The domestic lidar industry is mounting a lobbying offensive against a leading Chinese rival that’s stepping up its own PR game.

A self-driving car equipped with lidar, radar, cameras and GPS units being demonstrated at the auto trade show AutoMobility LA at the Los Angeles Convention Center on November 17, 2016. | David McNew/Getty Images

A key technology in futuristic cars is quickly becoming a new flashpoint in already fraught relations between the U.S. and China.

The development of “lidar” sensor technology has helped fuel the rise of driverless robotaxis roaming cities like San Francisco and Phoenix. But as automakers prepare to deploy lidar-enabled features such as adaptive cruise control and blind spot detection in more consumer vehicles, the homegrown industry is mounting a wide-ranging lobbying offensive against a leading Chinese rival that’s stepping up its own PR game.

The San Francisco-based lidar firm Ouster is appealing to Congress to stop the hemorrhaging by stoking fears that Chinese versions of the technology could be used to spy on Americans and deliver intelligence about sensitive U.S. infrastructure to Beijing. It’s a clash that comes as President Joe Biden navigates complicated relationships with China and segments of the U.S. auto industry while many Republicans are embracing a more aggressive tone toward the country.

“China’s ongoing efforts to dominate the market for LIDAR reduces our economic competitiveness, increases our reliance on them for critical technologies, and perpetuates their nefarious trade practices all while bolstering their military and security ambitions,” Ouster CEO Angus Pacala said in an email. “This is counter to U.S. interests and needs to stop.”

The U.S. industry’s leading trade group, the Lidar Coalition, declined to comment. But Ouster and its lobbyists have secured meetings with key lawmakers on the House Select Committee on the Chinese Communist Party and Biden administration officials, trying to raise alarm about potential threats. They’ve been urging blacklists or outright bans, as well as imposing tariffs on Chinese-made lidar sensors.

Ouster’s campaign is a page ripped out of the playbook that ultimately led Congress and regulators to ban another Chinese company — drone-maker DJI — from Defense Department procurements and other business. And some in Washington appear to be listening.

Asked about Ouster’s concerns, Transportation Secretary Pete Buttigieg said in an interview that the U.S. needs “to watch very closely to make sure it doesn’t entail an undue economic security or cybersecurity threat.” He also noted the need to “de-risk and necessarily decouple from China,” especially when it comes to technology.

When Republican and Democratic leaders of the House Select committee on China spearheaded a letter last month urging the Biden administration to consider restrictions on Chinese lidar companies, Ouster’s lobbyists had helped drum up support and signatures.

Lawmakers charged that China’s National Security Law, which compels Chinese companies to provide data on demand to the government, could mean that “troves of data on not only U.S. mapping and infrastructure, but also on U.S. military systems” could fall into the hands of the Chinese government and military.

Two independent German technical testing companies assessed Hesai’s major lidar product sold in the U.S. market and determined that it does not have the capability to store or transmit data outside the vehicle.

The letter also suggests that the CCP could introduce malware “that could degrade the performance” of Chinese lidar installed in U.S. systems — claims the Chinese government denies.

“China has always opposed the use of information technology to damage other countries’ critical infrastructure or steal strategic data,” Chinese Embassy spokesperson Liu Pengyu said in a statement accusing U.S. lawmakers of “taking words out of context and making one-sided interpretations.”

He also said the larger narrative at play was suspect.

“The US has repeatedly generalized the concept of national security and hyped up the ‘China threat’ theory, which China firmly opposes,” Liu said.

The 20 members who signed the letter pressed for a review that might lead to limits on how U.S. companies invest in foreign auto tech firms and other restrictions.

But Chinese manufacturer Hesai, which makes lidar offerings that are more sophisticated, and sometimes cheaper, than many U.S. companies, is fighting back, egged on by some U.S. auto interests whose vehicles already use its technology. New scrutiny on the Defense Department’s use of Chinese-made lidar and a Congressional Research Service report outlining its potential dangers also spooked the company into action in Washington.

