"Brother Radar" can no longer be sold either

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"Brother Radar" can no longer be sold either

mountain

2026.11.12 08:49

· From Beijing

Full text 4223 words

Text | Mountain, author I Xue Xingxing, editor I He Jian

The automobile market is in a slump, and Hesai, which sells radars, is also suffering losses.

On November 10, Hesai Technology released its third quarter financial report for 2026. Both shipments and revenue were below the lower limit of guidance and fell short of expectations.

The financial report shows that Hesai lidar shipped 729,700 units in the quarter. Although it increased 65.3% year-on-year, it was still lower than management’s previous estimate of 800,000 to 850,000 units. Operating income for the quarter was 1.068 billion yuan, a year-on-year increase of 34.3%, which was also lower than the lower limit of the previous quarter's guidance of 1.1 billion yuan.

Management explained during the earnings call that some car companies have lowered their sales targets this year, resulting in lower-than-expected lidar purchases. At the same time, the proportion of low-priced product shipments has increased, which has also caused Hesai's revenue growth to significantly lag behind shipment volume.

The latecomers are already coming in force and are constantly attacking the "Radar Brother". In the third quarter of this year, Sagitar Juchuang and Tudatong delivered about 595,600 units and 268,900 lidars respectively, with year-on-year growth rates of more than 200%, much higher than Hesai.

Fortunately, Hesai still maintained its profits. In the third quarter, Hesai's comprehensive gross profit margin was 41%, rising for two consecutive quarters. The operating profit of the core lidar business reached 145 million yuan, a year-on-year increase of 88%.

Hesai Technology Financial Report

However, the overall net profit of Ji Hesai was only 80.79 million yuan, a year-on-year decrease of 68.5%. This is more affected by the one-time gain of about 185 million yuan in the same period last year. After excluding this part of the gain, this year's net profit increased by about 14% year-on-year.

The profit was partially offset by losses on new business. In the third quarter, Hesai's strategic growth business (SGI) revenue, including robot power modules and Kosmo, doubled from the previous quarter to 90.51 million yuan, but operating losses also expanded from 64.04 million yuan in the previous quarter to 82.89 million yuan.

Hesai founder and CEO Li Yifan has full confidence in SGI. This year SGI’s cumulative revenue reached 135 million yuan, exceeding the full-year target of 100 million yuan set at the beginning of the year. Management predicted on the earnings call that SGI's full-year revenue target is 200 million to 300 million yuan this year, and will reach $100 million and break even next year.

One of the victims of the car market

In March this year, Hesai raised its full-year lidar shipment forecast to 3 million to 3.5 million units. At the time, it had just become the industry's first lidar company to post a full-year GAAP profit, having sold 1.62 million radars in a year. Management is optimistic that radar shipments for both cars and robots will double in 2026.

Now, predictably, that hope has been dashed. As of the end of the third quarter of this year, Hesai's cumulative lidar shipments were only 1.83 million units. To reach the lower limit of previous expectations, Hesai would have to sell at least another 1.17 million units in the last three months. During last night’s earnings call, management tacitly refrained from mentioning the 3 million unit target.

"The overall auto market is weaker than we expected at the beginning of the year." Hesai CFO Fan Peng said at the earnings call that many automakers, including some of their customers, have lowered their full-year sales targets this year. “When car companies reduce vehicle production, the corresponding ADAS lidar purchases will naturally be affected.”

The good old days of the car market are gone forever. According to data released by the Passenger Car Association, the national passenger car market retail sales in October this year were 1.643 million units, a year-on-year decrease of 27.1%. In the first 10 months of this year, the cumulative retail sales of passenger cars reached 14.978 million units, a year-on-year decrease of 22.3%.

The growth rate of shipments has stopped, and Hesai’s revenue has also failed to stabilize. Hesai's lidar business revenue in the quarter was 978 million yuan, a year-on-year increase of 22.9%, which was 42 percentage points lower than the growth rate of shipments. Calculated by dividing lidar segment revenue by total shipments, the average corresponding revenue per unit is approximately 1,340 yuan, which is much lower than approximately 1,802 yuan in the same period last year, but has rebounded from approximately 1,300 yuan in the second quarter of this year.

Increase in volume and decrease in price is a common problem in the entire automotive industry, and radar manufacturers are not immune to this. In the first half of this year, Sagitar Juchuang lidar sales increased by 169.6% year-on-year, but revenue only increased by 30.2%. During the same period, Tudatong's shipments increased by 364.8% year-on-year, but its revenue only increased by 127.9%.

Smart driving is gradually penetrating into lower-priced models, and profit decline seems inevitable. This year, Hesai’s AT series lidar was newly designated by Wuling, and shipments of low-price products increased. Hesai's gross profit margin in the third quarter was 41%, a decrease of 1.1 percentage points from the same period last year. The financial report attributed the decline in gross profit margin to the increase in the proportion of revenue from low-margin products.

