When Nvidia CEO Jensen Huang declared at CES in January that “some day, every single car, every single truck will be autonomous,” he was describing a future that is already being built, in part with sensors manufactured by a company the US Department of Defense has designated a Chinese military entity. A CNBC Investigations report published on July 7 found that Hesai Technology, a Shanghai-based lidar manufacturer placed on the Pentagon’s blacklist in 2024, has quietly become a dominant supplier to the US autonomous vehicle ecosystem, with its sensors integrated into Nvidia’s autonomous vehicle platforms, Amazon’s Zoox robotaxi, and a range of other US-operated systems.
Hesai’s lidar sensors are also installed at JFK Airport, where they monitor passenger and traffic flow at security checkpoints and gate entrances. They appear in autonomous trucking systems operated by Waabi and Kodiak, in delivery robots operated by Nuro, in agricultural automation systems run by Agtonomy, and even in autonomous lawn mowers. Nvidia’s automotive revenue grew 39 percent in fiscal year 2026 compared to the prior year, a figure that reflects the scale of the autonomous vehicle buildout in which Hesai plays a central role.
What the Pentagon Blacklist Does and Does Not Prohibit
The legal architecture around the Pentagon’s blacklist is a source of significant confusion. Being designated a “Chinese military company” under Section 1260H of the National Defense Authorization Act bars the designated firm from receiving US Department of Defense contracts. It does not, however, prevent US companies from purchasing or deploying the blacklisted firm’s products. That distinction has allowed Hesai’s sensors to proliferate across American commercial infrastructure even as the company remains on the DoD list.
This gap between designation and prohibition is not unique to Hesai. The Pentagon’s blacklist has grown to include dozens of Chinese technology firms, but the list’s legal teeth are limited to government procurement. Private sector companies face no legal obligation to avoid blacklisted suppliers, and many have continued to source from them, arguing that the designation reflects national security concerns rather than a finding of illegal activity.
Hesai CEO David Li has pushed back on the designation directly. “In the DOD case, I don’t feel there is sufficient evidence, and it’s not logical,” Li told CNBC. He also addressed the data security concern at the heart of the national security argument: Hesai’s sensors hold no data, Li said, because they lack memory capacity. Under this view, the sensors are passive hardware components, and the responsibility for securing any data they generate lies with the companies that integrate them into their systems.
The Security Argument: Mandated by Law, Not by Choice
That argument has not satisfied national security analysts. Craig Singleton of the Foundation for Defense of Democracies told CNBC that lidar sensors of the kind Hesai manufactures could enable Beijing “to access sensitive U.S. data or disrupt critical operations.” Singleton pointed to a passage in Hesai’s own SEC filing, which states that the Chinese government has “significant oversight in regulating our operations and may influence or intervene in our operations at any time.” His conclusion was blunt: “Whether they want to transmit that information or not isn’t a question, it’s mandated by law.”
The reference is to China’s National Intelligence Law, which requires Chinese companies and citizens to cooperate with state intelligence work when requested. The law does not require companies to actively collect or transmit data, but it does mean that a Chinese firm operating under Beijing’s jurisdiction cannot legally refuse a government request for cooperation. For US national security officials, that legal obligation, not any specific evidence of wrongdoing, is the core of the concern.
The Huawei Precedent and the Legislative Push
The most instructive parallel is Huawei. The Chinese telecommunications giant was placed on the DoD blacklist in 2021, and the Federal Communications Commission subsequently launched a “rip and replace” program to remove Huawei equipment from US telecommunications networks. That program cost billions of dollars and took years to execute. The experience has informed how some legislators are now thinking about Hesai.
Representative John Moolenaar of Michigan, who chairs the House Select Committee on the Chinese Communist Party, has proposed legislation that would phase out Chinese-made lidar sensors from US systems. The proposal mirrors the logic of the Huawei rip-and-replace program: identify the dependency, assess the risk, and mandate removal before the infrastructure becomes too deeply embedded to unwind.
The challenge is that Hesai’s position in the autonomous vehicle ecosystem is already deeply embedded. As the dominant supplier of lidar sensors to the global autonomous technology industry, removing Hesai from US systems would require finding alternative suppliers capable of matching its price, performance, and supply chain reliability, a task that US and European lidar manufacturers have so far struggled to achieve at scale.
(Related: Nvidia Used the Risk of Huawei to Win US Chip Export Approval, and It Worked)