Ouster is turning a commercial dispute into “a political/national security issue — which is definitely not something the customers want to see, especially the bigger ones,” Hesai CEO David Li said in an interview this fall. The lobbying campaign from U.S. interests — and complaints from their own U.S. customers — encouraged Hesai to hire its own high-priced team of lobbyists and PR reps, Li said.

Sitting in the Washington offices of Hesai’s newly retained public relations firm, the BGR Group, Li said his visit was a direct result of the “false rumors” being spread by Ouster.

Li said he’d had “multiple discussions with different customers,” who told him: “‘Hesai, please help people understand this.’”

Hesai customers include robotaxi companies Cruise — which is backed by General Motors — and Zoox, along with automated trucking company Kodiak Robotics. Those companies would not confirm that they pushed Hesai to lobby in Washington, but a Democratic aide on Capitol Hill, briefed on a meeting with Hesai, said staffers “got the clear impression that Hesai’s customers specifically asked Hesai to talk to Congress.”

One U.S. Hesai customer said any restrictions the government placed on Chinese-manufactured lidar would seriously hamper the company’s ability to do business.

“The Hesai scanning lidar is the only sensor on the market that has the performance and reliability we need to operate,” said a representative from an autonomous vehicle company using Hesai lidar, granted anonymity to discuss sensitive matters. “There just simply isn’t another option available at any price.”

At the end of September, Hesai hired the two biggest lobbying firms in Washington, Akin Gump and Brownstein Hyatt, in addition to hiring BGR. Ouster, meanwhile, has increased its quarterly spending on lobbyists by about 50 percent compared with last year.

In addition, a new group called the Coalition for Safe and Secure Technology has formed to help Ouster make a case about the threat from China.

The director, Mark Paustenbach, a Democratic political consultant, said the group also wants to “create a level playing field for American and American-allied businesses in the lidar space, while safeguarding against potential threats to our national security.”

Though the group plans to lobby, Paustenbach is not a registered lobbyist, and he would not disclose the coalition’s membership.

Ouster and Hesai are hardly strangers. They have repeatedly scrapped over alleged patent infringement. In 2019, Velodyne, which has since been acquired by Ouster, sued Hesai and the Chinese lidar company RoboSense for patent infringement. (Velodyne settled and agreed to a global cross-licensing agreement, allowing Hesai to use Velodyne’s technology before its acquisition by Ouster.)

Ouster has also sued Hesai for allegedly infringing on five Ouster patents; the court sent the case to arbitration in October.

Former National Security Council China Director Liza Tobin — now working as senior director for economy at the Special Competitive Studies Project, a group founded by former Google CEO Eric Schmidt — compares lidar to drones, solar panels and other devices that U.S. consumers now primarily buy from China.

“It starts to be like rinse and repeat,” Tobin said. “Sometimes once we start noticing the problem in a particular subsector, like lidar, it’s almost too late.”

Rep. Raja Krishnamoorthi, ranking member of the House Select Committee on the CCP, put it this way: “We’ve seen the movie before. The question is whether we can author a different ending.”

Restrictions may not come from the U.S. side in the end. China is considering an export ban on lidar. China restricts exports on other raw materials and technologies both as retaliation for U.S. trade controls and out of national security concerns.

However it happens, barring lidar sensors from China could end up helping China more than it helps the U.S. autonomous vehicle industry, the U.S. Hesai customer warned.

“Virtually the whole industry uses these sensors,” the customer said. “If they were barred from the U.S. market and there was no replacement, it would have a serious impact on the industry’s ability to develop and grow. ... presumably to the benefit of China and Europe and other leading technology developers.”

 

TrendForce 2024 Infrared Sensing Application Market and Branding Strategies
Release: 01 January 2024
Format: PDF
Language: Traditional Chinese / English
Page: 172