Hesai Group (HSAI) Earnings Call Transcript & Summary

Hello, ladies and gentlemen. Thank you for standing by. Welcome to Hesai Group's First Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note that today's conference call is being recorded. I will now turn the call over to our first speaker today, Yuanting Shi, the company's Head of Capital Markets. Please go ahead.

Thank you, operator. Hello, everyone. Thank you for joining Hesai Group's First Quarter 2025 Earnings Conference Call. Our earnings release is now available on our IR website at investors.hesaitech.com as well as via newswire services. Today, you'll hear from our CEO, Dr. David Li, who will provide an overview of our recent updates. Next, our CFO, Mr. Andrew Fan, will address our financial results before we open the call for questions. Before we continue, I refer you to the safe harbor statement in our earnings press release, which applies to this call as we will make forward-looking statements. Please also note that the company will discuss non-GAAP measures today, which are more thoroughly explained and reconciled to the most comparable measures reported on a GAAP in our earnings release and SEC filings. With that, I'm pleased to turn over the call to our CEO, Dr. David Li. David, please go ahead.

Thank you, Yuanting, and thank you, everyone, for joining our call today. Let's start with an overview of this quarter's progress. We began with a strong start in 2025, fueled by outstanding momentum in our ADAS and Robotics segment and backed by solid financial results. Our shipments more than tripled year-over-year to nearly 200,000 lidar units in the first quarter despite the impact of typical seasonal patterns. This explosive growth fueled an almost 50% year-over-year jump in our net revenue. Thanks to sharp execution, operational discipline and cost control, we're also able to reduce our net loss by impressive 84% year-over-year. Meanwhile, Hesai's leadership is being recognized across the industry. For the fourth consecutive year, Yole Intelligence, a highly respected independent research firm in Europe, ranked Hesai the #1 global leader in automotive lidar market share. According to Yole's 2024 analysis, we ranked #1 in 3 major categories, by revenue with a 33% share of the global automotive lidar market, a 26% share of the global passenger car lidar market and a dominant 61% share of the global robotaxi market. These achievements speak volumes at the pace at which we innovate, scale, deliver and reinforce our position at the forefront of the industry. Next, let's dive into our latest business highlights, starting with an accelerating momentum in ADAS market. The 2025 Shanghai Auto Show, one of the world's largest and most influential auto events, featured over 100 vehicle models with cutting-edge lidar technology. Hesai stood out with 12 OEMs at the show using our lidar technology. And among the 2025 production models making their debut, Hesai had the highest number of model integrations. The event shows that automakers are rapidly implementing intelligent driving across their lineups and that lidar is fast becoming a must-have for elevating safety in everyday passenger cars. Our ATX lidar is the embodiment of our core belief. Safety is not optional, [Foreign Language], never second-best, [Foreign Language], and without limit, [Foreign Language]. Designed to be affordable, ultra compact and offer best-in-class performance in its pricing category, ATX has been a true champion driving the democratization of intelligent driving. The sensor has already secured design wins with 12 major OEMs in May. Li Auto announced its entire L-series EV lineup will be integrated with our ATL lidar, a specialized variant of ATX, as standard configuration, delivering even sharper 3D perception. In addition, we recently secured a major design win with Zeekr to integrate ATX across several of its top-selling models, including a standard integration in the newly launched luxury shooting-brake sedan, the Zeekr 007 GT. At the same time, ATX is extending its reach with extended partnerships, landing new design wins with Great Wall Motors' EV brand Aura, Chery's iCAR New Energy lineup and the upcoming model from Geely, aiming at the mass market. With a rapidly growing roster of leading OEMs and flagship vehicles, ATX entered mass production in Q1 and made an immediate impact with close to 40,000 units shipped in its very first quarter on the market, powering models such as Leapmotor's B10, the industry's first vehicle offering advanced ADAS at RMB 120,000 price point with lidar hardware. According to public data, Leapmotor's B10 saw over 15,000 orders within just the first hour of its launch in March, with more than 70% opting for the lidar-equipped version, reflecting its strong appeal in the mass market. As part of our expanded strategic relationship with Leapmotor, we've secured a landmark order for 200,000 units of Hesai's ATX lidar, which is set to power a wide range of Leapmotor's production models starting in 2025. Internationally, we're also achieving breakthroughs. In addition to our exclusive design win with a top European OEM, a multiyear program across both ICE and EV platforms that extend into the next decade, we're excited to share that our business in Japan is rapidly gaining momentum. We recently secured a new proof-of-concept, POC, development project with a top 5 global Tier 1 supplier headquartered in Japan. This achievement marks the first time they've joined our client portfolio and is a significant milestone in our global expansion, serving as a powerful endorsement to our lidar technology in Japan. Hesai has been actively driving 