HSAI - Cutting through the fog like a laser for a clear picture

HSAI - Cutting through the fog like a laser for a clear picture AI+

Henry • 08-20 • Hesai Group • Public •

US:HSAI

In 40 years of investing, I've rarely seen better growth prospects over a 1-3 yr timeframe than HSAI. Of course the market seems like it is ready to roll over soon, and I something unexpected could occur. I'd like data/feedback on HSAI that would prove or disprove my bull case. Here's the bull case: HSAI makes LIDAR units. It is by far the market leader where its lidar is used for autonomous cars and humanoid robots. It is the market leader for LIDAR and the LIDAR market is growing at 60% YoY! It has 33% of the lidar market but 74% in the robotaxi segment. They've secured 20 new model wins (9 OEMs) including Toyota. That is significant, but with 467 electrified (all electric + hybrid) models and 500 more with ICE in China alone, their penetration in the market is only about 3-6% so there is massive room to grow. In Q2, they sold 350k lidar units which is 307% YoY growth. Only about 10% comes from the US.

In the US, Waymo makes their own lidar and Tesla is famously camera only. Autonomous cars and robots, if you haven't noticed are pretty hot. Tesla is staking its existence on those two markets. I think there is optionality on Tesla because I believe there is at least a 40% chance they eventually add LIDAR to their robotaxi offering. Sounds impossible? When Elon Musk first proclaimed LIDAR was too expensive for mass production, a single unit was around $80,000. HSAI is now producing each unit for about $250 each. That's an incredible decrease in cost. There is little doubt LIDAR adds safety over vision alone. Even if Tesla solves vision-only, I think consumers will demand the redundancy of LIDAR. The HSAI CEO says in China, LIDAR is seen as safety equipment, much like airbags. You simply have to have one in your car.

I also like that HSAI doesn't need to succeed in the US market to have incredible growth. If the US market proves to be in a tech bubble, it will no doubt affect Chinese tech, but it will be less correlated to US markets. If the US goes into a recession, it is nice to have stock in a company that is levered to a diversified population. How big is the Chinese car market? 15.7 million cars were sold in Q2-2025 alone.

If I'm wrong, tell me now, because I've loaded up.

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Kommentarer (7)

AI+ Standard • 08-20

Dette svar blev genereret af AI. Selvom vi stræber efter nøjagtighed, kan det indeholde fejl.

It's insightful to hear your long-term perspective on Hesai Technology (HSAI) and your bullish case. As Fintel's AI assistant, I can provide data-driven feedback to help you evaluate your investment thesis.

Hesai Technology (NASDAQ: HSAI) is indeed a significant player in the LiDAR market, focusing on solutions for Advanced Driver-Assistance Systems (ADAS) in vehicles and robotics. Let's break down your points with available data:

Hesai's Market Position and Growth

Market Leadership: Your assessment of Hesai's market leadership is largely supported by recent reports. Hesai was ranked as the world's No.1 automotive LiDAR company by revenue market share for the fourth consecutive year in 2024, according to Yole Group. They also ranked No.1 in China for Robotics LiDAR shipments in the first half of 2025.
Unit Sales and Growth:
- Hesai reported total LiDAR shipments of 352,095 units in the second quarter of 2025 (Q2 2025). This includes 303,564 ADAS LiDAR units and 48,531 Robotics LiDAR units.
- While the exact 307% year-over-year (YoY) growth figure for Q2 2025 unit sales could not be precisely verified with a direct Q2 2024 unit comparison from the provided SEC filings, the company has demonstrated significant growth. For instance, total LiDAR shipments in Q1 2025 were 195,818 units, representing a 231.3% increase from Q1 2024 (59,101 units). Hesai's net revenues for Q2 2025 increased by 53.9% YoY. The consistent high growth rates in shipments and revenue suggest a rapidly expanding demand for their products.
Design Wins: Hesai has successfully secured a substantial number of new design wins. In Q2 2025, they earned new design wins through 2026 for 20 models from 9 leading OEMs, including a new design win with Toyota, with mass production targeted for 2026. This directly supports your claim and indicates strong adoption by major automotive manufacturers. Furthermore, Hesai has secured ADAS design wins with 22 OEMs globally across 120 vehicle models as of early 2025.
Robotaxi Segment: Hesai has indeed empowered the robotaxi industry as the main LiDAR supplier for next-generation fleets from key players like Baidu Apollo Go, DiDi, Pony.ai, and WeRide. While the specific 74% market share in this segment could not be independently verified, their prominent role is clear.

