In a remarkable move aimed at enhancing the proliferation of lidar technology in the electric vehicle (EV) sector, Hesai Technology has recently announced plans to cut the price of its lidar systems by half next year. This strategy, as articulated by CEO Li Yifan, seeks to make lidar more appealing for budget-friendly electric vehicles priced below 150,000 RMB (approximately $20,000). For electric vehicles that exceed this price point, there's a potential increase in the adoption of lidar technology, possibly soaring to 40%.

This bold initiative isn't entirely a fresh beginning sparked by Hesai alone; the past few years have witnessed a consistent downtrend in lidar prices. In 2019, Hesai's lidar systems were priced at an average of around $17,400. A more transformative moment came in January when an industry competitor, One Road Technology, heralded what they called "lidar democratization," suggesting we were entering an era where lidar systems could cost less than $1,000.

This significant reduction from tens of thousands to mere hundreds of dollars over just five years underscores the relentless struggle among lidar manufacturers aiming to sustain viability in a fiercely competitive market.

Advertisement

The global landscape of the lidar industry can be characterized through the lens of its uneven growth. A recent report by YOLE Group highlighted that, in 2023, the global automotive lidar market surged to a valuation of $538 million, marking an impressive growth of 80% year-on-year. The report showcased nine leading firms, with Hesai holding a substantial 37% market share, followed by Robosense at 21%, and Innovusion, rebranded as Seyound, at 19%.

Moreover, Chinese suppliers dominate this market, collectively capturing a staggering 84% of the global market share. Yet, despite this flourishing sales landscape, many of these firms, including industry leader Hesai, find themselves grappling with substantial financial losses. In the previous year, Hesai suffered a net loss of 476 million RMB, with continuing losses reported across multiple quarters this year. Similarly, Robosense reported a net loss of 4.34 billion RMB last year, along with further deficits in the first half of 2024.

The situation paints a stark contrast to the industry's seeming vibrancy; it's a reflection of the ongoing debate surrounding the necessity of lidar in autonomous driving technology. The evolution of self-driving vehicles has seen a divide in approaches: one epitomized by Tesla’s vision-centric methodology reliant on cameras and AI for environmental sensing, and another involving a hybrid of multiple sensors, including cameras, lidar, and radar technologies.

The evolving dynamics of financial distress may be traced to several underlying factors: significant research and development (R&D) expenditures, high production costs, and a predatory pricing environment fueled by competition. Hesai, for instance, allocated over 791 million RMB for R&D in 2023, which represented 42.1% of its total revenue—a substantial figure in an already-consuming market.

Moreover, výroba lidar technology is inherently expensive due to its sophistication—serving as the most efficient 3D imaging tool currently available. Reports indicate that in 2021, vehicles equipped with lidar were typically priced above 400,000 RMB, with the lidar systems alone costing beyond 5,000 RMB. Consequently, this led to limited integration of lidar capabilities, primarily restricted to mid to high-end models.

The fierce price competition does not solely rest upon lidar manufacturers; automakers have started to join this fray as well. BYD, for example, has amusingly noted their cost-effective technological capabilities, claiming they could deploy lidar units costing significantly less than the market average should prices drop to around 3,000 RMB.

This pressing reality reflects in product decisions made by leading automotive manufacturers. Companies like Huawei have decided to forego lidar in their intelligent driving schemes while others like XPeng and NIO have introduced new models featuring purely vision-based frameworks. These strategic shifts reveal a growing skepticism toward lidar reliance within the market.

The escalating price wars and overwhelming R&D expenses have become pivotal factors in numerous companies reassessing their operational strategies. A prominent case is Mobileye, which recently declared it would halt internal development of next-generation lidar for both driving assistance and autonomous systems and intends to disband its lidar research department by year-end.

Historically, companies like Bosch once envisioned leading the charge in lidar technology but have since rescinded their aspirations. Facing financial challenges, many lidar firms have either gone bankrupt or consolidated operations in search of survival, with instances from Ibeo, Velodyne, and Ouster exemplifying the tumultuous landscape.

As it stands, lidar manufacturers are pivoting towards varied paths to survive in a market that juxtaposes heightened demand against debilitating operational costs. The first pathway involves technological advancement: Hesai recently launched its ATX high-performance long-range lidar, slashing costs while enhancing performance metrics like detection distance and resolution. This model represents a significant step forward as lidar manufacturers seek to innovate whilst also driving costs down.

Another strategy turning heads is manufacturing advancement. Major players are increasingly adopting platform-based production methodologies and engineering bespoke chips to optimize economies of scale. Major firms like Robosense and Hesai have established product platforms to streamline production processes further, significantly aiding in driving down costs.

Additionally, a third distinct pathway has emerged: diverging into alternate markets. While maintaining a focus on the automotive sector, several lidar manufacturers are channeling efforts into robotics and industrial applications, which generally offer higher profit margins. For instance, Robosense has reported that its robotics arm yields a substantially greater gross margin, prompting them to think strategically about future growth fueled by partnerships across different sectors.

As industry analysts gauge the future growth potential, projections highlight that the global market for lidar in robotics is anticipated to expand rapidly, with an impressive forecast of growth driven by increasing unit shipments and installations per robot.

Despite existing operational pressures, the trajectory towards profitability appears to be on the horizon for some lidar companies. By the first half of 2024, it was anticipated that the integration of lidar in China’s new energy vehicles might reach approximately 10% to 13%. For instance, Robosense reported remarkable sales figures, with their lidar product shipments surging by over 400% in early 2024. Hesai also reported doubling its lidar delivery volume, clearly displaying a market uptake.

Industry leaders indicate a cautiously optimistic outlook regarding profitability. Hesai recently reported quarterly revenues showing growth alongside stable gross margins, while Robosense projects that it may achieve profitability by 2025. These developments belay an encouraging sentiment within a tumultuous arena, indicating that the future could indeed shine favorably on the lidar landscape.