5 POC programs with 4 top global OEMs and Tier 1 suppliers across Europe and Japan. Three of these programs were successfully completed in the first quarter of 2025. The evaluation results from these programs will be shared with Hesai, fostering a deeper collaboration between both parties and further refine and enhance the market appeal of our products. While these POCs do not yet constitute true design wins, they mark significant progress, and we're encouraged by the positive momentum as we look ahead to the next phase of development. As domestic and international OEM demand continues to evolve across Level 2, Level 3 and Level 4 platforms, we took a major step forward this April with the launch of our game-changing Infinity Eye or Qian Lí Yan lidar solution, alongside 3 next-generation automotive-grade lidar sensors. This new platform, in conjunction with these sensors, is available in 3 configurations. Infinity Eye A is built for high-level Level 4 autonomous systems. We achieved this by combining 4 AT1440 ultrahigh-definition main lidars with 4 solid-state FTX lidars acting as a blind spot detector offering true 360-degree coverage without blind spots. Infinity Eye B is designed for Level 3 conditional autonomy. It features one new ETX main lidar, the world's longest-range automotive lidar, which can detect up to 400 meters at 10% reflectivity, that paired with 2 FTX lidars for enhanced blind spot perception. And for Level 2 ADAS applications, Infinity Eye C brings the perfect balance of performance and cost efficiency using one compact yet powerful ATX main lidar. A core feature of this new platform is a shared architecture across our AT, ET and the FT series that features more than 85% component commonality. This means faster development, lower cost and seamless scalability. These industry-leading solutions are a direct testament to our products' technical strength and our holistic approach to satisfying customer needs. Beyond delivering superior performance, we created comprehensive solutions that integrate our cutting-edge technological capabilities with cost-effectiveness. As a result of this strength, we have won design wins for over 120 vehicle models across 23 OEMs worldwide. Meanwhile, the broader robotics market represents tremendous opportunities, and our lidar solution sits at the core of this growth. According to Goldman Sachs estimates, China's autonomous mobility market is set for explosive growth and is expected to expand over the next decade from just USD 54 million in 2025 to USD 47 billion by 2035. China is clearly on track to become the world's largest autonomous mobility market. In recent months, we've been at the forefront of a new wave of robotaxi breakthroughs across China and beyond. As the main lidar supplier, we're powering mass-produced next-generation fleets for Baidu Apollo Go, DiDi, Pony.ai, WeRide, some of which have already expanded onto the global stage. Today, we're proud to be the world's largest lidar supplier for robotaxis. We're also thrilled to be accelerating L4 autonomy across both long-haul and last-mile logistics. Recently, we signed new agreements to bring our ultrahigh-definition AT1440 sensor to KargoBot Level 4 robotruck fleet. At the same time, we partnered with Zelos [ Suzhou Zhìnéng ] to scale its last-mile delivery operations and Neolix [ Xin Shíqì ] to deploy its unmanned Level 4 vehicles. As Level 4 autonomy moves into commercial deployment, we're proud to be the lidar partner helping customers scale smarter, safer and faster. Beyond transportation, lidar is unlocking a world of new possibilities, each bringing fresh opportunities to reimagine every day and drive incremental revenue and profit. We believe that every robot needs lidar as a core 3D sensor for precise positioning, mapping, navigation and perception. Take our JT lidar, for example. It's been chosen for the next-generation robotic lawnmowers, delivering superior accuracy, stability and efficiency over traditional RTK and camera-based systems especially in signal-challenged or visually complex environments. We also recently expanded our partnership with a leading smart home robotics company in China. Over the next 12 months, we expect to provide 300,000 JT units to this customer, generating meaningful revenue while helping transform everyday consumer products in intelligent lidar-driven capabilities. In summary, Q1 has laid a powerful foundation for what promises to be another transformative year for Hesai. We stand at a pivotal moment where breakthrough technology needs a real market-readiness. With our unmatched technology leadership and scalable production, we're leading in the industry to shape the future of mobility, and we're doing it alongside customers who share our mission: to make advanced perception and safety accessible for all. Before I hand it over to Andrew, I want to share some exciting news. In early May, the U.S. District Court for the District of Delaware has officially dismissed Ouster's patent infringement case against us with no conditions, no financial settlement and no injunctive relief. This brings an end to all existing IP actions against us and reaffirms the integrity of our technology. It's a powerful validation of the strength of our IP portfolio and the years of R&D that power it. We are proud that our innovations have not only withstood legal scrutiny but have also prevailed. Our deep passion for technology and our unwavering commitment to R&D continue to give us a real edge, and no legal tactics can change that. With that, I will now turn the call over to Andrew to share more details on our financial performance and outlook. Andrew, please go ahead.

