LiDAR "old king" cannot beat Chinese manufacturers

Intelligent innovation is becoming a key factor for car companies to compete in the market. In the current situation of price, cost and scale, the smart electric vehicle industry has begun a new round of elimination. Some companies that are "deeply stuck in the mud" have fallen behind or are in danger of being eliminated. In this process, some companies have to adjust their strategies, reduce their scale, and even lay off employees to cope with market challenges.

It is not only car companies that are laying off employees. Obviously, this pressure has been transmitted to many links in the industrial chain, and the competitive landscape in the subdivided tracks is also facing a reshuffle.

Not long ago, Luminar announced that it would lay off about 20% of its employees and would rely more on its foundry manufacturing partners.

According to reports, Luminar plans to restructure the company to a more "asset-light" business model, aiming to expand production. It is reported that the company's layoffs will affect about 140 employees and will begin immediately. As of December last year, Luminar had about 800 full-time employees in the United States, Germany, Sweden, India and China.

Luminar's layoffs actually reflect the plight of some overseas LiDAR manufacturers to a large extent. This giant in the LiDAR industry has now reached a "crossroads".

The former world's leading LiDAR company is no longer as glorious as it once was

A young genius, attending a top university but dropping out, starting from scratch, becoming extremely wealthy at a young age, etc. These elements that are circulated in novels and among many real Silicon Valley entrepreneurs are also possessed by Austin Russell, the founder of Luminar.

At the age of 17, Austin Russell founded Luminar while in high school; at the age of 18, Austin Russell dropped out of Stanford and the company's business began to really take off. In 2017, the company raised $36 million in the seed round.

When Luminar's 1550nm product Iris was unveiled in 2019, it attracted great attention in the industry due to its advantages in performance, accuracy and other aspects. Since then, car companies and Tier 1 giants such as Mobileye, Volvo, Mercedes-Benz and Audi have successively become Luminar's partners.

In 2020, Luminar successfully rang the bell on the U.S. stock market, with a peak market value of over US$10 billion, becoming the world's largest lidar company by market value. Austin Russell was also selected by Forbes as one of the world's youngest self-made billionaires.

Overseas LiDAR suppliers have long occupied a leading position in the industry by virtue of their first-mover advantage in the industry's rise and relying on the well-established automotive supply chain in the European and American markets.

However, the situation has changed in recent years. Some overseas LiDAR industry pioneers have collapsed on the eve of dawn due to difficulties in mass production and losses.

First, Ibeo, founded in 1998, filed for bankruptcy, and then Velodyne, the leader in the lidar industry, announced its merger with Ouster. The performance of the remaining leading overseas lidar manufacturers is also worrying.

During this process, although Luminar has never lacked orders, its mass production scale and revenue are still not enough to support its long-term high investment, and its market value has fallen again and again. As of the close of trading on May 7, 2024, Eastern Time, Luminar's market value was US$744 million, which has shrunk by more than 90% compared to its peak.

Image source: Xueqiu

In fact, based on the upgraded competition in intelligent driving in the industry in 2023, the demand for LiDAR market is growing rapidly. Looking at the performance of major LiDAR manufacturers, they basically achieved year-on-year growth, but not all LiDAR manufacturers can keep up with the pace of market development.

Everyone is moving forward, but if one party does not grow fast enough or in large enough quantities, it will actually be one step behind others. This is even more obvious in overseas LiDAR manufacturers.

Note: The relevant RMB data is converted based on the real-time exchange rate of RMB against the US dollar on May 8

According to the financial reports released by various lidar manufacturers, Ouster has performed well in the past year, with annual revenue reaching a record high of US$83 million in 2023. Luminar is also considered a "leader".

Financial report data shows that Luminar's revenue in 2023 will increase by 71% year-on-year to US$69.78 million, but its net loss will also increase from US$446 million in 2022 to US$571 million, a year-on-year increase of 28%.

The revenue scales of the remaining companies are all in the tens of millions of US dollars, or even millions of US dollars. It can be said that their scale and size have been completely surpassed by RoboSense and Hesai Technology.

