With the arrival of the first year of lidar in 2022 and the first year of urban intelligent assisted driving (NOA) in 2023, the lidar industry is ushering in an explosive period.
Since the beginning of this year, autonomous driving companies, automobile manufacturers, and mobile travel companies have actively promoted the full implementation of city-level intelligent assisted driving, and many cities such as Beijing, Shanghai, Shenzhen, and Guangzhou have issued relevant policies. Driven by industry + policies, autonomous driving is expected to break through commercialization.
As one of the core sensors for autonomous driving, domestic lidar has also ushered in a new milestone. Following the successful listing of Hesai Technology, the "first domestic lidar stock", Sagitar Juchuang and Tudatong successively launched sprints to the capital market.
At the same time, CICC, China Insights Consulting, Frost & Sullivan and other institutions stated that 2022 will be the first year of mass production of lidar, and domestic lidar shipments are expected to increase significantly in the next few years.
On August 14, the financial results for the second quarter of 2023 released by Hesai Technology also provided proof for the above point of view. According to the financial report, Hesai achieved revenue of 440 million yuan in Q2, a year-on-year increase of 108.5%; the delivery volume of lidar reached 52,106 units, a year-on-year increase of 946.5%, setting a new record for a single season; among them, the ADAS lidar grew rapidly, with a delivery volume of 45,694 units , a year-on-year increase of 27 times.
With the rapid increase in vehicle lidar, the arms race in the lidar industry has also entered a new stage. So, how does a domestic lidar company win the "slot battle" on the track and go fast and steadily on this technological expedition?
The midsummer of lidar is coming, and the capacity expansion is just in time
The stage of lidar from 0 to 1 has ended, and the industry is ushering in quantitative changes.
At present, the commercialization path of lidar companies is getting wider and wider. Most OEMs and Tier 1 believe that lidar is a necessity for advanced autonomous driving. In 2023, the total number of models with standard or optional lidar will exceed 30.
At the same time, domestic lidar is rising rapidly. As early as the end of last year, when Hesai Technology announced that the cumulative delivery of LiDAR reached the milestone of 100,000 units, the company had become the annual global LiDAR mass production champion. In the first half of 2023, the revenue and delivery volume of Hesai Technology will be higher than the sum of the other 6 lidar companies listed in the United States, indicating that Chinese lidar companies are at the forefront of the world in the market.
In this context, domestic lidar companies hope to achieve breakthroughs in mass production and manufacturing capabilities by virtue of the clustering advantages of my country's supply chain.
For example, the Jiangsu, Zhejiang and Shanghai industrial circles have been able to quickly mobilize a group of suppliers to form a complete supply chain. Therefore, Hesai Technology will start to build the "Hesai Maxwell Intelligent Manufacturing Center" in Shanghai Jiading Industrial Zone in 2021. The investment of this intelligent manufacturing center exceeds 1 billion yuan, and it will undertake the automation of functional modules such as lidar research and development, production, and vehicle specification testing. For production tasks, the automation rate of the entire line is targeted at 90%.
As of August this year, the construction of the Intelligent Manufacturing Center project has been basically completed, and the interior decoration of the R&D and production building has been basically completed. According to the Shanghai Jiading official account, the construction party is rushing to finish the work and strive to put it into use before the end of the year.
This also reveals Hesai Technology's clear understanding of the development of the lidar industry: ADAS products are growing strongly, and the demand for production capacity is about to enter a new stage. In the first half of 2023, Hesai’s cumulative total delivery volume of lidar is 86,940 units, a year-on-year increase of 630.3%, of which ADAS lidar delivery volume is 73,889 units, exceeding the annual delivery volume of ADAS lidar last year.
Since its establishment, Hesai has delivered more than 190,000 LiDARs. The production capacity brought by the intelligent manufacturing center that will soon be put into production will support Hesai's next large-scale expansion.
At present, the overall large-scale mass production rate of the lidar industry is still low, and the market still has broad room for growth. According to the "Lidar Data Report-March 2023 Edition" data released by Zuosi Automobile Research and Development, the total number of lidar vehicles installed in 2022 will reach 129.6 thousand, a year-on-year increase of 1490.2%, but the assembly rate of lidar models is only 0.56%.