Thank you, David, and hello, everyone. I will now go through our operating and financial figures for the first quarter of 2025. For further details beyond what I cover on this call today, I encourage listeners to refer to our earnings release. Our Q1 results highlight strong sustained momentum. Total revenues saw 46% year-over-year, reaching CNY 525.3 million or USD 72.4 million. This impressive growth was fueled by exceptional shipment performance. Nearly 200,000 units were delivered during the quarter, more than triple the volume from the same period last year. Notably, this marks our third consecutive quarter of over 150% year-over-year shipment growth, a clear reflection of both surging market demand and the strength of our operational execution. The surge in shipments was driven primarily by the rapid adoption of our ATX lidar among OEMs, with large-scale mass production commencing in Q1. At the same time, our JT lidar gained strong momentum with 45,000 units shipped in the first quarter alone, driving our robotics lidar shipments to nearly 50,000 units in the first quarter of 2025 with over 600% year-over-year growth. Meanwhile, our gross margin stood healthy at 42% in Q1, and we cut operating expenses by 9% year-over-year, reflecting the strength of our disciplined cost management. As a result, we narrowed our first quarter net loss by 84% year-over-year to CNY 70.5 million or USD 2.4 million while remaining non-GAAP-profitable for the quarter, a performance that was significantly stronger than our earlier guidance and especially notable given that Q1 is typically a seasonally slower period. Looking ahead, we are encouraged by the strong momentum we built in Q1 and remain confident in our outlook for the rest of the year. For Q2, we are expecting net revenues of between CNY 680 million or USD 93.7 million and CNY 720 million or USD 99.2 million, which would be a 48% to 57% increase year-over-year. This forecast conservatively takes into account the current tariff environment as well as some expected short-term shifts in customer demand to Q3 mainly from U.S.-bound robotics lidar shipments. Despite these considerations, we are projecting total shipments of over 300,000 units in the second quarter, a substantial increase of almost 250% year-over-year. Even more encouraging, we expect to reach GAAP breakeven in Q2 and remain firmly on track to hit our full year profitability targets despite navigating a dynamic tariff environment. As the global environment continues to evolve, we will remain proactive, refining our strategies to ensure minimal disruption to our long-term growth path. We are confident that our products remain highly competitive even in a tariff-impacted landscape. And if cost adjustments are needed, we will take a measured approach to pricing, always focused on delivering strong value to our customers. At the same time, we are prioritizing long-term resilience with strong momentum behind our overseas manufacturing plans to swiftly mitigate geopolitical risks and better serve our global customers. In May, we signed a lease for our new factory in Southeast Asia, a decisive first step forward. To conclude, Q1 represents an exceptional start to 2025 with outstanding performance across revenue, shipments, margins and cost management. We have laid a solid foundation and are confident in our ability to sustain this positive momentum in the coming quarters. This concludes our prepared remarks today. Operator, we are now ready to take questions.

[Operator Instructions] Your first question comes from Tina Hou from Goldman Sachs.

Congrats on the strong result and strong guidance. So my question is mainly regarding our full year guidance. Since we have seen -- I think, starting from the beginning of the year, we have seen a very strong take rate for lidar from both premium OEMs as well as mass market ones, so wondering if we're still maintaining our annual shipment guidance for 1.2 million to 1.5 million. Or do we see more like upside from there? And also related to that, as the ADAS lidar portion becomes larger for our entire portfolio, how do we see the trajectory for our gross margin? And where could 2025 total company gross margin end up? Yes, that's my main question.

