US House committee chair ‘concerned’ by Tesla deals in China | Automotive Industry News

The leader of a United States congressional committee on China has expressed worry about electric powered carmaker Tesla’s dependency on China, a working day just after the firm revealed strategies to open a Megapack battery manufacturing unit in Shanghai.

Tesla announced the manufacturing unit in a tweet on Sunday, and Chinese condition media said it would initially deliver 10,000 Megapack units a year, equivalent to all around 40-gigawatt hours of electricity storage, and enhance a substantial existing Shanghai plant generating electric automobiles.

Mike Gallagher, the Republican chair of the House of Representatives’ find committee on China’s Communist Social gathering, said on Monday he would like to know how Tesla’s CEO Elon Musk balances US govt assist for Tesla and its operations in China.

“I’m anxious about this,” Gallagher told the Reuters news agency when asked about the battery manufacturing unit.

“Tesla seems completely dependent, A, on the largesse of the federal authorities by way of tax breaks, and B, on obtain to the Chinese marketplace,” Gallagher mentioned.

“The sort of deals they’ve struck there appears quite concerning. I’d just be curious to know how Elon Musk balances each of those people,” he stated, adding that Musk’s house flight venture SpaceX was by contrast a “massive achievement story”.

Tesla did not quickly respond to Reuter’s request for comment on Gallagher’s remarks.

Musk responded to criticism on Twitter on Sunday, indicating in a tweet that “Tesla is expanding production quickly in Texas, California and Nevada”.

The company’s Shanghai factory accounted for additional than half of the automaker’s global production in 2022. Tesla produced $18.15bn in profits from China previous 12 months, accounting for in excess of one particular-fifth of its total profits.

Tesla’s plans to open up the Megapack manufacturing facility arrive amid expanding tensions concerning China and the US and a drive by Beijing to woo international companies back just after the country’s extended COVID-19 lockdowns battered its overall economy.

Gallagher met very last week in California with know-how and entertainment corporations – which include Apple, Alphabet’s Google and Disney – about their organization dealings in China.

The find committee, which Republican Residence Speaker Kevin McCarthy established in January, has sought to encourage People in america of the require to forcefully contend 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 corporations heading forward, but recommended he could call for company executives to testify if his investigation into their ties to China were stymied.

“If we reach roadblocks, and we get to a stage in which lawyers are getting concerned with responses, which is when you start to imagine about subpoenas,” he claimed.

A few resources at substantial US firms, from technology to retail, instructed Reuters they are nervous about the prospect of their executives staying termed to testify about organization operations in China and facial area queries these types of as no matter if their organizations use materials manufactured in China with compelled labour.

Gallagher stated he was aware executives from a range of enterprises may well be worried about testifying.

“It could be a major asset supervisor on Wall Road. It could be a movie star or a high-powered producer. It could be the CEO of a significant tech company,” he reported. “If they want to do small business in China, there are sure concerns no one desires to be questioned.”

Gallagher declined to examine the subject areas of the committee’s upcoming hearings, but said he was on a “tight timeline”.

So far the committee has held two hearings, just one framing “existential” US-China competitiveness, and the other on Chinese governing administration abuses towards Muslim minorities in its western Xinjiang location.