Mercedes-Benz will integrate Hesai’s lidar sensors into its smart driving cars for global markets, marking the first time a foreign automaker has adopted Chinese-made lidar technology for vehicles sold outside China, a source with direct knowledge of the matter said.
The decision comes amid rising trade tensions, as the US ramps up efforts to limit the use of Chinese components and software in vehicles made by global automakers. Meanwhile, German car manufacturers, key players in their country’s struggling economy, are striving to remain competitive.
Mercedes reportedly deliberated for months over the move due to legal and geopolitical risks before selecting Hesai, China’s largest lidar manufacturer, for its cost efficiency and large-scale production capacity, the source added. A Mercedes-Benz spokesperson declined to comment on speculation regarding new suppliers.
Following the news, US-listed shares of Hesai surged 36.6% in early trading. On Monday, the company projected its 2025 net revenues to reach 3-3.5 billion yuan ($415-484 million).
Hesai, whose competitors include US-based Luminar, announced an “exclusive multi-year” contract on Monday to supply lidar products to a leading European automaker, though it did not disclose the company’s name.
Lidar technology uses lasers to generate three-dimensional images of a vehicle’s surroundings, aiding navigation and obstacle detection—key components of self-driving systems that automakers are developing.
Hesai’s Chief Financial Officer, Andrew Fan, told Reuters on Tuesday that the deal was purely a commercial decision by the automaker, but declined to name the company. “I assume the automaker has to find alternatives that can be comparable to Hesai’s products on performance and price, but the result is there is none,” Fan said.
According to Fan, European automakers have already used Hesai’s lidar systems in vehicles sold within China. To meet increasing demand, Hesai has been expanding its two production lines in China, targeting an annual output of over 2 million units this year.
The company is also establishing production lines overseas, aiming to launch them as early as next year to address concerns from international clients over tariffs and logistics risks. Fan did not disclose the location of the planned overseas factory.
Demand for lidar technology continues to grow in China’s competitive automotive market, where carmakers are increasingly equipping even affordable models with advanced smart features.
Reuters
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