May 05 2025, by Tim Xu, Founder of TS Research

The Paradox of Success

Beneath the gleaming façade of record LiDAR shipments lies an inconvenient truth: no major player has cracked profitability. The numbers tell a sobering tale- while China’s LiDAR installations skyrocketed from 8,000 units in 2021 to over 574,000 last year, industry gross margins have collapsed from 70% to sub-40% since 2019.

Having witnessed the auto industry’s shift from petrol dominance to today’s EV and self-driving revolution, I’m seeing the same pattern as the early 2000s radar adoption phase – first breakthrough tech sparks market frenzy, then the bubble bursts, leading to brutal industry consolidation. History always rhymes.

Why This Hurts More
Unlike radars, LiDAR carries the weight of L3+ autonomy’s promise. Moreover, according to our research, Chinese car owners, especially NEV owners, have a superstitious attitude towards LiDAR. Hesai’s assembly lines hummed with AT128 units bound for XPeng and Li Auto—yet each sale loses money. This isn’t just a pricing war; it’s a bet on an autonomous future that’s arriving slower than projected.

China’s LiDAR Dragon

The global LIDAR market is projected to grow at a 17.66% CAGR (2025-2033), reaching $13.3 billion (IMARC). Chinese firms now command 92% of the passenger vehicle LIDAR market share (2024), with Hesai (33%), RoboSense (24%), and Huawei (19%) leading the charge. This dominance stems from three key advantages:

1. Government Support: China’s “Smart Vehicle Innovation Development Strategy” has accelerated L3+ autonomous vehicle development, creating insatiable LIDAR demand.
2. Cost Innovation: Hesai’s AT128 sells at ¥7,800 ($1,070) in 2023, down from ¥113,100 in 2019 – an 93% reduction through chip integration and automated production.
3. Vertical Integration: Hesai’s self-built “Maxwell” Smart Factory achieves 90% automation with 45-second cycle times, enabling 150,000+ annual units capacity.

The Profitability Paradox

Despite shipping 221,800 units in 2023 (2.8x YoY growth) and securing 19 OEM contracts, Hesai’s financials reveal systemic challenges:

Comparative Performance (2024 Benchmark)

The Three Paths to Survival

From my advisory work with Tier 1s, I’ve distilled the existential choices:

1. The Tesla Vision-Only Bet (Abandon LiDAR, bet on vision)

• Reality Check: After BMW and Nissan’s failed attempts, only Xpeng’s XNGP shows comparable pure-vision capability—and even they quietly added LiDAR to G9.

2. The Intel Inside Play (Embed LiDAR into vehicle architecture)

• Hesai’s collaboration with Nvidia on Thor-based perception pipelines hints at this future. But as Qualcomm’s MD revealed to me: “OEMs won’t pay for redundant sensing.”

3. The Mobility-As-A-Service Moonshot (Pivot to Robotaxis)

• While Waymo’s Jaguar I-PACE uses Hesai units, the math remains dire: USD 5,451/LiDAR versus USD 0.03/mile revenue in current ride-hailing.

The Human Factor

At last month’s LiDAR conference in Shanghia Pudong, a veteran engineer from Valeo confessed over baijiu: “We built this industry on dreams of Level 4, but consumers just want better parking aids.” His resignation mirrors the sector’s dilemma—how to fund tomorrow’s transformational tech with today’s ADAS pennies?

My Prediction
By 2026:

• 2-3 LiDAR giants will emerge (likely Hesai + 1 Western player)
• Pure-solid-state devices will drop below USD 300—triggering the “Airbag Moment” when regulators mandate LiDAR for NCAP 5-star ratings
• The rest? Acquired or bankrupt. Just like the camera module shakeout of 2015.

Final Thought

In my 20 years analyzing auto tech waves, true inflection points come not from technology, but policy and psychology. When Beijing finally greenlights L3 liability frameworks- likely 2026 – the floodgates open. (However, the recent statement from the Ministry of Public Security regarding the AD test results of Dongchedi makes me feel that this matter still needs to be postponed. Remarked at July 25, 2025) Until then, LiDAR remains a beautiful, money-losing necessary bet on the next automotive epoch.