US House committee chair ‘concerned’ by Tesla deals in China

The leader of a US congressional committee on China has expressed concern over electric car maker Tesla’s reliance on China, a day after the company unveiled plans to open a Megapack battery factory in Shanghai.

Tesla announced the plant in a tweet on Sunday, and Chinese state media said it would initially produce 10,000 Megapack units per year, equivalent to about 40 gigawatt-hours of energy storage, and would complement a massive existing plant in Shanghai that produces electric make vehicles.

Mike Gallagher, the Republican chairman of the Chinese Communist Party’s House of Representatives select committee, said Monday he would like to know how Elon Musk, CEO of Tesla, could support the U.S. government’s support for Tesla and its activities in China. keeps in balance.

“I’m worried about this,” Gallagher told Reuters news agency when asked about the battery factory.

“Tesla appears to be completely dependent, A, on the generosity of the federal government through tax breaks, and B, on access to the Chinese market,” Gallagher said.

“The kind of deals they’ve made there seems very worrying. I’d just be curious to see how Elon Musk balances both,” he said, adding that Musk’s spaceflight venture SpaceX, on the other hand, was a “massive success story.”

Tesla did not immediately respond to Reuter’s request for comment on Gallagher’s comments.

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

The company’s Shanghai plant will account for more than half of the automaker’s global output by 2022. Tesla generated $18.15 billion in revenue from China last year, accounting for more than a fifth of its total sales.

Tesla’s plans to open the Megapack factory come amid rising tensions between China and the US and a push from Beijing to lure foreign companies back after the country’s extended COVID-19 lockdowns battered the economy.

Gallagher met technology and entertainment companies – including Apple, Alphabet’s Google and Disney – last week in California about their business dealings in China.

The select committee, which Republican House Speaker Kevin McCarthy set up in January, has sought to convince Americans of the need to vigorously compete with China and “selectively decouple” the US and Chinese economies in certain strategic industries.

Gallagher said he hoped to engage with Tesla and other companies in the future, but suggested he could ask company executives to testify if his investigation into their ties to China was hindered.

“When we hit roadblocks and we get to a point where lawyers start interfering with answers, that’s when you start thinking about subpoenas,” he said.

Three sources at major US companies, from technology to retail, told Reuters they are concerned about the prospect of their executives being called upon to testify about business activities in China and facing questions such as whether their companies use supplies produced in China using forced labor .

Gallagher said he knew executives from several companies could be concerned about witnesses.

“It could be a big asset manager on Wall Street. It can be a movie star or a powerful producer. It could be the CEO of a major technology company,” he said. “If they want to do business in China, there are certain questions no one wants to be asked.”

Gallagher declined to discuss the topics of the commission’s upcoming hearings, but said he had a “tight timeline”.

So far, the commission has held two hearings, one on “existential” competition between the US and China, and the other on abuses by the Chinese government against Muslim minorities in the western region of Xinjiang.