Hesai Braces For 10-fold Profit Jump As It Eyes Europe’s Smart Evs For Self-driving Lidar

Hesai Group’s profit this year is poised for a 10-fold jump, as the world’s most valuable producer of laser radars casts its sights on Europe to put its sensors on more self-driving electric vehicles (EV) to help them navigate.

The Shanghai-based company, which sealed a deal on Tuesday to supply Mercedes-Benz with light detection and ranging sensors, or lidars, said it was in partnership talks with several global carmakers, which might generate “substantial” business in 2027.

“International carmakers, particularly those in Europe, will use Hesai’s products as they see lidar sensors as an important feature in their petrol and electric cars,” the company’s chief financial officer Andrew Fan said in an interview with the Post. “The supply contracts will eventually bring us a lot of revenue because the production volume of those marques is high.”

Hesai is following the path that had been blazed by Chinese EV assemblers – from BYD to Xpeng – as they look overseas to the export market to survive the brutal discount war at home. The global ambitions of the 10-year-old company belie its cost advantage and technological advancement forged from brutal competition.

Hesai’s long-range automotive lidar AT128. Photo: Hesai

Hesai said this week that its advanced ultra-long-range automotive lidar would be used in the next-generation cars of a “leading European” assembler over the next decade, without divulging the brand. Reuters reported that the customer was Mercedes-Benz, the first time that a leading European carmaker picked a Chinese supplier for its worldwide product.

“Hesai’s products cannot be ignored by the assemblers due to our advanced technology,” Fan said, without confirming or denying Reuters’ report. “Geopolitical factors have limited impact on our drive to go global.”

Hesai’s corporate headquarters in Shanghai on November 26, 2024. Photo: Reuters.

Lidars use lasers to measure distances to objects. Smart cars, typically the new generation of EVs and ultra luxury marques, use this data to build highly accurate maps of their surroundings, a key feature in self-driving or assisted driving.

Hesai holds a 37 per cent share of the global market for lidar sensors, counting brands such as Li Auto, and Volvo Cars’ owner Geely as its customers, according to the consultancy Yole Group.

The mainland is the world’s largest automotive and EV market with deliveries of pure electric and plug-in hybrid vehicles accounting for about 60 per cent of the global total.

The Mercedes-Benz Concept CLA Class on display at the International Motor Show in Munich on September 6, 2023. Photo: Agence France-Presse

Hesai’s prospects appear murky in the United States, after the US Defence Department’s on-again and off-again sanctions for allegedly “working with the Chinese military.” Hesai said last October it was pursuing legal proceedings against the Pentagon to get off that list.

The US and European Union (EU) slapped additional tariffs on Chinese-made electric vehicles last year.

“Trade barriers will not slow the rapid expansion by Chinese supply-chain vendors into international markets,” said David Zhang, the general secretary of the International Intelligent Vehicle Engineering Association. “Their technology and production [processes] can help accelerate the auto sector’s transition into intelligent EVs. They will also consider setting up local production facilities outside China.”

An undated photograph of Hesai Group’s headquarters in Shanghai. Photo: Handout.

Like EV assemblers, Hesai was looking into the feasibility of building plants overseas, Fan said, declining to divulge more details.

Hesai became the world’s first lidar maker to post a profit when it reported net income of 14 million yuan (US$1.9 million) in 2024, swinging from the net loss of 241 million yuan a year earlier. The company’s net profit may rise to 200 million to 350 million yuan in 2025, Fan said, buoyed by surging deliveries of its lidar sensors to car assemblers and robot makers.

Hesai had reduced the cost of the sensors to about US$200 per unit from thousands of dollars five years ago as production volume climbed, Fan said.

Around 15 million new cars, or two-thirds of China’s auto sales in 2025, will be fitted with a preliminary autonomous-driving system, according to Zhang Yongwei, the general secretary of China EV100, a non-governmental organisation that counts most of the nation’s top EV executives as members.

The intelligent cars would feature at least Level 2 self-driving capabilities including steering, acceleration and deceleration, but would require drivers to take control at any time, Zhang said.