China’s biggest maker of the laser sensors used in self-driving cars plans to open its first overseas plant next year as customers urge it to shield itself from geopolitical tensions.
Shanghai-based Hesai, already embroiled in fighting a blacklisting by the Pentagon, is looking to build production lines abroad in addition to its China factories to “avoid risks related to geopolitics and tariffs”, chief financial officer Andrew Fan told the Financial Times in an interview.
“Our clients who are hoping to diffuse the risks have found it a wise approach,” Fan said, adding that a diversified supply chain could also hedge potential logistics disruptions.
Hesai is the leading provider of lidar systems, which use pulsed laser light to help autonomous vehicles generate a three-dimensional map of the surrounding environment.
The company drew global attention after the US defence department included it on a list of “Chinese military companies” last year and later removed it after Hesai began legal proceedings. It was reinstated on the list last October, prompting further legal action. Fan called the Pentagon’s decision a “misunderstanding” of the start-up’s business. The company is suing, stating that its products are strictly for commercial and civilian use.
While the Pentagon blacklisting had “very limited” legal strength, it forced Hesai’s prospective investors and clients to “think twice” before buying the company’s stock and products, Fan said.
The Biden administration had banned imports and sales of connected vehicles with Chinese software and hardware over concerns the technology could be a national security threat, and President Donald Trump has stepped up tariffs on China.
Despite the geopolitical threat, Fan expressed confidence that a recently secured contract with a European automaker could allow the company to install its devices in autonomous vehicles on the road in Europe and the US.
Reuters reported on Tuesday that the customer was Mercedes-Benz and it was the first time a foreign automaker had sought to use such Chinese-made technology for models sold outside China.
“On the heels of the global supply programme, we hope to accelerate our overseas production . . . which is an inescapable step toward our global ambitions,” said Fan.
Hesai will break ground by the end of the year on its first overseas project, with a goal of production in 2026 and creating “hundreds of jobs locally”, he said, while refusing to disclose the location.
Shares in Hesai soared 50 per cent higher in the US on Tuesday after the company said it broke even for the first time in 2024, becoming the world’s first profitable listed lidar maker.
Management predicted an adjusted net profit ranging from Rmb350mn to Rmb500mn ($48mn to $69mn) for 2025, significantly ahead of the Rmb189mn consensus estimate of analysts polled by Bloomberg.
In contrast to retrenchment by US competitors such as Luminar and Innoviz, Chinese lidar start-ups have been riding the momentum of China’s rise as a global leader in electric vehicle manufacturing.
Chinese suppliers held a 65 per cent share of the global lidar market in 2024 and are “well-positioned to maintain this position” due to strong demand from local carmakers, according to S&P Global Mobility.
Their products are about half the price of US rivals, said Ming Hsun Lee, auto analyst at Bank of America.
“2025 will be a ‘take-off’ year for lidar adoption in the China market,” Goldman Sachs analysts wrote in a research note. “More models are adopting lidar as a standard feature.”
Fan said: “More and more people are embracing the idea that lidars are safety belts and airbags in the smart driving age.”
Hesai has also worked to diversify its client portfolio beyond self-driving vehicle makers, seeking partnerships with a wide range of industrial companies. It is supplying lidars to China’s humanoid robot start-up Unitree and robot lawnmower manufacturer Mova.
Additional reporting by Edward White in Shanghai
