In recent developments, Hesai Technology has announced ambitious plans to reduce the price of its LiDAR technology by half next yearThis initiative aims to broaden the application of LiDAR in electric vehicles, making it more accessible to manufacturers of low-cost electric models.

According to CEO Li Yifan, this price cut will make LiDAR appealing for electric vehicles priced under RMB 150,000 (approximately $20,000), potentially boosting the adoption rate of LiDAR technology in higher-end electric vehicles to about 40%.

This price reduction announcement isn't a sudden shift; rather, it continues a trend of declining prices in the LiDAR market over recent years

Back in 2019, the average selling price of Hesai's LiDAR was around $17,400. Fast forward to January of this year, when another company, Jingjing Technology, boldly declared the entrance of LiDAR into a "thousand-yuan era."

It is a remarkable journey, with prices plummeting from tens of thousands to mere thousands within five years—a testament to the struggles LiDAR manufacturers face striving to stay afloat amidst fierce market competition.

The global state of the LiDAR industry can be summarized as a dichotomy—a bright prospect in some regions while dim in others.

The YOLE Group recently reported a striking 80% increase in the global automotive LiDAR market, which has reached $538 million in 2023.

The top players in this market include Hesai Tech, which holds a 37% market share, followed by RoboSense at 21%, and others like Seeed, Valeo, and even tech giants like Huawei and Waymo.

Notably, Chinese LiDAR suppliers currently dominate, commanding an impressive 84% of the global market share.

However, despite this growth and dominance, the leading companies continue to face significant losses

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Hesai reported a staggering loss of around $67 million last year, with ongoing losses reported in the first three quarters of this yearSimilarly, RoboSense recorded losses exceeding $6.1 million in the same timeframe.

The tumultuous fate of LiDAR manufacturers represents a microcosm of the controversies surrounding LiDAR technology itself.

A crucial question remains: "Do we really need LiDAR?"

In the race for autonomous driving, there exist two contrasting philosophies: Tesla's vision-centric approach relies heavily on cameras and AI to interpret the surroundings, while the alternative combines multiple sensors, including cameras, LiDAR, and radar, to create a more robust understanding of the environment.

The issues driving losses for these companies revolve around extensive R&D expenses, high production costs, and the fierce price wars that permeate the industry—elements that have particularly jolted LiDAR manufacturers.

To begin with, the R&D expenditure is substantial

Hesai invested approximately $11 million in R&D in 2023 alone, marking a 42.4% increase year-on-yearThis accounted for about 42.1% of its total revenue.

Across the board, RoboSense reported an even higher allocation, with R&D expenditures constituting 56.7% of its total revenue in 2023, showcasing the financial pressures these companies endure.

Next is the issue of production costsAs the most efficient and accurate 3D imaging technology available today, LiDAR is inherently expensiveAs of 2021, vehicles equipped with LiDAR typically exceeded $6,000 in cost, limiting their adoption predominantly to mid- to high-end models.

Additionally, the competitive landscape has fostered relentless price wars

Continuing to operate as companies scale has created a dire need to balance profit margins, which is exacerbated in the LiDAR industry given the broader persistent struggles it endures.

As per recent calculations, the average price of LiDAR used in Advanced Driver Assistance Systems (ADAS) is projected to plummet by over 15% by 2024.

RoboSense has seen its product prices drop dramatically over the years, from a peak of around $1,500 down to approximately $520, with further reductions anticipated into 2024.

Those price drops aren't isolated—automakers have entered the fray, driving the cost of LiDAR down even further

The chairman of BYD, Wang Chuanfu, noted that while the market price for a single unit may hover around $500, it doesn't reflect the actual manufacturing cost, which could be significantly lower.

Of significance, many automakers have opted to forgo LiDAR altogetherHuawei has removed LiDAR from its AITO M7 Pro’s smart driving solutions, while companies like XPeng and NIO have introduced vision-centric solutions in their newest offerings.

The consequence of these price wars, coupled with substantial R&D expenses, is palpableMobileye, a committed player in the field, recently announced it would terminate its development of next-generation LiDAR, deciding instead to refocus its efforts and close the LiDAR division entirely.

Back in 2020, Bosch initiated its LiDAR development, confident it could lead to enhanced safety for autonomous driving

However, by 2023, the company announced the abandonment of its LiDAR projects, a turn of events indicating the significant challenges faced in this market.

In fact, prior to 2023, numerous LiDAR firms succumbed to the pressures of financing and bankruptcyNotably, the early pioneer Ibeo succumbed to bankruptcy in late 2022, and others like Velodyne and Ouster merged to consolidate their financial positions amid declining revenues.

As such, the future prospects for LiDAR technology in the automotive sector are being reshapedManufacturers now pursue different paths to survive and thrive in a rapidly changing landscape.

One avenue is through technological innovation

Hesai recently launched its new high-performance long-range LiDAR, ATXThis compact, wide-angle sensor utilizing fourth-generation chip architecture is designed for advanced driving applications and boasts improved range, resolution, and field of vision while reducing costs.

In April this year, RoboSense unveiled the MX, a mid-to-long range LiDAR equipped with their proprietary SoC chip, leading the charge towards more affordable LiDAR technology.

Moreover, leading companies are not only focusing on advancing technology, but also on optimizing manufacturing processesScalability can significantly reduce costs, and many firms are now adopting platform-based manufacturing and custom chip development methods.

Hesai has invested heavily in constructing their "Maxwell" manufacturing center, positioning itself to produce 1.5 million units annually with rapid turnover times.

In addition, some LiDAR companies have even diversified into other industries, including robotics

RoboSense is seeing significantly higher margins in their robotics division, pushing them towards exploring growth opportunities outside of automotive markets.

The recent reports indicate that the LiDAR in electric vehicles in China is projected to grow, with estimates suggesting an adoption rate of around 10% to 13% for the first half of 2024.

Companies are simultaneously pushing for profitabilityIn the first half of this year, RoboSense reported a staggering 415.7% increase in LiDAR sales compared to the previous year.

Hesai's performance metrics have also displayed promising signs, with CEO Li Yifan indicating an optimistic outlook for reaching break-even by the end of 2024.

As the LiDAR landscape evolves, reflection shows it is a turbulent yet transformative journey towards integration in electric vehicles and potential profitability.