Tina, thanks for the question. Let me take this first. Regarding our 2025 full year guidance, despite the evolving tariff environment, I think we are still maintaining our 2025 revenue guidance at CNY 3 billion to CNY 3.5 billion, the total shipment remained at 1.2 million to 1.5 million and 40% in gross margin with CNY 200 million to CNY 350 million GAAP net profit for 2025. So we maintain our 2025 full year guidance unchanged. I would also like to share some information about our Q2 guidance. In the upcoming quarter -- in the current quarter, our revenue is expected to reach about CNY 680 million to CNY 720 million, strong year-on-year growth of about 48% to 57%, driven by the rapid adoption of lidar in passenger vehicles in China. This forecast conservatively takes into account the current tariff environment as well as some expected short-term shifts in customer demand to Q3 mainly from the U.S.-bound robotics lidar shipments. In Q1, we shipped about nearly 200,000 units in total, up over 200% year-on-year. We expect the shipments to continue accelerating through the year, with 2Q shipments reaching over 300,000 units. The ATX lidar, which has a market price at around $200, entered mass production in Q1 and is ramping up shipments in Q2, expected to account for about 50% to 60% of total deliveries in Q2. With all these ATX lidar shipments in consideration, our GP margin is expected to remain healthy at around 40%. As you can tell from our Q1 gross profit margin, with the ATX ramping up, our quarter-over-quarter margin still enjoyed a moderate improvement. Therefore, we are still very positive about reaching the full year gross profit margin target. On the bottom line, despite the typical seasonality in Q1, we achieved a non-GAAP profitability and significantly narrowed our GAAP net loss by 84% for Q1, well above our previous guidance. We anticipate a further quarter-over-quarter improvement in Q2, reaching breakeven point on a GAAP level. That's my responses to the questions of Tina. Hopefully, that can address the questions you just mentioned.

Yes, that's very clear.

Your next question comes from Jessie Lo from Bank of America.

My question is regarding to the ADAS lidar ASP trend. As we currently supply ATX or ATL and also existing [ ATP ] product to our clients and then after we migrate to AT1440 and also ET and even potentially like next year for the overseas clients, how do you foresee this ADAS lidar ASP trend?

Thank you, Jessie. Regarding we -- starting from Q1, since our product mix has started to shift meaningfully with the ramp-up of ATX mass production, our blended or average ASP will be naturally brought down. But it doesn't tell the full story. It's more helpful to look at the ASP volume trends by products. For 2025, we have 3 variations of the AT series in production. First, our [ ATP ] lidar will see a moderate ASP decline in the low teens year-over-year, reaching around $350 in year 2025. The ATP is expected to account for a low 6-figure shipment volume in 2025 with production scheduled to conclude by end of this year. Then we will have the ultrahigh-performance AT lidar built for A3 application -- L3 applications, which carries a higher ASP of about $500 but is being shipped in relatively smaller volume this year. We expect large-scale shipments of 8 of these high-performance lidar to ramp up starting 2026. Lastly, our ATX lidar, most cost-efficient, compact version with a market price at $200, it started mass production in Q1 and has already adopted -- has been adopted as a standard feature for many popular car models. For large-volume orders, customers typically receive a modest discount of the market price, a common practice across the supply chain industry. While the ATX brings down the blended ASP, it opens up much larger volume potential. We project ATX to ship in the high 6-digit range, possibly up to 1 million units in year 2025. At present, we do not anticipate new market products pricing another half of the ATX. For the foreseeable future, the ATX will remain Hesai's flagship long-range front lidar, offering high cost performances. Overall, while the mix is shifting, we believe lidar content per vehicle will remain stable in the long run given its irreplaceable safety and functional value. With the adoption of L3 driving the need for multiple lidar units per vehicle to enable full 360-degree coverage, we expect lidar content per vehicle to stay in the range of $500 to $1,000. Jessie, that's my response to your question.

And then I have a second question regarding our capacity and CapEx. So earlier in the last conference call, we mentioned that towards end of this year, we will be expanding our capacity domestically to 2 million units. So could you share some of the progress on that capacity expansion? And then on top of that, you also mentioned that we just signed a lease in Southeast Asia. And then what's currently like CapEx will look like for the Southeast Asia capacity and also the total production units and potential like profitability from this overseas plant.

Okay. So as of now, as you just mentioned, we have about 2 million production capacity guided by end of this year. To give you an update of that, we are building up new production lines starting from Q1, which will begin mass production in Q3. Therefore, this 2 million production capacity is being installed on track. Also, on top of that, we have more production lines in the planning stage, which might start building up in this year, and it typically takes us 4 to 5 months to set up a new production line in China. Our operations are very lean and efficient. Meanwhile, I would also want to comment on our overseas expansion plans. We are making good progress on our overseas manufacturing plants, which are a key part of strengthening our long-term resilience under the current geopolitical environment. To better manage the risk and support our global customers more effectively, we have signed a lease contract for our new overseas factories in May, making a key step forward. We plan to break ground later this year and expect the facility to be up and running by late 2026 or early 2027 to support the demand of our overseas customers. Our highly automated production technology enables us to set up an overseas production line with controlled and efficient CapEx. To summarize, we expect that our 2025 CapEx should be around USD 30 million to USD 50 million in total. David, go ahead.

