China’s car industry gears up for next level of self-driving tech: sensor maker Hesai
News Summary
China's auto industry is actively preparing for next-generation autonomous driving features, even before Beijing clears the regulatory path for Level 3 (L3) systems, according to Andrew Fan, CFO of Hesai Group, the world's largest automotive lidar sensor maker. Hesai is ready to supply its lidar sensors and other technologies for premium models with L3 self-driving capabilities. Fan anticipates a significant increase in the adoption of advanced hardware and solutions for L3-compliant cars next year, noting that some carmakers are already integrating these systems to pre-empt rivals. The cost of advanced lidar sensors necessary for L3 could range from US$500 to US$1,000 per unit. Leading Chinese carmakers, particularly those focused on premium electric vehicles such as Zeekr (under Geely) and Huawei-backed Seres, are ramping up development of semi-autonomous vehicles fitted with these advanced lidar sensors, indicating strong demand.
Background
Level 3 (L3) autonomous driving systems, defined by SAE International as "hands-off" capabilities, allow drivers to disengage from vehicle operation under certain conditions but still require them to be ready to intervene. This level necessitates more advanced sensor hardware, such as lidar, for precise environmental perception. Currently, China's legal framework for L3 autonomous driving is not fully established, creating regulatory uncertainty for widespread commercial deployment. However, the Chinese government continues to support the development of autonomous driving technologies through policies like the "Intelligent Connected Vehicle Technology Roadmap 2.0." Hesai Group, as a leading global lidar supplier, plays a crucial role in this technological race, with its products adopted by several prominent automakers.
In-Depth AI Insights
Why are Chinese automakers rushing to deploy L3 hardware, even ahead of current regulations? - This reflects intense competition among Chinese automakers for leadership in the intelligent electric vehicle sector. Early deployment of L3 hardware is not just about technological readiness but also a crucial marketing and brand differentiation strategy. - Despite regulatory lag, companies likely anticipate that policy clarity is only a matter of time. Pre-positioning ensures they can rapidly launch products and capture market share once regulations are eased. - This move may also be influenced by the government's encouragement of technological innovation and its "automotive powerhouse" strategy, aligning companies with national goals to potentially gain support. What are the market position and investment prospects for core sensor suppliers like Hesai Group? - As the world's largest automotive lidar manufacturer, Hesai Group is poised to directly benefit from the surging demand for L3 hardware from Chinese automakers. The high unit cost (US$500-US$1,000) suggests significant revenue growth potential. - However, lidar technology is rapidly evolving, and cost remains a critical challenge for widespread commercial adoption. Investors should monitor technological roadmaps, potential competitors (e.g., solid-state lidar breakthroughs), and the pace of cost reduction. - Profitability will depend on economies of scale, technological barriers, and the depth of ties with automakers, all of which will influence long-term valuation. What implications does China's "hardware-first, regulation-later" autonomous driving development model have globally? - China is demonstrating a "rapid iteration, bold pioneering" model in autonomous driving, where technology and hardware lead, with regulations and infrastructure following gradually. This approach could accelerate technology verification and data accumulation but also carries potential safety and legal risks. - For global investors, this highlights the unique resilience and innovation-driven nature of the Chinese market, potentially creating new growth areas for related technologies and supply chains. Concurrently, it reminds investors to closely monitor policy evolution and potential regulatory risks, especially regarding differences in international standards for safety and liability.