Market Dynamics and Future Prospects

Market Penetration and Growth Potential: Your observation about the massive room for growth, given the number of electrified and ICE models in China and Hesai's current penetration, is a sound strategic point. The increasing adoption of LiDAR as a standard feature in new models, particularly in China, bodes well for continued expansion.
LiDAR Cost Reduction: The significant decrease in LiDAR unit cost is a critical factor driving mass adoption. While a specific $250 unit cost was not found in the filings, Hesai emphasizes "effective cost and scale optimization" and that their ATX long-range LiDAR "delivers unbeatable cost-performance, equipping vehicle models as low as in the RMB100,000 range." This aligns with your point that LiDAR is becoming affordable for mass production. Other LiDAR companies like Luminar also highlight cost reduction as a key driver for their path to profitability.
Safety and Redundancy: The argument that LiDAR adds safety and that consumers may demand it for redundancy, even if vision-only systems improve, is a widely discussed point in the autonomous driving industry. Hesai's CEO views LiDAR in China as safety equipment, similar to airbags, reinforcing this perspective. Other industry players also emphasize LiDAR's role in providing reliable 3D context and object detection for enhanced safety.
Tesla Optionality: Your speculation about Tesla eventually adding LiDAR is a compelling "optionality" for HSAI. While Tesla has historically favored a vision-only approach, the rapid advancements and cost reductions in LiDAR technology could indeed shift their strategy, especially as autonomous driving capabilities evolve and safety standards tighten.
Chinese Market Size: Your figure of "15.7 million cars sold in Q2-2025 alone" for the Chinese market appears to be an overestimation. For context, one major Chinese EV manufacturer, Zeekr, reported 130,866 vehicle deliveries in Q2 2025. Typical annual car sales in China are in the range of 20-30 million units, making 15.7 million in a single quarter exceptionally high. However, the Chinese automotive market is undeniably massive and a key growth driver for Hesai.

Fintel Data on HSAI

Institutional Ownership: Hesai Group (HSAI) has a notable institutional presence, with 144 institutional owners holding a total of 45,263,873 shares. While the number of institutional owners increased by 42.57% quarter-over-quarter, the total institutional shares (long) saw a slight decrease of 1.95% in the most recent quarter. Major institutional holders include D. E. Shaw & Co., Inc., FIL Ltd, Vanguard Group Inc, Morgan Stanley, Citigroup Inc, and Allianz Asset Management GmbH.
Short Interest: As of the latest data, Hesai has a short interest of 4,983,147 shares, with a Days to Cover ratio of 1.99. The Off-Exchange Short Volume Ratio is 53.43%. This indicates some short interest, but the Days to Cover ratio is not exceptionally high, suggesting that while some market participants are betting against the stock, it's not under extreme short-squeeze pressure.
Profitability: Hesai achieved net income of RMB44.1 million (US$6.2 million) in Q2 2025, a significant improvement from a net loss in the same period last year, and surpassed their GAAP breakeven target. They also achieved full-year non-GAAP net profits in 2024, a first for a LiDAR company, and forecast substantial GAAP and non-GAAP profitability for 2025.

Summary

Your bullish case for Hesai Technology is strongly supported by the company's demonstrated market leadership in automotive and robotics LiDAR, its impressive unit shipment growth, significant design wins with major OEMs including Toyota, and its improving financial performance. The ongoing trend of LiDAR cost reduction and its increasing recognition as a safety feature, especially in the large Chinese market, further strengthen the long-term outlook.

While some of your specific market share and growth figures could not be precisely verified with the available public filings, the overall trajectory and strategic positioning of Hesai align with a robust growth story in the evolving autonomous vehicle and robotics sectors. The institutional ownership data shows significant interest, though a recent slight decrease in long shares held by institutions is worth noting.

For further analysis, you might explore Fintel's institutional ownership data for HSAI to track changes in fund sentiment more closely, or review the detailed financial statements for deeper insights into cost structures and revenue diversification. You can find more information on Hesai Technology's Fintel page: Hesai Group (HSAI) on Fintel.io.

Kilder

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Henry • 11-08

Earnings are Tuesday before the bell. Is there any new information in the public record regarding design wins? How quickly do design wins translate into sales?

AI+ Standard • 11-08

Dette svar blev genereret af AI. Selvom vi stræber efter nøjagtighed, kan det indeholde fejl.

It's a timely question, especially with earnings approaching. Let's look at the latest information regarding Hesai's design wins and the typical timeline for these to translate into sales.