Therefore, the current core competitiveness of lidar companies lies in mass production and delivery capabilities, and manufacturers with strong mass production and delivery capabilities are expected to continue to expand the market. In the process of lidar companies developing the market, quantitative changes in product delivery will eventually lead to qualitative changes in technology.
Market + R&D in parallel, the road to becoming a Tier 1 automotive company
In the development of the laser radar industry from 1 to N, the mass production of laser radar enterprise products and technological progress are complementary.
From the perspective of specific application scenarios, pre-installed mass production is the core of LiDAR's minimum volume. In this scenario, the ultimate goal of car companies is to enable consumers to perceive the value of this system, thereby completing the closed loop of sales. Focusing on consumers' smart driving experience, car companies have to seek a balance among performance, cost, and reliability, and make progress together. Therefore, if a lidar company wants to become a Tier 1 automotive company, it must pursue the market and research and development in parallel.
On the one hand, lidar companies must continue to verify the technical route during the product delivery process.
The performance and characteristics of lidar depend on its five major technical elements, which are ranging principle, laser wavelength, transmitting device, receiving device, and scanning method. Downstream OEMs choose different technology combinations to form their own lidar solutions according to their own needs and goals, which in turn determines the product capabilities and long-term potential of each OEM.
At present, the lidar industry is still in a state where various technical routes are blooming. For example, according to the ranging method, lidar can be divided into two categories: one is the time-of-flight ranging method TOF using direct measurement, and the other is frequency-modulated continuous wave technology FMCW using coherent measurement.
For practical application scenarios, car companies are obviously more aware of the situation than upstream manufacturers. Therefore, domestic lidar manufacturers must find the right technical route in the process of helping car companies to implement assisted driving.
In addition, the various product tests of head lidar companies also require the cooperation of downstream manufacturers. For example, newer products such as ET25 in the product line of Hesai Technology cannot be separated from OEMs and autonomous driving companies for vehicle-level reliability testing.
On the other hand, the investment in research and development of lidar products will eventually help companies to take the road to commercialization wider and wider.
From the perspective of development stage, the lidar industry has just passed the mass production barrier. At this stage, when it is really necessary to win the choice of car companies, the comprehensive strength of lidar companies is particularly important. Especially for traditional car companies in the transformation stage, many of the worries about installing new functional modules for new cars can only be eliminated by continuing to demonstrate technical strength and service level.
The characteristics of the technology industry determine that lidar companies must improve their technical strength through research and development, and sunk costs and "precipitated" investments in the early stages of the new product cycle are inevitable. Every innovation is burdened with heavy costs, but it is precisely because of these weights that the results have no moisture.
Li Yifan, CEO of Hesai Technology, also said: Chip technology research and development, self-built production lines, supply chain management, functional safety, network security, expected functional safety, standardized definitions, product design, etc., everything is time-consuming and labor-intensive. Any one of the items requires lidar companies to invest time costs in units of years, as well as huge labor costs.
It took Hesai Technology seven years to become the world's No. 1 LiDAR company in the global ADAS field, and this process is accompanied by continuous R&D investment. In the second quarter of 2023, Hesai’s research and development expenses were 161 million yuan, an increase of 49.1% from 108 million yuan in the same period of 2022, and the total research and development expenditure in the first half of the year reached 369 million yuan.
The market reaction also proves that Hesai's long-term investment is worthwhile. According to the data released by Gasgoo Automotive Research Institute, from January to June 2023, Hesai Technology's lidar sales share in the Chinese market reached 51.4%, with an installed capacity of 83,940 units, ranking first.
Under the outstanding market performance, Hesai's operating cash flow has been positive for two consecutive quarters, reaching 58.3 million in this quarter, a quarter-on-quarter increase of 4 times.
Facts have proved that only by taking the two roads of market and R&D well, and forming a good mechanism of "R&D-market-(feedback)-R&D", can lidar companies become the final winner in the protracted battle for autonomous driving.
Accelerate globalization + industrial chain cooperation, make the cake bigger and bigger
With the accelerated development of autonomous driving and intelligent networking technologies, the blueprint for domestic lidar has only just begun.
