Unlock Editor’s Digest Lock for Free
The largest manufacturer of laser sensors used in Chinese self-driving cars is set to open its first overseas factory next year to encourage customers to protect it from geopolitical tensions.
Already caught up in the battle against the Pentagon’s blacklist, Shanghai-based HESAI is looking to build overseas production boundaries in addition to its Chinese factories to “avoid risks related to geopolitics and tariffs.”
“Clients who want to spread risk feel that’s a smart approach,” fans said, adding that diversified supply chains could also hedge potential logistical disruptions.
HESAI is a leading provider of LIDAR systems and uses pulsed laser light to help autonomous vehicles generate three-dimensional maps of their surrounding environment.
The company attracted global attention after the US Department of Defense included it on its list of “Chinese military companies” last year, and deleted it after hESAI began legal proceedings. He returned to the list last October, urging further legal action. Fans called the Pentagon’s decision a “misunderstanding” of the startup business. The company is suing, saying its products are strictly for commercial and private use.
The Pentagon blacklist had “very limited” legal strength, but fans said it was forced to “think twice” to future investors and clients of Hesai before purchasing Hesai stock and products.
The Biden administration has banned the import and sale of connected vehicles, including Chinese software and hardware, and the technology could pose a national security threat, with President Donald Trump stepping up Chinese tariffs.
Despite the geopolitical threat, fans expressed confidence that a recently protected contract with a European automaker will allow the company to install devices in self-driving cars on roads in Europe and the US.
Reuters reported Tuesday that the customer was Mercedes-Benz, and it was the first time a foreign automaker had tried to use such Chinese-made technology on models selling outside of China.
“We want to accelerate overseas production soon after the global supply program. This is an inevitable step towards our global ambitions,” fans said.
He said HESAI will break in by the end of the year with the goal of production in 2026 and the goal of creating “hundreds of local jobs.”
HESAI shares rose 50% in the US on Tuesday after it first broke in 2024 and said the company was the first to become a profitable Lidar maker.
Management projected adjusted net profits from RMB350mn to RMB500MN ($48 million to $69 million) in 2025.
The lidar system uses pulsed laser lights to help autonomous vehicles generate 3D maps of their surrounding environment ©HESAI
In contrast to cuts from US competitors such as Luminar and Innoviz, Chinese Lidar startups are riding the momentum of China’s rise as a global leader in electric vehicle manufacturing.
According to S&P Global Mobility, Chinese suppliers held a 65% share of the global Lidar market in 2024, and are “well positioned well to maintain this position” due to strong demand from local automakers.
According to Ming Hsun Lee, a car analyst at Bank of America, their products cost about half the price of their US rivals.
“2025 will be the year of “take-off” for LIDAR adoption in the Chinese market,” an analyst at Goldman Sachs wrote in a research note. “More models use Lidar as standard feature.”
Fans said: “More and more people are embracing the idea that Ridder is a safety belt and airbag in a smart driving age.”
HESAI has also worked to diversify its client portfolio beyond autonomous vehicle manufacturers, seeking partnerships with a wide range of industrial companies. Lidars is supplied to Chinese humanoid robot startup Unitree and Robot Lawnmower manufacturer Mova.
Additional Reports by Edward White of Shanghai
