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By Meg Flippin, Benzinga
The global LiDAR sensor market is heating up as manufacturers attempt to include more of these safety features in their vehicles. After all, LiDAR sensors can help drivers respond better to their surroundings, which then potentially reduces accidents and improves navigation. Self-driving vehicles currently on the road and in development need LiDAR sensors to operate safely.
The market is forecasted to grow in the years to come. One research firm estimates it will reach $7.9 billion by 2030, growing at a CAGR of 19.3%. It’s also a crowded market, with many LiDAR sensor makers vying for vehicle makers’ attention and business. Standing out is difficult, but it’s something Hesai Group (NASDAQ: HSAI) seems to be achieving, if their progress in the third quarter is indicative.
Leading In Market Share
The global maker of three-dimensional light detection and ranging (LiDAR) solutions says that as of the third quarter, it has emerged as a leader in terms of revenue, gross margins, cash flow and cash reserves when compared to its peers. Net revenue in the third quarter reached $76.9 million, up 21.1% year-over-year, and the company projects it will become the first automotive LiDAR company globally to achieve quarterly revenue of $100 million in the fourth quarter of 2024.
Total lidar shipments during the third quarter were 134,208 units, up 182.9% YoY; Q3 2024 ADAS lidar shipments were 129,913 units, up 220.0% YoY. It marked two consecutive quarters of nearly 50% sequential growth in shipments. Hesai expects a record-breaking fourth quarter, with lidar shipments projected to reach 200,000 units – nearly matching its total shipments for 2023.
Looking to the fourth quarter, Hesai estimates a net profit of $20 million and a positive operating cash flow. Hesai anticipates achieving full-year profitability on a non-GAAP basis for 2024. If it achieves those targets, Hesai said it will become the first profitable automotive LiDAR company globally in the fourth quarter of 2024. “Achieving profitability is a pivotal milestone, creating a virtuous cycle where increased resources fuel enhanced innovation and product development, driving stronger sales and sustainable growth,” said Hesai.
Its commanding position in the market is also winning the company industry recognition. In July, Yole Group named Hesai the top automotive LiDAR company by market share for the third consecutive year. Hesai said the achievement came after a strong year of record-breaking revenue and shipments, strategic design wins, an expanded product roster and new partnerships.
“We are honored to be recognized by Yole Group as the leader in the global LiDAR market for the third year in a row,” David Li, CEO and co-founder of Hesai, said at the time. “Our unique R&D and production capabilities allow us to mass produce high quality LiDAR at an unparalleled speed. As a result, Hesai will continue to advance road safety through our best-in-class products.”
Bringing Manufacturing In House
At last check, Hesai had a 37% market share in the ADAS and autonomous driving markets. The second-place competitor had a 21% market share, according to Yole Intelligence. Hesai is also dominating the L4 autonomous driving LiDAR segment, achieving 74% global market share in 2023. Of the top 10 L4 autonomous driving companies, nine use Hesai’s LiDAR sensors. Several clients, including Leapmotor, Changan Automobile, and Great Wall Motor (OTC: GWLLF), have switched to Hesai after initially selecting other companies, the company reports.
What Hesai says sets it apart from its rivals is its in-house integrated technology that boasts long-term cost reductions and improvements in efficiency. By operating an in-house manufacturing facility, Hesai says it can produce its sensors on a large scale and deliver them in a timely manner. It doesn’t hurt that Hesai also created what it says is the world’s first integrated R&D and manufacturing center for LiDAR technology. That focus on advancing the market could give it an opportunity to establish a lasting leadership position.
Crossing The Chasm
According to Hesai, the LiDAR industry is currently in the “crossing the chasm,” a theory popularized by Geoffrey Moore that highlights the struggles a product faces going from early adoption to being used by the masses. When the product begins to achieve mass appeal, with at least 16% market penetration, it starts “crossing the chasm.”
Hesai said that the automotive LiDAR market had penetration rates of 24% as of September, a firm indication that the transition to mass appeal is underway. From January to September 2024, the cumulative delivery volume of mass-produced LiDAR installed for passenger cars in the Chinese market exceeded 990,000 units, representing a 202% increase year-over-year, according to Chinese auto media Gasgoo.
Among the top 10 emerging new energy vehicle brands in China, excluding new brands from traditional automakers, the average adoption rate of automotive LiDAR reached nearly 60% in September and continues to rise, according to Gasgoo.
LiDAR still has a long way to grow before it's ubiquitous in the market like airbags, but adoption is growing at a steady pace. Hesai is positioning itself to be a big beneficiary when the market does eventually cross that chasm.
Featured photo courtesy of Hesai Group.
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