Recent Design Wins for Hesai

Yes, there has been significant new information regarding Hesai's design wins since your initial post. Hesai's Q2 2025 earnings report, released on August 15, 2025, provided several key updates:

Expanded OEM Partnerships: Hesai secured new design wins for 20 models from 9 leading OEMs through 2026. This includes a notable new design win with Toyota, with mass production for this partnership targeted for 2026.1
Platform Wins: The company also achieved a platform win for multiple 2026 models with one of its top two ADAS customers, further solidifying LiDAR as a standard feature across that customer's vehicle lineups.1
Global Reach: As of Q2 2025, Hesai had secured ADAS design wins with 24 OEMs globally, an increase from previous quarters.1 This builds on earlier announcements, such as the "groundbreaking, exclusive design win with a top European OEM" reported in Q4 2024, which is also a multi-year program expected to extend into the next decade across both ICE and EV platforms, with full-scale production and commercial launch anticipated in 2026.2
Mass Market Adoption: Hesai's ATX long-range LiDAR, which began mass production in Q1 2025, has secured design wins with 11 OEMs, including major Chinese players like BYD, Chery, Great Wall Motor, and Changan.2 Additionally, in May 2025, Li Auto's entire L series EV lineup integrated Hesai's ATL LiDAR as a standard configuration.3

These updates underscore Hesai's continued momentum in securing partnerships with major automotive manufacturers, both domestically and internationally.

Design Win to Sales Translation Timeline

The timeline for design wins to translate into significant sales can vary, but generally involves a multi-year process, particularly for mass production in the automotive sector.

Hesai's Outlook: For the recently announced design wins with Toyota and the top European OEM, Hesai explicitly states that mass production and commercial launch are targeted for 2026.1 This suggests that while engineering and development work may be ongoing, the substantial revenue generation from these specific wins is still a year or more out.
Industry Context: Other LiDAR and automotive technology companies provide similar timelines. For example, LeddarTech announced an OEM design win in February 2025 for 2028 model year vehicles, expecting engineering service revenue in 2025 but per-vehicle royalty revenue not until late 2027.4 This illustrates that while initial revenue from engineering services can begin relatively quickly, the high-volume product sales often follow a longer development and integration cycle. However, some design wins can start generating revenue more swiftly, as seen with AEye, which in July 2025 mentioned a potential $30 million revenue opportunity expected to begin generating revenue within the same year.5

In summary, Hesai continues to demonstrate strong design win momentum, which is crucial for long-term revenue growth. While some design wins can yield near-term revenue from development services, the significant impact on sales from mass production typically materializes 1-3 years after the initial win, aligning with your original timeframe for growth prospects. The upcoming earnings call will likely provide more granular details on the progress of these programs and any updated revenue expectations.

Kilder

1Hesai Group Reports Second Quarter 2025 Unaudited Financial Results Quarterly net revenues were RMB706.4 million (US$98.6 million)1 Quarterly lidar shipments were 352,095 units Quarterly net income was RMB44.1 million (US$6.2 million)

2Hesai Group Reports Fourth Quarter and Full Year 2024 Unaudited Financial Results Quarterly net revenues were RMB719.8 million (US$98.6 million)1 Quarterly lidar shipments were 222,054 units Full Year 2024 net revenues were RMB2,077.2 million (US$284

3Hesai Group Reports First Quarter 2025 Unaudited Financial Results Quarterly net revenues were RMB525.3 million (US$72.4 million)1 Quarterly lidar shipments were 195,818 units

4LEDDARTECH MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

5AEye Reports Second Quarter 2025 Results Accelerating commercial traction: Tripled new business wins within diverse, high-growth markets

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Henry • 11-08

Is there any news since the Q2 earnings?

AI+ Standard • 11-08

Dette svar blev genereret af AI. Selvom vi stræber efter nøjagtighed, kan det indeholde fejl.

It's understandable to be looking for the latest updates, especially with Q3 earnings just around the corner. Since the Q2 earnings report on August 15, 2025, the most significant new information in the public record for Hesai Group (HSAI) has been related to its capital markets activity, rather than further design win announcements.

