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Briefing Jul 22, 2020 10:50 am EqualOcean

Hesai Reaches a Patent Cross-Licensing Agreement with Velodyne

Analysis EO
Analysis · 2
report
Analysis EO
Jul 15, 2020 07:27 am ·

HESAI: China's Answer to Velodyne

Key takeaways ► HESAI is an emerging Light Detection and Ranging (LiDAR) supplier enjoying rapid development over recent years. It focuses on mechanical LiDAR and solid-state LiDAR and has customers of most well-known autonomous driving companies worldwide. ► Competing with global LiDAR industrial leader Velodyne, HESAI survives by its cost-efficiency. The challenge of the whole industry is to further reduce the price to an acceptable level for bulk purchases. ► Tech giants and Tier 1 suppliers are entering the LiDAR market. HESAI is expected to have a positive future in the competitive industry based on its core technology and support from the capital market. Business overview Founded in 2014 in Shanghai, HESAI has developed a completed series of mechanical LiDAR and solid-state LiDAR. As a startup, HESAI has taken fast steps toward commercialization. HESAI’s customers now not only include Chinese autonomous vehicle manufacturers, but also Silicon Valley’s leading players like Lyft, Cruise, Nuro, and Zoox. LiDAR is the key sensor of autonomous vehicles (AV). It has increasing importance for L3 and higher-level autonomous driving technologies. For L2 and lower, ‘camera + RADAR’ is enough. Higher level AVs require improved accuracy and more details of the surrounding environment – this is where LiDAR beats RADAR. LiDAR will become standard equipment for the next generation AVs. The pain of LiDAR now is the high price point, which is not affordable for AV manufacturers. The traditional mechanical LiDAR sells for tens of thousands of dollars, which is almost impossible for mass production. As a Chinese manufacturer, HESAI takes advantage of the cheaper labor force. Its LiDAR products are generally 30%-50% cheaper compared with its Silicon Valley peers, with close quality. After 2017, HESAI also turned to solid-state LiDAR. Compared with mechanical LiDAR, it has a smaller size and lower price – but therefore, weaker performance.  Market landscape As the top Chinese LiDAR provider, HESAI is challenging the international market leader Velodyne. As the trailblazer of LiDAR, Velodyne dominated the market until 2017, when the solid-state LiDAR started to attract more attention. Since then, Velodyne’s technology advantage against competitors has narrowed dramatically.  Although HESAI’s LiDARs have achieved similar technological standards, Velodyne’s products are still the best on the market with regard to anti-interference, synchronization, and stability. HESAI and another Chinese LiDAR provider RoboSense are the two most eye-catching competitors that have snatched notable market shares from Velodyne. HESAI focuses on the LiDAR for RoboTaxi and RoboSense mainly develops LiDAR for low-speed autonomous vehicles. With clear focused sub-sectors, the two Chinese players have developed fast in recent years. The low-price strategy has helped HESAI win many of the leading autonomous driving companies worldwide. More than half of the AV companies on the California disengagement report are applying HESAI’s LiDAR to their AV fleets. (Read more about the self-driving vehicles of Lyft and Cruise.) For companies that are developing autonomous driving systems, LiDARs are purchased for the testing platforms. Thus, they will not pay many extra dollars for Velodyne’s advantages like anti-interference. With similar technological features, the cost-efficiency of HESAI’s LiDAR is attractive to most customers. When HESAI attracts a great number of autonomous driving technology developers, Velodyne is ahead of the corporation with automobile manufacturers and OEMs. These companies usually have a clear plan for the development of L3/L4 AV parts or products. For companies with commercialization requirements, improved accuracy and stability are desired, which is exactly the advantage of Velodyne against its peers. Velodyne also has customers of AV startups that focus on special vehicles that require additional stability, such as IDRIVERPLUS (low-speed autonomous vehicle provider) and EQ (autonomous minecarts). HESAI is still focusing on filling the gap between it and Velodyne to further enter the car parts market. Compared with AV technology startups, automobile manufacturers can provide LiDAR providers with much larger-scale and more stable sales. Velodyne has built cooperation with international car parts providers including Hyundai Mobis and Veoneer in order to become their long-term provider. HESAI is also trying to expand its international sales channels, which can be seen from its recent operational and financial connection with BOSCH. New changes in the LiDAR sector Both HESAI and Velodyne are facing the same problem, still. The prices of their LiDAR products are not low enough for automobile manufacturers’ bulk purchases. Automobile manufacturers generally require applicable LiDAR to have a relatively small size and price of several hundred USD. Solid-state LiDAR is much closer to this standard compared with mechanical LiDAR, thus will be the new market focus.  The rising LiDAR market has attracted attention from more players from Tier 1 and the tech industry. BOSCH and Huawei have entered the LiDAR industry recently. DJI, the world-leading camera drone manufacturer, has already published its LiDAR products developed by its incubated subsidiary Livox. The giants show great concern to the commercialization. They all set the prices of their LiDARs around one thousand USD, which is very close to the target price of the market. The competition for LiDAR providers will be fiercer. But it will accelerate the development of LiDAR to fulfill the requirements for the commercialized L3/L4 AV. The Chinese AV market is expected to have steady long-term growth. The localization of LiDAR, as a key component, is desired by the industry. Thus, the future of HESAI is still very positive with such a competitive industry. Being the domestic LiDAR tech leader, the development of HESAI is very likely to be continuously supported by the capital. In conclusion, companies with applicable core technologies are always favored by the Chinese capital market.

News
News · 1
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