In the past two days, ChatGPT's every move has been the focus of the market, occupying most of the discussion in the market, and the market is talking about which technology company will be born in China's ChatGPT. It is under this excessive limelight that another domestic field that has recently achieved considerable results has been diluted in the heat - lidar.
(LiDAR search index soared, source: Baidu index)
On February 6 and 7, LiDAR company RoboSense announced that it had received mass production orders from FAW Toyota and Cialis. The former is the first time that domestic lidar has entered the Toyota supply chain system, which is known for its strictness and refinement.
On February 9, Hesai Technology officially landed on NASDAQ and won the title of "the first domestic lidar stock". Hesai Technology's IPO price was priced at $19, which was the upper limit of the previous offering price range, and its shares rose nearly 15% on the day of listing, with a market value of $2.6 billion. In addition, the news of the listing of Hesai Technology has driven the A-share lidar industry chain Juguang Technology and Changguang Huaxin to rise for several consecutive days.
Although domestic lidar companies overshadowed by AI may give people the feeling of "muffled wealth", domestic lidar is currently in a favorable position in the industry. On the contrary, overseas lidar companies have had an unfavorable flow and are full of difficulties in commercialization.
Historical experience tells us that when a track runs out of the first listed company, it is often not the end of competition, but the beginning of the next stage of competition. With the further strengthening of the trend of automotive intelligence, marked by the listing of Hesai Technology, the lidar industry is likely to usher in a climax this year and next. As domestic lidar accelerates their overseas expeditions, this proposition becomes more weighty.
The domestic arms race ran out of listed companies, and as a result, overseas players "ran out"
Toyota has maintained the number one car sales in the world for three consecutive years, with sales reaching 10.5 million units in 2022. Sagitar Juchuang officially revealed that its RS-LiDAR-M series lidar has received orders for more than 50 models from nearly 20 car companies such as Toyota, with an expected order volume of more than 10 million units. Obviously, compared with the huge scale of unfulfilled intelligent cars, the imagination of lidar orders still needs to be expanded.
At the same time, Hesai Technology has also shown optimism for future growth. 25% of its IPO fundraising budget will be invested in capacity construction and 35% will be used for research and development. In 2023, the "Maxwell" super intelligent manufacturing center with an annual production capacity of one million units will be put into operation.
However, overseas lidar manufacturers have just gone through a year of reversal. In 2022, in October, the "originator" of lidar Ibeo went bankrupt; In November, listed companies Velodyne and Ouster went to merge in response to the market crisis, with a combined market value of only $400 million, only about 4% of its peak; In December, Quanergy Systems, a once-star company, went bankrupt.
2022 is the "first year of lidar mass production", Innovusion completed the milestone of 50,000 units off the line, and Hesai Technology successfully achieved the delivery of 100,000 units in the last few days of the year. In fact, 2022 is also known in the industry as the "first year of commercialization of autonomous driving". In these two closely related statements, the reason for the victory of domestic lidar looms.
The first is the choice of route. In the fierce competition of automotive intelligence and electrification, China is the world's leader, driving suppliers such as lidar to roll in to create stronger and more cost-effective products. Moreover, Chinese car companies are more aware of the situation, first develop assisted driving functions below L3, establish initial consumer appeal, and improve the level of commercialization.
In contrast, overseas lidar manufacturers put their hopes on high-end automatic driving in the early days, but the difficulty of landing is obvious to all, and the intelligent action of overseas car companies is also more slow - in addition to Tesla, unfortunately, Tesla refuses the lidar route, making market development more difficult.
Domestic lidar manufacturers choose a more down-to-earth development path to help car companies do assisted driving that can be landed, and have obtained structural dividends. Overseas lidar manufacturers missed this opportunity, and some startups are aiming at the next generation of pure solid-state lidar products, which is more difficult to gnaw and more difficult to land.
In fact, Frost & Sullivan data shows that in 2021, Hesai Technology's lidar also accounts for about 60% of the global market share in the field of autonomous driving fleets. LiDAR manufacturers must have the chase of fully unmanned driving, but they must also judge the situation. As Li Yifan, CEO of Hesai Technology, once said, delivery is the only standard for testing lidar companies.
The friendliness of domestic lidar manufacturers to car companies has further allowed them to obtain financing opportunities. Last year, Sagitar Juchuang raised 2.4 billion yuan in financing with the participation of BYD and Yutong Bus; Tudatong's $66 million B+ round of investment has appeared NIO; Xpeng also joined the ranks of shareholders of Yijing Technology.
Relying on this intimacy, domestic lidar has run through the road of financing-R&D-commercialization, and car companies have also found suppliers to cooperate. Moreover, startups have the opportunity to delve deeper into technology and move towards deeper technology routes with healthier business models.
Western Securities predicts that the global number of lidar vehicles is expected to exceed 700,000 units in 2023, with a year-on-year growth rate of more than 400%. This round of opportunities still belongs to more Chinese players.
(2022 global lidar delivery pre-ranking, Chinese manufacturers won five of the top ten, source: Yole Intelligence)
In addition, when predicting the bright prospects of lidar mass production in the early stage, most people consciously or unintentionally ignore the fact that since the car is one of a combination of a variety of top-of-the-line precision structural products, the lidar moving a mounting position may require additional application testing. Car companies need not only a product, but also the service of this running-in process.