Yes, this is David. I want to give you some insight on the ASP. So there are really 2 ways to reduce or improve the cost structure of our products. The first one, I think it's by design. It's really the integrated circuits, the ASICs, and it's really the innovation. So for each generation, obviously, we designed that roughly 2 years ahead of the shipment and then -- for domestic market. And the way we look at it is that okay, we think about the volume, we think about where we should reach at the price and we sort of reverse that back into the cost structure. And by that time, we already factor in how many were expected to ship for the lifetime of the product, at least for the first 2, 3 years. So that's why if you look at the results of the ASP, it's very predictable, right? It starts with above $500 and slowly decline, but it's within the expectation because we already designed the cost structure based around that. The second reason is that it's still the economies of scale. As you can see, the ATX and ATL product, when we're shipping this year, the volume is much higher than ATP. And then it will grow to another level next year with very high certainty. That's where we see slow decline of the ASP similarly with products like ETX. But you will not be able to expect a decline that's falling to the range of halving that simply because if you look at the original design and architecture of such a product, it will have a slow decline on ASP, but it doesn't have the room to continue to the 50% level. That isn't designed. So that's how we see the price will change down the road.

Your next question comes from Tim Hsiao from Morgan Stanley.

I've got 2 questions. The first one is about the competition because we noticed that one of Hesai's local lidar peers is reportedly winning the project from the brands like Xiaomi and Leapmotor, which I think both are Hesai's key clients. So is the management team concerned about the potential reshuffles as I think your company used to be the sole supplier to the top-notch car EV makers like Xiaomi? And what's the implication to our orders and the potential price competition? That's my first question.

Okay. Thank you, Tim. We do not want to comment on our market speculations because ultimately, orders and official announcements speak for themselves. The lidar industry has been a very competitive arena since its inception. And currently, only a few players possess massive production capabilities. Hesai's products have earned a strong reputation for their performance, quality and reliability over time. Notably, we have observed a consistent trend of our ADAS customers switch from our competitors, which underscores Hesai's robust competitive edge. I would say winning contracts doesn't mean mass production and doesn't mean they can generate a meaningful revenue from these contracts. Strategically, we chose to collaborate with high-quality promising clients to ensure a reasonable pricing and maintain healthy financials. Our customer bases comprise top-tier OEMs, reflecting our commitment to quality partners. Unlike the Internet industry, the lidar vector requires long-term perspective. Our goal is to build a sustainable industry, avoiding short-term gains at the expense of long-term viability. Achieving a win-win scenario with our clients is our ultimate objective.

This is David. I think it's kind of unfair for Andrew -- to ask Andrew to comment on competitors, especially [ Xiaomi ], so maybe I'll offer some of my market information. I imagine we are aware of that, which you mentioned. I think it's -- the speculation is always maybe, and it's difficult for an existing vendor like us to prove the negative. I think it's in every customer's best interest to continue to understand what's available on the market, and they do. Everyone does that. It's just a common practice. But in the end, you have to provide your unique value proposition for your quality, your performance and pricing as a combo. Especially when you already are an incumbent player for OEMs, there's a lot of inertia in this in terms of the data compatibility, and also their vehicles are designed around your sensor. So there is a pretty high bar for a second vendor to be able to step in especially during a phase where everybody is rushing to upgrade their products to the smaller, better sensor to take it to the next level. So the answer is we actually are aware of it. In the end, you should refer to the announcement of the OEM to know what's really going on. And I would not just make decisions or speculations based on rumors.

My second question is about the new products because during the presentation, I think David also mentioned about new solutions, the Infinity Eye. So just want to get a little bit more color about when do you think the shipments or mass production will start and the potential client wins. And of course, the value content would be much higher, but do you have the rough idea about the rough range of the value content and the margin that is the new solution? Yes, that's my second question.

