# US House committee chair ‘concerned’ by Tesla deals in China Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2023-04-11 Category: NEWS Category URL: https://financedigest.com/category/news Meta Title: Concerns over Tesla's China Dependency on Megapack Meta Description: Find out why US congressional committee leader is concerned about Tesla's relationship with China, as the electric carmaker plans to open a Megapack URL: https://financedigest.com/us-house-committee-chair-concerned-by-tesla-deals-in-chinahtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2023-04-10t224519z2lynxmpej390mvrtroptp4usa-china-congress-tesla-1736814175881-compressed.jpg) By Michael Martina and Patricia Zengerle WASHINGTON (Reuters) – The leader of a U.S. congressional committee on China said on [Monday he was concerned about electric carmaker Tesla Inc’s dependency on China, a day after the company revealed plans to open a Megapack battery factory in Shanghai](https://www.financedigest.com/shanghai-finds-cases-after-five-days-of-zero-covid-but-end-of-lockdown-on-track.html "Shanghai finds cases after five days of ‘zero COVID’ but end of lockdown on track"). 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 complement a huge existing Shanghai plant making [electric vehicles](https://www.financedigest.com/tax-credits-for-eu-electric-vehicles-to-dominate-mondays-trade-talks-with-u-s.html "Tax credits for EU electric vehicles to dominate Monday’s trade talks with U.S"). 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’s CEO [Elon Musk](https://www.financedigest.com/elon-musk-and-others-urge-ai-pause-citing-risks-to-society.html "Elon Musk and others urge AI pause, citing ‘risks to society’") balances U.S. government [support for Tesla and its operations](https://www.financedigest.com/synapse-appoints-new-finance-and-operations-manager-to-support-the-rapid-growth-of-the-business.html "Synapse appoints new Finance and Operations Manager to support the rapid growth of the business") in China. I’m concerned about this,” Gallagher told Reuters when asked about the [battery factory](https://www.financedigest.com/factbox-companies-invest-in-ev-battery-factories-in-europe.html "Factbox-Companies invest in EV battery factories in Europe"). Tesla seems entirely dependent, A, on the largesse of the federal government via tax breaks, and B, upon access to the [Chinese market,”](https://www.financedigest.com/swiss-bank-ubp-returns-to-chinese-markets.html "Swiss bank UBP returns to Chinese markets") Gallagher said. The sort of [deals they’ve struck there seem very concerning](https://www.financedigest.com/nato-deal-with-turkey-greeted-with-caution-and-concern-in-sweden.html "NATO deal with Turkey greeted with caution and concern in Sweden"). I’d just be curious to know how [Elon Musk](https://www.financedigest.com/elon-musk-plans-to-cut-half-of-twitter-jobs-bloomberg-news.html "Elon Musk plans to cut half of Twitter jobs – Bloomberg News") balances both of those,” he said, adding that Musk’s space flight venture SpaceX was by contrast a “massive success story. Tesla did not immediately respond to a request for comment on Gallagher’s remarks. Musk responded to criticism on Twitter on Sunday, [saying in a tweet that “Tesla is increasing](https://www.financedigest.com/should-we-be-more-cautious-about-contactless-1-in-4-young-adults-with-contactless-cards-say-theyve-increased-their-spending.html "Should we be more cautious about contactless? 1 in 4 young adults with contactless cards say they’ve increased their spending") production rapidly in Texas, California & Nevada. The company’s Shanghai factory accounted for more than [half of the automaker’s global production](https://www.financedigest.com/over-half-of-britons-say-loyalty-cards-encourage-them-to-buy-a-product-niq.html "Over half of Britons say loyalty cards encourage them to buy a product – NIQ") in 2022. Tesla generated $18.15 [billion in revenue from China](https://www.financedigest.com/china-greenlights-audi-faws-3-3-billion-electric-vehicle-venture.html "China greenlights Audi-FAW’s .3 billion electric vehicle venture") last year, accounting for over one fifth of its total revenue. Tesla’s [plans to open the Megapack factory come amid growing tensions between