As a debate rages in the automotive sector about whether LiDAR (light detection and ranging) is necessary for autonomous driving, one Chinese company is aiming to use its USD 200 model to put the issue to rest.
Founded in 2014, Hesai Technology specializes in LiDAR that has a wide field of view and high resolution, with its products in use by 24 companies, mainly Chinese automakers. The company ranks first in the global automotive LiDAR market with a 33% share, according to French market research firm Yole Group.
LiDAR’s critics, among them Tesla CEO Elon Musk, say the technology is too expensive to be commercially viable.
Data from Chinese automaker Li Auto, a Hesai client, shows that vehicles equipped with LiDAR can avoid 90% of fatal accidents on highways and prevent up to 20% of collisions on ordinary roads.
“LiDAR has been proven to be an excellent technology for stopping vehicles before collisions,” Li Yifan, Hesai’s co-founding CEO, told Nikkei in an interview at the IAA Mobility industry expo in Munich in September.
But its adoption has not yet become widespread due to its price, which is typically over USD 10,000 per unit. “Unless we significantly reduce the price, it will be difficult to install it in all vehicles, and safety will not improve,” said Li, who has aimed to cut costs by 99.5%.
In collaboration with major automakers, US chip giant Nvidia and German automotive parts giant Bosch, Hesai began developing a LiDAR unit in 2022 with a price of USD 500. Finding it difficult to reduce the price further, it later switched to in-house production of core components like lasers, receivers and drivers, and has sold over one million units in total.
While significant investments in production facilities increased the overall cost of the process, the company has successfully lowered the price of its new ATX model to USD 200. The product went into mass production this year.
“In-house production offers the advantage of not only reducing costs but also enabling rapid feedback into the design process,” Li said. “This allows for the use of superior, lower-cost components.”
Musk has criticized LiDAR for its high costs, saying in 2019 that “anyone relying on LiDAR is doomed.” He has argued instead that autonomous driving can be achieved solely through advanced cameras. Some Chinese companies like electric vehicle startup Xpeng and internet giant Baidu, which is developing robotaxis, have also moved away from LiDAR.
Li remains confident. “Nearly 100 automakers and parts suppliers recognize LiDAR as essential technology for protecting lives and are using it,” he said. “Some are now saying Musk’s view was mistaken. The industry has already reached its conclusion.”
For the next generation of LiDAR and beyond, Hesai believes that its price of USD 200 will become the standard for balancing safety and widespread adoption.
The next step is further market penetration. Hesai’s LiDAR technology has been adopted by Toyota Motor’s joint venture in China, but the majority of customers are still Chinese automakers.
“European automakers consider LiDAR essential for Level 3 autonomous driving,” Li said, expressing confidence that adoption will become more widespread. “In recent years, they have begun doing business with Chinese manufacturers possessing advanced technology.”
Hesai is also bolstering its production setup, aiming to double output at its two plants in China this year from the 2024 figure to over one million LiDAR units. It also plans to establish its first overseas factory in Southeast Asia, aiming to start production in late 2026 to early 2027.
The company listed on the Hong Kong stock exchange in September to help raise funds for the expansion, raising HKD 4.16 billion (USD 535 million).
“Airbags, once prohibitively expensive, are now standard equipment in all vehicles,” Li said. “We want to achieve the same situation with LiDAR.”
This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.