Why Hesai Is Winning as China’s Smart-Car Lidar Market Takes Off

Why lidar matters for smart and driverless vehicles

Lidar—short for light detection and ranging—uses laser beams to measure the distance to surrounding objects. The resulting three-dimensional view helps a vehicle identify nearby cars, people, obstacles and terrain, supporting perception for ADAS and more automated driving systems.

For automakers, the technology can therefore serve as a visible upgrade in the race to offer safer and more capable “smart” vehicles. For Hesai, rising adoption creates opportunities to sell more units per vehicle as well as to win programs across a growing number of models.

The technology is not a guarantee of autonomous driving, and the available evidence does not establish that lidar alone determines vehicle safety or automation capability. Its commercial value instead depends on how automakers integrate it with software and other vehicle systems—and whether consumers and manufacturers continue to pay for those capabilities.

A broad OEM network reduces single-customer risk

Hesai’s customer relationships are one of the clearest reasons its growth story extends beyond a single vehicle launch. The company says it supplies all of China’s top 10 automotive groups. An industry report also says Hesai had secured production nominations across more than 160 vehicle models from 40 brands by 2025.

A separate DBS analysis lists design wins or mass-production programs involving Li Auto, Xiaomi, Changan, Geely, Great Wall Motor, Chery, Zeekr, Leapmotor, SAIC Audi, SAIC-GM and a Toyota joint venture, among others. Hesai has also been identified as a strategic lidar partner and confirmed supplier for Mercedes-Benz models designed to enable Level 3 autonomy.

The pipeline continues to develop. Great Wall Motor selected Hesai’s ETX ultra-long-range lidar for a mass-production program scheduled to begin production in late 2026, while Changan and other automakers selected the company for multi-lidar programs. Li Auto’s L8 and L9 models entered mass production with four Hesai lidar units each, according to reporting on the company’s second-quarter earnings.

These relationships do not all represent current revenue at the same scale. Some are design wins or future programs, so the key test is whether they progress on schedule and generate durable margins. Still, the breadth of the network suggests Hesai is positioned as a platform supplier rather than a component vendor dependent on one model or automaker.

Capacity expansion signals confidence in mass adoption

Hesai plans to increase annual manufacturing capacity from 2 million lidar units to more than 4 million in 2026, citing demand from ADAS and robotics. Management has also set a 2026 shipment target of 3 million–3.5 million units.

The expansion is strategically important. Lidar suppliers must be able to meet automakers’ production schedules while reducing costs enough for the technology to move into broader vehicle segments. Building capacity ahead of demand can help Hesai serve more programs, but it also raises execution risk: factories, yields, customer launches and working-capital requirements all have to align with the forecast.

Hesai wants to move beyond the automotive supply chain

Management’s longer-term ambition is broader than selling lidar into cars. CFO Andrew Fan has said Hesai wants to become a technology company rather than merely an automotive supply-chain vendor.

The company is applying its spatial-perception expertise to robotics and what it calls “physical AI”—systems that perceive and interact with the real world. Hesai reported collaborations with more than 50 embodied-AI companies worldwide for its JT128 lidar, while its second-quarter results described a broader platform spanning perception, understanding and actuation.

This strategy could diversify the business if robotics demand develops into a meaningful commercial market. It could also make Hesai less dependent on automakers’ purchasing decisions. But the robotics and physical-AI opportunity is earlier-stage than the company’s established automotive business, and management’s expansion plans should be assessed against realized revenue rather than vision alone.

What Hesai’s prospects depend on next

The evidence points to a credible growth runway, built on three reinforcing trends:

• More vehicles are adopting lidar, particularly as Chinese brands compete on intelligent-driving features.
• Hesai has broad OEM coverage, including Chinese automakers, joint ventures and selected international programs.
• The company is scaling production and shipments to serve expected ADAS and robotics demand.

The main caveat is that adoption is not guaranteed. Hesai must convert design wins into mass production, maintain product and manufacturing performance, and defend its economics as automakers compete aggressively on vehicle prices. Its future also depends on lidar remaining a preferred architecture as software, cameras and other sensing technologies evolve.

The strongest interpretation is therefore not that Hesai is insulated from China’s auto slowdown. Rather, it is exposed to a faster-growing layer of the market: the intelligence and perception systems being added to new vehicles. If that equipment cycle continues, Hesai’s scale, customer reach and move into robotics give it multiple paths to grow beyond the traditional automotive component business.