China](https://www.financedigest.com/dutch-responds-to-us-china-policy-with-a-plan-to-curb-semiconductor-tech-exports.html "Dutch responds to US China policy with a plan to curb semiconductor tech exports") and the U.S. and a push by Beijing to woo foreign firms [back after the country’s](https://www.financedigest.com/as-who-pandemic-pact-talks-begin-poor-countries-on-back-foot.html "As WHO pandemic pact talks begin, poor countries on back foot") extended COVID-19 lockdowns battered its economy. ‘THINK ABOUT SUBPOENAS’ Gallagher met last week in California with technology and entertainment companies – including Apple, Alphabet Inc’s Google and Disney – about their business [dealings in China](https://www.financedigest.com/analysis-no-china-no-deal-bid-to-break-sovereign-debt-logjams-gets-weary-thumbs-up.html "Analysis-No China, no deal: Bid to break sovereign debt logjams gets weary thumbs up"). His select committee, which [Republican House](https://www.financedigest.com/analysis-u-s-regulators-could-be-pressured-by-slim-republican-house-control.html "Analysis-U.S. regulators could be pressured by slim Republican House control") Speaker Kevin McCarthy created in January, has sought to convince Americans of the need to forcefully compete with China and to “selectively decouple” the U.S. and [Chinese economies](https://www.financedigest.com/younger-chinese-are-spurning-factory-jobs-that-power-the-economy.html "Younger Chinese are spurning factory jobs that power the economy") in certain strategic industries. Gallagher said he hoped to engage with Tesla and other companies going forward, but suggested he could require [corporate executives to testify if his investigation](https://www.financedigest.com/tarter-krinskydrogin-launches-corporate-investigations-group.html "Tarter Krinsky&Drogin Launches Corporate Investigations Group") 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’s when you start to think about subpoenas,” he said. Three sources at large U.S. companies, from technology to retail, told Reuters they are anxious about the prospect of their executives being called to testify about [business operations in China](https://www.financedigest.com/credit-agricole-launches-china-ma-and-investment-banking-business.html "Credit Agricole launches China M&A and investment banking business") and face questions such as whether their companies use supplies produced in China with forced labor. Gallagher said he was aware executives from a range of [businesses might be concerned](https://www.financedigest.com/another-lockdown-is-the-top-concern-of-nearly-half-of-uks-small-businesses.html "Another Lockdown is the Top Concern of nearly Half of UK’s Small Businesses") about testifying. It could be a major [asset manager](https://www.financedigest.com/french-watchdog-fines-h2o-asset-management-executives-over-tennor-investments.html "French watchdog fines H2O Asset Management, executives over Tennor investments") on Wall Street. It could be a movie star or a high-powered producer. It could be the [CEO of a big tech company](https://www.financedigest.com/in-listening-mode-new-bayer-ceo-keeps-open-mind-on-company-split.html "In listening mode, new Bayer CEO keeps ‘open mind’ on company split"). If they want to do [business in China](https://www.financedigest.com/lighting-maker-signify-cuts-2022-outlook-again-on-china-business-lighting.html "Lighting maker Signify cuts 2022 outlook again on China, business lighting"), there are certain questions nobody wants to be asked,” he said. 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” U.S.-China competition, and the other on [Chinese government](https://www.financedigest.com/chinese-love-affair-with-manchester-property-to-strengthen-as-government-welcomes-new-investment.html "Chinese love affair with Manchester property to strengthen as government welcomes new investment") abuses toward Muslim minorities in its western Xinjiang region. (Reporting by Michael Martina, Patricia Zengerle. Additional reporting by Hyunjoo Jin in [San Francisco; Editing by Don Durfee and Josie Kao)](https://www.financedigest.com/paul-jasper-joins-rimon-laws-san-francisco-office-as-partner.html "Paul Jasper joins Rimon Law’s San Francisco Office as Partner") --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---