Why Generating Profit Remains Challenging for Lidar Companies

On September 16, Hesai Technology (Hesai Technology) celebrated its dual listing on the U.S. and Hong Kong exchanges, closing its trading debut in Hong Kong at HKD 234 and commanding a market value of HKD 35.8 billion. The company raised HKD 4.16 billion (approximately USD 535 million) through its IPO, with cornerstone backing from Hillhouse Investment and Grab Holdings totaling USD 148 million, and a 168.65-times oversubscription of its public tranche—a level of enthusiasm that suggests lidar might be viewed as a risk-free opportunity.

Yet the reality of profitability in the lidar sector tells a different story. Although lidar sensors serve as the “eyes” of advanced driver-assistance and automated driving systems, only a handful of companies are nearing break-even. Even Hesai recorded a first-quarter loss of RMB 17.5 million in 2025 and only managed to return to modest profitability in the second quarter. RoboSense likewise posted a RMB 150 million loss in the first half of 2025.

The contrast with other high-technology booms is stark. When smartphones became ubiquitous, Apple and Samsung reaped enormous profits. As electric vehicles surged, Tesla and BYD found clear paths to profitability. In lidar, however, technical leadership has yet to translate into consistent earnings.

Globally, Chinese firms dominate the market. A Yole Group report indicates that domestic brands account for 95 percent of worldwide lidar deployments, led by Hesai Technology, RoboSense, Huawei, and Tudatong. Former industry pioneers such as Velodyne have been acquired, and Quanergy has delisted, consolidating market influence firmly under Chinese manufacturers.

Despite growing volumes—China’s lidar installations could reach 2.5 million units in 2025—average selling prices have plunged from RMB 8,000–10,000 per unit in 2022 to RMB 2,000–3,000 today, squeezing manufacturers’ margins.

A closer look at market leaders underscores the profit dilemma. According to Dongguan Securities, RoboSense led domestic passenger-car lidar shipments in 2024 with a 33.6 percent share, followed by Huawei at 27.4 percent, Hesai Technology at 25.6 percent, and Tudatong at 13.4 percent. Globally, Hesai topped revenue rankings with a 33 percent share, while RoboSense claimed leadership in unit shipments with 519,800 cameras versus Hesai’s 455,200—reflecting divergent strategies of prioritizing either scale or margin.

Hesai stands out as the only one among the Big Four to have achieved full-year profitability in 2024 after enduring losses from 2021 through 2023. The company swung back to a modest loss in Q1 2025 before posting a net profit of RMB 44.1 million in Q2. Its strength stems largely from a commanding 61 percent share of the high-value L4 autonomous-driving segment—where lidar units sell for RMB 50,000–150,000 each—compared with just 12 percent for RoboSense.

RoboSense’s position is more precarious: despite reigning as global shipment champion, its H1 2025 loss of RMB 150 million—albeit a 44.5 percent year-on-year improvement—illustrates the difficulty of converting volume into profit.

Huawei’s lidar operations, embedded within its broader technology ecosystem, do not report standalone financials but have captured the highest domestic market share in H1 2025. Brands such as AITO and Avita rely on Huawei’s sensors, benefiting from an integrated product-and-services offering that competitors find hard to replicate.

Tudatong remains the smallest of the four and faces the steepest uphill battle. Its proposed backdoor listing in Hong Kong at a valuation of HKD 11.7 billion follows cumulative revenues of USD 310 million from 2022 to Q3 2024 against net losses totaling USD 540 million, with over 90 percent of sales tied to a single customer—NIO.

Overseas pioneers have largely retreated. Velodyne was acquired by Ouster in 2022 after struggling with commercialization and cost control; Quanergy delisted in 2024 amid steep valuation declines; Luminar, though still operating, incurred over USD 100 million in losses during the first three quarters of 2024. Investor Lin Tao observes that foreign players pursued conservative technical paths and failed to match the cost efficiencies of Chinese rivals.

If lidar’s technical value and surging demand—for which Gasgoo Auto Research data records a 71 percent year-on-year increase to 1.002 million domestic installations in H1 2025—are uncontested, why do profits remain elusive? Before autonomous driving became mainstream, lidar was a niche, high-priced component with limited scale. Now that regulatory mandates and consumer expectations drive broader adoption—such as the shift from one sensor in luxury models to four in vehicles like the new AITO M9—price competition has intensified.

“Lidar is like a vehicle’s eye,” explains engineer Zhao Qing, “providing three-dimensional environmental data where cameras and radar fall short, especially in low-visibility conditions.” Yet as lidar moves into vehicles priced under RMB 200,000—often as part of city-level No-Assistance driving packages—OEMs demand aggressive cost reductions. According to Guosheng Securities, RoboSense’s average price per unit fell by more than 20 percent from RMB 3,000 in 2023 to RMB 2,300 in 2024, while Hesai’s average dropped from RMB 2,500 to RMB 2,000.

Converging semi-solid-state architectures and chip-based integration mean most leading manufacturers now offer similar performance and form factors—eroding differentiation and fueling a race to the bottom on price.

In response, lidar vendors are turning to robotics as a new growth avenue—supplying lawn-mowing, delivery, and cleaning robots with their sensors. Early results are encouraging: in H1 2025, Hesai shipped 98,300 units into robotics applications—a sevenfold increase—while RoboSense derived 28.2 percent of its revenues from robot deployments.

Lidar enables robots to map and navigate complex environments by emitting laser pulses and constructing 3D point clouds, performing reliably in all lighting and weather conditions. Leading automation firms such as Unitree Robotics, Zhiyuan Robotics, DeepRobotics, and Boston Dynamics equip their platforms with lidar to ensure precise obstacle detection and path planning.

Unlike the automobile market, where original-equipment manufacturers handle system integration, robotics clients require turnkey solutions encompassing hardware calibration, algorithm optimization, and software adaptation for highly varied scenarios. This shift allows lidar companies to command higher margins—RoboSense’s gross profit rose from 13.6 percent in H1 2024 to 25.9 percent in H1 2025—even as average prices dipped from RMB 8,700 to RMB 4,800.

The robotics sector also offers virtually limitless application scenarios, from consumer-grade lawn care to industrial automation, suggesting a significantly larger addressable market than the roughly 90 million vehicles produced annually worldwide.

Nonetheless, new challenges loom. The robotics space may soon attract the same competitors—Huawei, Tudatong, and other firms will leverage existing lidar expertise to pursue these opportunities, intensifying competition. Moreover, successful market penetration requires lidar suppliers to evolve into comprehensive solution providers, mastering not only sensor hardware but also software, services, and ecosystem partnerships.

As investor Lin Tao notes, only those companies that build defensible positions across technology, integration, and client support will break free from the industry’s “hard-to-profit” cycle and realize sustainable growth.