Okay. I'll first -- to provide like a response to the question about our launch of Infinity Eye, we are very proud to be the first provider of a full stack of L2 to L4 lidar solutions. We have seen very encouraging feedback from our OEM customers since the launch of our new Infinity Eye. One of its key strengths is its flexibility. Infinity Eye A, B and 3 are built on a shared architecture but are tailored to different customer needs and system setups. Depending on the OEM's vehicle platform and software stack, each configuration can support anything from L2 all the way to L4 autonomous driving. All of our primary lidar sensors deliver outstanding performance, but each is optimized for specific technical priorities. The AT1440 boasts the world's highest angular resolution, delivering ultrahigh-definition, image-level point cloud. The ETX, which is a core part of our Infinity Eye B solutions, is engineered for superior ranging capabilities, offering best-in-class detection distances. Both AT1440 and ETX are high-performance lidars, each priced above $500. The ATX, which is a core component for Infinity Eye C, priced around $200, represents our cost-effective solutions, combining compact design with robust performances. The choice among them depends on the specific autonomous driving capabilities of our customers. All 3 models, i.e., AT1440, ETX and ATX are suitable for L2 to L4 applications and have all secured a series of production design wins. These design wins are a strong validation of the Infinity Eye solutions' adaptability and technical differentiation across our lidar portfolio. And as we repetitively conveyed a message to the market, though we have different price ranges for our different products, but when we design the pricing, the architecture of the product and also the cost components of the product, we always aim a healthy and relatively stable gross margin target. Therefore, as you can tell from our historical gross profit margin performances, I would like assure you that the gross profit margin will not fluctuate significantly in the future due to the change of product mix with these new products launching.

Great. Congratulations on the solid results again.

Your next question comes from [ Bingri Kwee ] from Guotai Haitong.

This is [ Bingri ] from Guotai Haitong Securities. Congratulations on the strong results and guidance. So my question is about the tariffs. Could you please share some details about the impact of Trump tariff on pricing, supply chain, et cetera, and how to deal with this problem?

Okay. We are closely monitoring the situations of tariff, which is changing on a daily basis, and have conducted a thorough analysis of the potential impact. While the tariffs do introduce certain cost considerations, we believe that their impact on our overall business will be limited for 3 primary reasons. First, our direct exposure is very limited. The U.S. market is projected to account for only 10% of our total revenue in year 2025. Secondly, only 5% of our total revenue or 50% of the revenue from U.S. is under the so-called DDP terms or delivered duty paid models where we as the seller bear the cost of tariffs. And thirdly, our continued focus on operational efficiency and cost control and also our market position give us the flexibility to effectively manage external challenges like those. And we have a relatively strong market position against our customers. Moreover, we have several levers, including adjusting the pricing strategies and efficiency gains, which will help absorb or offset these tariff-related costs. When we provide -- also, when we provided our profitability outlook in our last earnings call, which is March this year, we had already assumed a 45% tariff as our base-case scenarios. We have seen some customers front-loaded or rescheduled their orders due to the uncertainty around future policy changes especially after April. But depending on the current shipments and the delivery schedules, this may shift some of our revenue from Q2 to Q3. That's also part of the reason why our Q2 guidance is presented as a range. For the full year, we are keeping our revenue guidance unchanged at CNY 3 billion to CNY 3.5 billion. We haven't seen our major customers canceling their orders due to these tariff changes. For the full year targets, our gross margin target remains healthy around 40%, and we expect the current impact from tariffs on our full year gross margin and profitability to be immaterial.

Yes, I want to also add to the tariff topic. So first is, obviously, a small percentage of our revenue today already from the U.S. And there are really 2 types of customers when they face the tariff. A small part will treat this as a -- when it was really high, and they treat this as unacceptable. So they just pause. They're not canceling because they couldn't find an alternative, but they were pausing for some time until they came back down to where it is now. The other part is actually front-loading more because they realize that there is risk down the road that it could go back up again or facing other challenges, and they definitely don't see an easier solution just to switch over at all. So they actually try to buy more. And at the price, they're okay, and they feel like it's a reasonable number especially now, and they just wanted to make sure the continuity of their supply chain is guaranteed. So that's why we also see some of the customers placing, let's call that, for lack of a better word, revenge orders as we see both type of customers.

Your next question comes from Jia Lou from BOCI.

My first question is regarding our new ADAS product ATL and ATX. We noticed that our key client Li Auto's newly launched models all integrated Hesai's ATL lidar, which is a customized version based on ATX, but most other OEM customers all choose the standardized ATX version. So for Hesai, is there any difference between ATL and ATX in terms of ASP costs and gross margin? And in future, is standardized ATX will remain as a mainstream solution for OEM customers or more OEMs will follow Li Auto to adopt a specialized one?

Yes. I'll just give some of the background of this product. It's a variant, but it's an enhanced and advanced version with enhanced resolution and a few other things. The main idea behind that is that, well, we wanted to keep the standardized platform. For a specific customer like Li Auto, they are very particular about the specific advanced functions of the lidar because that's what they see as needed as they develop their AD Max platform. So in a way, it's a customized version for them to best match the requirements of their software. In an ideal world, maybe every customer have something look differently than others want. But in Li Auto's specific case, we have very particular requirements that's above the standard ATX and we were able to meet that. And so that's the nature of such a product. And we don't have additional information on the price or the gross margin, but it remains largely in line with the typical platform.

