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12 Mar 2024
Lidar firm confident of another strong year, despite impact of recent Department of Defense listing as 'Chinese military company'.
Hesai Technology, the Chinese lidar company at the forefront of the photonics technology’s adoption in robotaxis and passenger vehicle safety systems, says it is on course for another year of rapid growth in 2024.
The Shanghai-headquartered firm, whose stock is listed on the Nasdaq, has just reported full-year sales of ¥1.88 billion ($264 million), up nearly 60 per cent on the 2022 figure.
Thanks to its shift into mass production towards the end of 2023, the annual sales figure is expected to rise at around the same rate this year, to somewhere between $400 million and $450 million.
‘Smear campaign’ contested
That optimism comes as key customers in China begin to deploy lidar for advanced driver assistance systems (ADAS) applications much more widely, outweighing a slowdown in demand for robotaxis - and the negative impact of the US Department of Defense’s recent decision to include Hesai on its list of “Chinese military companies”.
Hesai CEO and co-founder Yifan “David” Li and his colleagues are contesting that listing, vehemently denying any connection to the Chinese authorities or defense-related application of its products - and accusing US-based rivals including Ouster and its Velodyne subsidiary of a smear campaign against it based on “unsubstantiated, baseless and false allegations”.
In an investor conference call discussing the latest developments, Li and company CFO Louis Hsieh did concede that the DoD listing had had a negative impact on perceptions of the company among potential US customers.
However, with most of the impetus towards near-term adoption and deployment of lidar currently coming from Chinese makers of electric vehicles (EVs), the Hesai management team remains confident of a sharp uptick in shipments for dozens of production vehicles as 2024 progresses.
Production ramp
The firm has recently announced key deals with the likes of Li Auto, Great Wall, and Stellantis joint venture partner Leapmotor, claiming design wins with each of China’s top five EV makers and adoption in ADAS among 16 different OEMs and “Tier 1” suppliers globally, across more than 60 vehicle models.
And while the current financial quarter represents something of a transitional period, disrupted as usual by Chinese New Year effects, an uptick in momentum will be obvious by the middle of this year.
“Our outlook for 2024 is highly optimistic, driven by the addition of 13 SOP [i.e. start of production] vehicle models and six SOP ADAS OEM customers in the second quarter of 2024 based on our customers’ order forecasts,” Hsieh told investors.
“We believe this will lead to an approximate 3x quarter-over-quarter increase in total lidar shipments, or about 150,000 units, in the second quarter of 2024. We expect the third and fourth quarters orders to jump even further, to about 200,000 units per quarter.”
That rapid increase in production is expected to mean that Hesai will have shipped a cumulative two million lidar units by the end of 2025, driven largely by the Chinese EV industry - described by Li as being five years ahead of rivals in the US and Europe.
Wavelength ‘misconception’
Li also used the latest investor call to say that Hesai was challenging what he called “long-standing misconceptions” that long-range perception exceeding 250 meters was only possible using lidar with lasers emitting at longer wavelengths around 1500 nm.
Hesai’s long-range “AT512” lidar for ADAS applications, which is set to move into production next year, uses conventional 905 nm emission, with Li claiming that its rivals were now converging on the shorter wavelength.
At the same time, said the CEO, the “Moore’s law” effect enabled by Hesai’s investment in mass production was enabling it to produce lidar units at lower price points - opening up the market to significantly cheaper passenger vehicles than the premium models where the technology has appeared thus far.
Both Li and Hsieh likened the emergence of lidar to that of airbags previously, noting that EV customers in China were increasingly seeking the technology for inclusion in “intelligent driving” systems on the vehicles they were purchasing.
“It’s all about safety, convenience, and driving enjoyment,” observed the CFO. “That’s what’s driving the development.”
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