied.
“If we reach roadblocks and we get to a point where lawyers are getting involved with answers, that’s when you start to think about subpoenas,” he said.
Three sources at large US companies, from technology to retail, said that they are anxious about the prospect of their executives being called to testify about business operations in China and face questions such as whether their companies use supplies produced in China with forced labor.
Gallagher said he was aware executives from a range of businesses might be concerned about testifying.
“It could be a major asset manager on Wall Street. It could be a movie star or a high-powered producer. It could be the CEO of a big tech company. If they want to do business in China, there are certain questions nobody wants to be asked,” he said.
Gallagher declined to discuss the topics of the committee’s upcoming hearings, but said he was on a “tight timeline.”
So far the committee has held two hearings, one framing “existential” US-China competition, and the other on Chinese government abuses toward Uighurs in Xinjiang.
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