Yole Intelligence predicted in the "2023 Global Automotive LiDAR Market and Technology Report" that the global automotive LiDAR market size will increase by about 15 times in the next five years, reaching US$4.7 billion by 2028, of which the ADAS passenger car market size up to $3.9 billion.
Achieving mass production is just a step forward for lidar companies. To achieve substantial success, lidar companies still need to answer the question of how to continue to make profits, which requires making the cake even bigger. Specifically:
One is to embark on the road of globalization and continuously increase the "thickness" of one's own stories.
The growth of Hesai Technology proves the importance of overseas markets. In the past three years, the total revenue of Hesai's overseas market has reached nearly 1.187 billion yuan, accounting for more than half of the company's total revenue, with a growth rate of more than 100%.
Hesai Technology set up an office in Silicon Valley (Palo Alto) in the United States at the beginning of its establishment. In May of this year, Hesai announced that it would land in Stuttgart, Germany, the "capital of automobiles". The opening of the European office marks the acceleration of its global business layout.
Expanding the North American and European markets is the only way for domestic lidar companies. Making full use of Stuttgart's industrial advantages and ecological resources in the field of automobile and parts manufacturing, Hesai can enhance its comprehensive competitiveness.
In addition to Hesai Technology, other domestic lidar companies have also accelerated their pace of going overseas this year. For example, Sagitar Juchuang entered the Toyota Motor supply chain system in February.
Different from domestic new energy vehicles going overseas in the past, domestic lidar products go overseas independently, which shows that Chinese lidar companies are attracting the attention of overseas car companies, which brings them a new story.
The second is to strengthen industrial chain cooperation and accelerate the implementation of scenarios.
Since the beginning of this year, the pace of commercial exploration of autonomous driving has been accelerating. At present, Guangzhou has issued road test permits to 308 test vehicles from 13 test subjects including Pony.ai, WeRide, GAC Group, and Apollo (Baidu); Licenses for trial operation; some areas in Beijing, Shanghai, and Shenzhen are also open to pilot commercialization of intelligent connected passenger vehicles with "no one in the car".
The commercialization pilot of "unmanned vehicle" is further advanced, and the cooperation between upstream and downstream enterprises in the relevant industrial chain is increasing. For example, on August 4, GAC Toyota Motor Co., Ltd., Toyota Motor (China) Investment Co., Ltd. and Pony.ai signed an agreement to jointly promote the unmanned, large-scale and commercial application of L4 autonomous driving.
In the lidar market, different vehicle customers have diverse needs, and only in-depth cooperation can better understand customer needs. Therefore, only by accelerating the construction of an ecology of cooperation in the entire industry chain can lidar manufacturers win more markets in the future.
In this regard, Hesai Technology aims to become a Tier 1 automotive company, and will cooperate more and more closely with industrial chain companies in the second half of the year:
On the one hand, it is cooperation with OEM OEMs. In July, Hesai announced that it has won the pre-installation project designation for several models of SAIC’s commercial vehicle sector. All new models will be equipped with Hesai Technology’s ultra-high-definition long-range laser radar AT128. It has also reached cooperation with two well-known OEMs from North America and Europe on the research and development of advanced driving assistance (ADAS). At the same time, among the 11 mainstream OEMs that Hesai has secured for mass production, a total of 6 will begin mass production and delivery by the end of 2023.
Another aspect is the upgrade of cooperation with Nvidia. In August, Hesai announced the integration of lidar into NVIDIA DRIVE Sim, and developers of automakers and autonomous driving companies can directly call Hesai's high-precision lidar model through NVIDIA DRIVE Sim.
LiDAR companies and automotive original equipment manufacturers, self-driving car and robot companies, and chip companies have carried out in-depth cooperation in the entire industry chain, integrating their respective software and hardware technologies, which is expected to catalyze the rapid increase in the penetration rate of advanced autonomous driving.
Looking forward to the future, as urban NOA ushers in a large-scale release and the popularization of smart driving accelerates, domestic lidar will soon be sublimated from quantitative to qualitative.
Source: US Stock Research Institute