Perhaps in the face of technical barriers, this cost is nothing, but when it is really necessary to win the willingness of car companies to choose, process costs, supplier response speed, and service capabilities are particularly important. Especially for traditional car companies in the transformation stage, many of the apprehensions of installing new function modules for new cars can only be eliminated by continuing to demonstrate technical strength and service level.
LiDAR does not have a relatively low application threshold like ChatGPT, and at a higher level of vision, the industrialization of technical products requires this kind of service thinking, otherwise it will be difficult to step out of the laboratory.
The world is no longer hot and cold, because two different business cycles have been reached. The only way to break the game seems to be to make another technological breakthrough, but after saying goodbye to the generous blood transfusion brought about by the early capital frenzy, it seems that the previous generation darlings who lack commercial prospects can no longer maintain the state of "turning a deaf ear to the window and reading only the books of the sages". LiDAR has finally changed the sky, and only a few players are sticking to the next stage of competition.
The pressure from 1 to N begins to manifest
The stage of lidar from 0 to 1 is over, and Chinese manufacturers have won a ride. In the development from 1 to N, the problems are not mild enough to be ignored.
The typical difficulty mainly discussed in the industry lies in the landing of all-solid-state lidar - Flash, OPA two major technical routes, OPA is recognized by the industry as the best solution for comprehensive performance, but the process problem has not yet been solved. Quanergy Systems dropped off the track because it focused on OPA but couldn't achieve results.
On the technical roadmap, the biggest potential "threat" should be Aeva, whose FMCW route lidar is expected to be mass-produced in 2024. This is an extremely difficult route, but can achieve performance "generation-breaking" development, because it is highly anti-interference, very stable, and can obtain multi-dimensional speed information (4D) to achieve GPS-free navigation. If Aeva succeeds, it will change the existing lidar landscape. However, the cost of FMCW is still being explored.
At this stage, for domestic lidar manufacturers that have achieved results, the market and research and development need to be parallel. Many startups are already accelerating their going global. Sagitar Juchuang and Hesai Technology both brought their new products at CES2023 in January this year.
Currently, the BMW iX, Volkswagen ID.BUZZ and Volvo XC90 are equipped with lidar from Innoviz, Aeva and Luminar. Assuming that there are more examples of Sagitar Juchuang entering FAW's Toyota supply chain, domestic lidar will further attract the attention and recognition of overseas car companies and enter the new supply chain.
The cost advantage is particularly noteworthy, and Chinese manufacturers already have healthier business models and can experiment more. The latest gross profit margin of Hesai Technology is shown in the prospectus as 44%, and the results of several overseas giants - Innoviz, Luminar, and Velodyne are not very good: -139%, -147% and -99%. Manufacturers positioned in Robotaxi in the early days even created too expensive solutions because they were not sensitive to cost, and now they are in a dilemma, because traditional car companies are most concerned about cost. The 3,000 yuan domestic plan and the $1,000 Luminar plan, the latter will be increasingly less attractive.
The growth of lidar is also inseparable from the progress of automobiles, the competitiveness of China's automobile industry is undergoing qualitative changes, if lidar companies cannot keep up with this speed, it will become a stripped "impurity".
In addition to the market and research and development, lidar companies are also seeking to break through mass production manufacturing capabilities. The advantage of domestic production lies in the clustering of supply chains, for example, the Jiangsu, Zhejiang and Shanghai industrial circles can quickly draw out a number of suppliers to become a complete supply chain. Moreover, China's scale came earlier than overseas, and lidar manufacturers have more confidence to do large-scale expansion, and Hesai Technology hopes to expand the construction of production lines is an example.
AVIC Securities pointed out that the barriers of lidar are actually a combination of technical barriers and engineering barriers. Localized substitution is also effective in the field of lidar supply chain, and the second generation of intelligent solid-state lidar M1 of Sagitar Juchuang, the core device is non-customized, and there can be more room for cost reduction. With controllable costs, there can be industrialization, in order to further meet the different preferences of the global market.
epilogue
Front-loading mass production is the core of lidar production, and this scenario needs to find a balance between performance, cost, and reliability. A small number of models or car companies may focus more on a certain point due to positioning reasons, but the ultimate goal of car companies is to let consumers perceive the value of this system, so as to complete the closed loop of sales. Reasonable costs must be considered when getting on the car, and the improvement of performance is increasingly attracting more attention, which is of great significance to enhance consumers' intelligent driving awareness.
When it comes to potential options for technology routes, industry-leading companies have established their strengths. CITIC Securities mentioned in the research report that the same transceiver electronic system solution of Hesai Technology can be used for mechanical rotary and solid-state routes. Transceiver modules are also the focus of performance, which is related to the current and future competitiveness of their solutions.
In 2023, the number of standard or optional LiDAR models will total more than 30 models, and even bigger opportunities are just around the corner. Hesai Technology has spent seven years to become the world's largest lidar company in terms of shipments in the ADAS field, and Sagitar Juchuang is currently the manufacturer with the most harvested models. The spring of China's lidar was awakened by these pioneers.
![To the trillion-level commercial vehicle autonomous driving track, Youdao Zhitu and Hesai Technology reached a strategic cooperation[fig]](data:image/gif;base64,R0lGODlhAQABAIAAAP///wAAACwAAAAAAQABAAACAkQBADs=)