Hesai denies allegations of misleading investors and military ties

China’s Hesai Technology is denying serious allegations made by a short-selling firm, Blue Orca Capital. The company, which makes laser sensors for electric vehicles, is accused of misleading investors about its finances and having links to the Chinese military. After the allegations surfaced, Hesai’s shares fell by 7.8% in New York on Tuesday. The company is currently engaged in a legal battle with the Pentagon, which has labeled it as a military-affiliated entity. Blue Orca’s report claims that Hesai is "dishonest" about its military connections and questioned its recent financial disclosures. Hesai’s co-founder, David Li, responded to the allegations, stating that they strongly disagree with the claims and view them as baseless. He emphasized the company’s commitment to ethical business practices. The Financial Times could not confirm the accuracy of Blue Orca's claims at this time. This report came shortly after Hesai's stock surged by 50% after the company reported its first profit forecast for 2025. The report from Daiwa Securities called Hesai an “innovation leader” and projected significant growth in the company’s lidar shipments and market share in China. In the report, Blue Orca included photos of Hesai sensors allegedly found on Chinese military vehicles. Hesai maintains it does not sell to military entities and claims it has no ties to the military. They stated any use of their products by military organizations is unauthorized. Hesai has faced scrutiny from the Pentagon, which first added it to a blacklist of Chinese military companies last year. The designation was briefly lifted, but was reinstated later based on new information. The company insists it operates independently of the Chinese government and military.