Okay. Got it. And my second question is related to the robotaxi lidar. Recently, we see that Baidu, DiDi, Pony all adopt our ADAS product, the AT series to replace traditional mechanic lidar for cost reduction. Just wondering the usage of ADAS lidar by these L4 players, the transitional temporary solution for robotaxi industry, looking ahead, will -- Hesai will develop a specialized product series for robotaxi or will continue to sell ADAS lidar to these L4 players?

Okay. I'm glad that you asked this question as Hesai is the largest robotaxi lidar supplier globally with 60% to 70% market share. Our main lidar products are widely used by all the top robotaxi players in China and outside China. Historically, robotaxi operators have used the mechanical spinning lidars for small fleet testing and operations. However, recent trends in China indicates an urgent need for scalability in the robotaxi fleets. By adopting our flagship ADAS lidar on robotaxi, our customers achieve a better balance between price and performance of the sensors, enabling faster fleet growth and helping them become closer to profitability. As a result, we are expecting to receive significantly larger lidar orders for use in our robotaxi for the years to come. Historically, on the robotaxi side in China, we expect that moving from smaller-scale, high-priced mechanical lidars to larger-scale ADAS lidars will boost our revenue and gross profit in the long run as the robotaxi business grows in China. Meanwhile, global robotaxi companies continue to rely on mechanical spinning lidars to ensure the highest sophistication of their AD solutions. Take this, for example, from the earnings. We are the exclusive supplier to a top global robotaxi player, and their fleet has already racked up nearly 1 million autonomous miles in 2024. Now they are gearing up for a bigger expansion in 2025, scaling their self-driving fleets in a big way, all powered by our Pandar-series lidars. With the robotaxi market rapidly advancing towards large-scale commercialization, our technology plays a crucial role in enabling safe and reliable autonomous driving -- autonomous transportations. Also, when our ATX -- AT128 or ATX type of lidar to be deployed in the robotaxi, these ASIC-based, semi-solid-state design provides a more cost-efficient solution. However, due to its 120-degree horizontal field of view, a robotaxi typically requires 3 to 4 units of our AT-series lidar to achieve 360-degree perception, also advanced algorithm approach. So that's my response to your question. Hopefully, that can cover that.

Your next question comes from [ Jiang Liu ] from Huatai Securities.

My first question is about the global market. When will we deliver lidars to the global OEMs? And what's the impact of volume for the next 1 or 2 years? And how to estimate the NRE income from the global OEMs this year?

Okay. Hesai has been actively -- discussion and cooperation with our global customers. Recently, we have actively driving 5 POC programs with 4 top global OEMs and Tier 1 suppliers across Europe and Japan, including the most recent POC awarded in Q1 by a top 5 global Tier 1 supplier headquartered in Japan. While these POC contracts are not yet full design wins, they play a critical role in the decision-making process. OEMs typically define final product specifications based on POC outcomes and use this phase to validate and codevelop surrounding components. As a result, suppliers engaged earlier in the POC stage are strategically positioned and may have a higher chance of securing the design win once the OEM issues a formal RFQ. We have secured design win partnerships with 5 global OEMs, 4 through their JVs and most importantly an exclusive design win with a top European OEM, as we announced in last quarter. This long-term deal extends into the next decade across both their ICE and EV vehicle platforms, representing the largest global program in the automotive lidar industry. When we refer to the largest global program, it signifies not only our collaboration with this leading global OEM but also the extensive worldwide reach of our shipments, spanning China and numerous other international markets. Our quality and performance have become our name card, and our ability to deliver a comprehensive solution, bundling both long- and short-range lidars, makes us the go-to partner for global OEMs. The market potential is just massive. Global lidar penetration is nearly zero today. But as both ICE and EV started to adopt ADAS and lidar, we are unlocking an additional $30 billion to $60 billion market in the overseas market in the long run driven by 60 million overseas vehicles at a $500 to $1,000 lidar content per car, as we estimated. That's my question to your -- that's my response to your question, [ Jiang Liu ].

Your next question comes from Sia Huang from SPDBI.

This is Sia from SPDBI. And I've got just one question about our dual listing plan. As market rumor is saying that Hesai has confidentially filed for a Hong Kong listing, how do we respond to this?