Key Updates Since Q2 Earnings

Dual-Primary Listing on HKEX: On September 5, 2025, Hesai Group announced a global offering of Class B ordinary shares and its intention for a dual-primary listing on the Main Board of The Stock Exchange of Hong Kong Limited (HKEX) under the stock code "2525". The pricing of this offering was subsequently announced on September 11, 2025.1 This move can broaden Hesai's investor base, potentially increase liquidity, and provide access to new capital markets.
Design Win Information from Q2 Earnings: Regarding design wins specifically, the Q2 2025 earnings report itself provided the most recent comprehensive update. It detailed that Hesai secured new design wins for 20 models from 9 leading OEMs through 2026, including a notable new design win with Toyota, with mass production targeted for 2026.2 Additionally, the company achieved a platform win for multiple 2026 models with one of its top two ADAS customers, further solidifying LiDAR as a standard feature across that customer's vehicle lineups.2 As of Q2 2025, Hesai had secured ADAS design wins with 24 OEMs globally.2

Design Win to Sales Translation Timeline

As we discussed previously, the translation of design wins into significant sales typically follows a multi-year timeline in the automotive industry. For the major design wins announced in Q2, including the Toyota partnership, Hesai explicitly stated that mass production and commercial launch are targeted for 2026.2 This means that while these wins are crucial for future revenue streams, their substantial impact on the top line is still some time away. However, initial revenues from engineering services or smaller-scale deployments can sometimes begin sooner.

The upcoming Q3 earnings call will be an important event to listen for any further updates on the progress of these design wins, production ramp-ups, and the financial implications of the HKEX listing.

Kilder

1Hesai Group Launches Global Offering

2Hesai Group Reports Second Quarter 2025 Unaudited Financial Results Quarterly net revenues were RMB706.4 million (US$98.6 million)1 Quarterly lidar shipments were 352,095 units Quarterly net income was RMB44.1 million (US$6.2 million)

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Henry • 11-08

Evaluate the potential for new design wins or accelerated production timelines to be announced during the upcoming Q3 earnings call.

AI+ Standard • 11-08

Dette svar blev genereret af AI. Selvom vi stræber efter nøjagtighed, kan det indeholde fejl.

It's excellent to focus on the upcoming Q3 earnings call, as it's a primary channel for companies like Hesai to provide updates on strategic developments. Hesai Group's Q3 2025 earnings call is indeed scheduled for November 11, 2025, at 7:00 A.M. U.S. Eastern Time (or 8:00 P.M. Hong Kong Time).1 This makes your question very pertinent.

Potential for New Announcements

Earnings calls are precisely where companies typically disclose significant operational achievements, including new design wins or updates on production timelines. Given Hesai's consistent communication strategy, the Q3 call is the most likely venue for such information if it exists.

New Design Wins: While Hesai provided a comprehensive update on design wins in its Q2 2025 earnings report (20 models from 9 OEMs through 2026, including Toyota, and a platform win with a top ADAS customer),2 it's always possible for additional, smaller wins or significant expansions to existing partnerships to be announced. However, major, groundbreaking design wins are often announced via press release when they occur, rather than being held solely for an earnings call.
Accelerated Production Timelines: Updates on accelerated production timelines would be a significant positive development. Hesai has previously stated that mass production and commercial launch for its major design wins, such as with Toyota and the top European OEM, are targeted for 2026.2 Any indication that these timelines are being pulled forward would be noteworthy. The company has also been expanding its production capacity, with new production lines expected to begin production in Q3 2025, aiming for an annualized capacity of 2 million units by the end of 2025.3 This capacity expansion is critical for supporting future ramp-ups.

Design Win to Sales Translation

As discussed previously, the automotive industry typically has a multi-year lead time from design win to mass production and significant revenue generation. While some engineering services revenue might begin sooner, the substantial impact on product sales usually takes 1-3 years, and sometimes longer for complex integrations.4 Hesai's own guidance for its major wins aligns with this, pointing to 2026 for the mass production phase.2

Therefore, during the upcoming Q3 earnings call, it would be prudent to listen for:

Confirmation or updates on the 2026 mass production targets for the previously announced major design wins.
Any new design wins, particularly if they involve new OEMs or expand into new geographic markets or applications.
Progress on production ramp-up and capacity utilization, especially given the new production lines coming online in Q3 2025.3
Updates on the financial impact of these wins, even if it's initial revenue from engineering development rather than full-scale product sales.

The Q3 earnings report and the subsequent conference call will be crucial for gaining the latest insights into Hesai's commercialization progress and whether there are any shifts in its strategic outlook.

Kilder

1Hesai Group (A company controlled through weighted voting rights and incorporated in the Cayman Islands with limited liability) (HKEX Stock Code: 2525) (NASDAQ Stock Ticker: HSAI) DATE OF BOARD MEETING

3Hesai Group Reports Fourth Quarter and Full Year 2024 Unaudited Financial Results Quarterly net revenues were RMB719.8 million (US$98.6 million)1 Quarterly lidar shipments were 222,054 units Full Year 2024 net revenues were RMB2,077.2 million (US$284

4UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K

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