Recently, Luminar released its first quarter earnings report this year, with revenue of US$21 million in the first quarter, a 5% decrease from the fourth quarter of 2023.

Interestingly, Luminar said that Tesla was the company's largest customer for lidar sensors in the first quarter, accounting for more than 10% of the company's total revenue of $21 million in the first quarter, which means that Tesla purchased at least $2.1 million worth of lidar.

Tesla, as a pioneer in opposing LiDAR, is Luminar's largest customer. It is unknown for what purpose Tesla will use the LiDAR, so we will not discuss this for now.

However, Tesla's purchasing scale is not large, and this cooperation is full of uncertainty, so it is difficult to say that it will play a big role in Luminar's long-term development.

At present, Luminar is relatively far away from the rapidly developing Chinese market, and may not be as good as domestic manufacturers in terms of production efficiency and cost, making it more difficult to expand Chinese customers.

However, with the launch of Volvo's flagship model EX90, Luminar's billions of dollars in orders have begun to turn into revenue, but how long it will take and how much it will eventually land remains to be seen. Luminar itself expects that in the second half of 2024, its product shipments will be more than five times the total of the past 12 years. By the end of 2025, more than 100,000 cars will be equipped with Luminar's lidar.

The ideal is beautiful, but the current difficulties are also obvious. Based on the continued expansion of losses and the need for mass production, Luminar urgently needs to make adjustments.

Austin Russell said: "Today, we stand at the crossroads of two realities: our core business has become stronger in technology, products, industrialization and commercialization, but at the same time, the capital market's evaluation of the company has encountered unprecedented challenges, and the previous business model and cost structure no longer suit the company's needs."

The core of this adjustment is mainly to "reduce the burden". Luminar pointed out that the layoffs are expected to reduce annual operating costs by 50 million to 65 million US dollars.

It is worth noting that in addition to layoffs, Luminar will also "sublease some or all of its facilities." Luminar spokesperson Milin Mehta pointed out that Luminar will continue to operate its Florida factory, which is used to develop, test and research products.

This more "asset-light" business model, with production shifting to outsourcing, aims to expand the scale of production. From the current perspective, it is a good strategy. However, from a longer-term perspective, it is difficult to say whether this measure is good or bad.

After all, companies like Hesai Technology and RoboSense attach great importance to building their own factories.

Chinese manufacturers stir up trouble

In contrast to overseas companies, domestic lidar manufacturers are experiencing rapid development.

Faced with many new technologies and products such as solid-state LiDAR and chipization, domestic LiDAR manufacturers such as Hesai and RoboSense have quickly followed up and surpassed others.

On the other hand, the competition in intelligent driving is fierce, and Chinese automakers are more aggressive in using LiDAR, which has brought benefits to a number of domestic LiDAR companies, with an increase in fixed points and a surge in revenue. After several years of development, RoboSense and domestic LiDAR manufacturers have rapidly grown and expanded with their cost advantages and the advantages of being a local service provider, further seizing the market space of overseas LiDAR manufacturers.

Hesai Technology and RoboSense were listed in 2023 and early 2024 respectively. Today, RoboSense is the world's largest lidar company by market value, with over HK$17 billion.

In 2023, the total number of LiDAR products sold by RoboSense will increase by 355.4% year-on-year from about 57,000 units in 2022 to about 259,600 units in 2023. Among them, the sales of LiDAR products for ADAS applications will increase significantly from about 36,900 units in 2022 to about 243,000 units in 2023, a year-on-year increase of 558.5%.

Hesai is not far behind, with total LiDAR shipments of 222,000 units in 2023, up 176.1% year-on-year. ADAS LiDAR shipments in 2023 are 195,000 units, up 214.8% year-on-year.

In 2024, the automotive LiDAR market will continue to expand. According to the data from the Gasgoo Automotive Research Institute's intelligent driving configuration database, from January to February this year, RoboSense ranked first in the installed capacity of LiDAR suppliers with 73,986 units and a market share of 55.3%. Huawei Technologies ranked second with 22,025 units and a market share of 16.5%. Tudatong and Hesai Technology ranked third and fourth with 18,972 and 17,141 units, respectively.