US House committee chair 'concerned' by Tesla deals in China

WASHINGTON – The leader of a US congressional committee on China said on Monday that he was concerned about electric carmaker Tesla’s dependency on China, a day after the company revealed plans to

open a Megapack battery factory in Shanghai.

Tesla announced the factory in a tweet on Sunday, and Chinese state media said it would initially produce 10,000 Megapack units a year, equal to around 40 gigawatt-hours of energy storage, and complementing a huge existing Shanghai plant making electric vehicles.

Mr Mike Gallagher, the Republican chair of the House of Representatives’ select committee on China’s Communist Party, said he would like to know how Tesla chief executive Elon Musk balances US government support for Tesla and its operations in China.

“I am concerned about this,” Mr Gallagher told Reuters when asked about the battery factory.

Tesla seems entirely dependent on “the largesse of the federal government via tax breaks” and upon the access to the Chinese market, said Mr Gallagher.

“The sort of deals it has struck there seem very concerning. I would just be curious to know how Elon Musk balances both of those,” he said, adding that Mr Musk’s space flight venture SpaceX was by contrast a “massive success story”.

Tesla did not immediately respond to a request for comment on Mr Gallagher’s remarks.

Mr Musk responded to criticism on Twitter on Sunday, saying in a tweet that “Tesla is increasing production rapidly in Texas, California and Nevada”.

The company’s Shanghai factory accounted for more than half of the automaker’s global production in 2022. Tesla generated US$18.15 billion (S$24.2 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 United States

and a push by Beijing to woo foreign firms back after the country’s extended Covid-19 lockdowns battered its economy.

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

His select committee, which Republican House 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.

Mr Gallagher said he hoped to engage with Tesla and other companies soon, but suggested that 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 is when you start to think about subpoenas,” he said.

Three sources at large US companies, from technology to retail, told Reuters they were 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 labour.

Mr Gallagher said he was aware that 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.

Mr 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 alleged Chinese government abuses towards Muslim minorities in its western Xinjiang region. REUTERS