Okay. Thank you for asking this question. Regarding the market speculation about our dual listing plan in Hong Kong, I have no comment on that. That said, we periodically evaluate all our possible and available options, including listing on other stock exchanges to protect our investors' interest and sustain our growth trajectory. Rest assured, our commitment to the company's long-term success in the capital markets remains steadfast. I guess the reason why you asked this question or the market is so focused on this is related to the market rumors about potential delisting of China ADRs from U.S. market. But based on the advice of our SEC compliance counsels, there is no legal or factual basis on the current NASDAQ listing rules or past precedents that support the delisting of Hesai from any government bodies. To date, we have received no inquiries, no investigations nor communications from NASDAQ concerning the potential delisting or similar actions. Based on the currently available information, we do not find any concrete legal risk of being delisted from NASDAQ. At this time, we are fully compliant with all the regulatory requirements from NASDAQ market.

Yes. I don't know if people will respond to a confidential filing. The entire point is it's confidential.

Your next question comes from Joanna Ma from CMBI.

Congrats on the solid results. So I have a question regarding, could you please share with us your review on impact on lidar industry development from latest AEBS draft for soliciting opinion?

I'll take it on the AEB question. Yes, I think it's very important -- hello? Can you hear me?

Yes.

Yes. I think it's taking such a technology to the next level. Historically, the idea is, if you buy a car with a lidar, you have a few more functions, some type of NOA, blah, blah, blah, and people can always say, "No, I feel very comfortable driving my own car," or "I feel like I'm safer than the car driving itself." So that's where lidar was about. And then starting from last year, AEB take us to a new domain in which it will trigger, no matter if you turn it on or not, if it sees a risk. Essentially, it becomes the future of invisible airbag, and it's even better than airbag because obviously, it can stop a crash before it crashes. So the entire penetration of AEB with lidar became much faster than the previous round for that reason. And this is what we see. The entire lidar industry or the ADAS industry is now rushing to have most of the vehicles have a 100% take rate for lidars. Almost everybody is doing that because now you buy a car, you don't want people to see -- to worry about not having a lidar. And now we're also seeing a lot of the discussion at the regulatory level because clearly having advanced ADAS function with the ability to detect in complex environment is a must and most people agree lidar is a critical part of such an effort. So that's why you see the penetration rate is quickly going up. And now the marketing for different OEMs are focusing on not only the computation but also the lidar. Many, many car launches today will have explicitly a page about lidar adoption in their car because no one wants to be not future-proof.

Okay. Got it. That's really helpful. And my second question, also can management share with us your outlook on the room for operating efficiency improvements in the coming years? And also, are there any updates regarding the outlook for your CapEx?

Okay. Let me answer this question. The second question first, the CapEx, I have guided that we expect our full year CapEx will be around USD 30 million to USD 50 million in the current year. For the OpEx, on a non-GAAP basis, our OpEx in year 2024 is about CNY 1 billion. And about 65% of the OpEx is R&D, and 15% goes to sales and marketing, and the rest are the G&A. In 2025, we actually guided that we are going to -- we expect that we are going to achieve a CNY 100 million savings in the GAAP basis OpEx. We are committed to taking expenses management to the next level, ensuring even better efficiency and financial discipline. As you can tell from our Q1 results, our OpEx declined by about 9% on a quarter-over-quarter basis, which is in line or even slightly better than the full year cost saving target. Our head count for year 2025 currently is about 50% for R&D staff, 15% for production, and the remaining is the sales and marketing and G&A-related employees. Also, I would like to highlight the importance of the operating leverage. We have spent over a decade building a strong and stable organization structure, which is what we called a large mid-platform with a lean front end. This allows us to scale our business without significantly increasing R&D expenses while our revenue and gross profit grows. Therefore, we expect our R&D investments to remain relatively stable on the absolute amount even as our revenue and gross profit continue to grow at a solid pace. Internationally, our ADAS business is still in the early stage and contributes a relatively modest share of total revenue as of today. At the end of the -- at the same time, we are allocating some of the R&D resources to support our global programs. In our Robotics segment, most of the costs are tied up to our global sales network. On the product side, we are benefiting from our platform-based development, so we are not starting from scratch in each application of robotics, which help us scale more efficiently. Yes, that's my answer to the question you just raised.

As there are no further questions, I'd like to now turn the conference back over to the company for closing remarks.

Thank you once again for joining us today. If you have any further questions, please feel free to contact our IR team. This concludes today's call, and we look forward to speaking to you again next quarter. Thank you, and goodbye.

This concludes today's conference call. You may now disconnect your line. Thank you.