The contribution of robotic lidar may have alleviated the impact of the weak automotive market on Hesai’s profits to a certain extent. Fan Peng revealed during the earnings call that although the shipment volume of robotic lidar is much lower than that of automotive products, robotic lidar is expected to contribute about 50% of the revenue of the lidar business this year due to higher average selling prices and gross profit margins.

Hesai's robot lidar is mainly used in scenarios such as Robotaxi, humanoid robots, and lawn mowing robots. In the third quarter, this part of the business shipped 91,600 units, a decrease of 35.6% from the previous quarter, mainly because a customer of lawn mower robots reduced purchases due to operational problems. However, shipments of high-end lidar used in robotaxi and humanoid robots were better than expected, with higher selling prices offsetting some of the impact of low-priced products.

The financial report shows that in the third quarter of this year, the operating profit of Hesai’s core lidar business reached 145 million yuan, a year-on-year increase of 88%, and the operating profit margin increased to 14.9% from approximately 9.7% in the same period last year. In addition, although the group's operating expenses increased by 46% year-on-year, the new investment mainly went to strategic growth businesses. According to Fan Peng, after excluding this part of the investment, the operating expenses of the core lidar business actually dropped year-on-year.

Hesai is unwilling to engage in a price war anymore. Fan Peng said at the conference call that after years of self-developed chips and core component cost reductions, Hesai’s room to continue to achieve significant cost reductions through technological advancement in the future is relatively limited. Continuing to lower prices at any cost may damage product quality and reliability. “We are unwilling to make such a trade-off.”

Fan Peng said that the price competition in the ADAS lidar market is gradually becoming more rational. According to the signed 2027 contract, the price and profit margin of the ATX series products are expected to be further stable, and the profit margin next year will be the same as this year.

Without more room for cost reduction, Hesai can only hope to sell more expensive and more radars. They disclosed in their financial report that the high-end ET series has been newly designated by five car companies, with a total order volume in hand exceeding one million. Another option is to equip a vehicle with more radars. Hesai's FT series, which is used for lateral and blind spot sensing, has recently won zero sales and a designation from a European car company.

Li Yifan believes that lidar is still the business foundation of Hesai and can continue to make stable profits and create cash flow. He said that with the implementation of L3 autonomous driving, the high-end lidar market will grow. At the same time, more radars installed on bicycles, lower-priced models, and the expansion of the export market will promote the growth of Hesai lidar business.

But none of this appears to be enough to offset the overall weakness in the auto market. Hesai expects fourth-quarter revenue of 1.1 billion to 1.15 billion yuan. Based on 1.001 billion yuan in the same period last year, the year-on-year growth rate is about 10% to 15%, which is far lower than the 34.3% growth rate in the third quarter. Calculated based on the latest guidance, Hesai's full-year revenue growth in 2026 will be approximately 22.5% to 24.2%, which is also lower than the 45.8% in 2025.

Sharpa holds up the robot

During Hesai’s second quarter earnings call three months ago, Hesai founder Li Yifan elaborated on the company’s new vision—expanding from a lidar supplier to a full-stack infrastructure platform for robotics and physical AI.

According to Li Yifan’s description, this platform consists of three aspects: perception, understanding and action, and corresponds to Hesai’s three current businesses, lidar, Kosmo spatial intelligence and robot power modules.

Among them, the fastest one is the robot power module. This is a core component used in robot joints and dexterous hands. According to Li Yifan’s introduction, this is a potential trillion-dollar market. “A full-scale humanoid robot may require more than 100 sets of power modules, and the cost of these parts may even account for more than half of the BOM of the entire machine.”

In the second quarter of this year, Hesai began delivering power modules for dexterous hands to customers and recognized revenue for the first time. The cumulative delivery volume in the quarter exceeded 10,000 units. By the third quarter, Hesai said that the whole body joint module has also entered the mass production stage.

The financial report shows that in the third quarter, Hesai delivered 23,405 sets of robot power modules, a month-on-month increase of 97%, and a total of 35,295 sets were delivered in the first three quarters. Hesai has now increased its monthly production capacity to 10,000 units, and management expects full-year shipments next year to reach six figures.

But the problem is that these power modules are currently mainly sold to Sharpa, another company founded by the same Hesai founding team.

In 2024, the year after Hesai went public, Hesai CEO Li Yifan, CTO Xiang Shaoqing, and chief scientist Sun Kai co-founded the robot company Sharpa. The media called it "the second collective venture of three people."

Sharpa was the first to receive investment from Hesai. In April 2025, Hesai invested approximately 100 million yuan to acquire approximately 10% of Sharpa’s equity. But in August of the same year, Hesai sold its entire holding for approximately 276 million yuan. However, since the founders of Hesai still jointly and indirectly hold the majority of Sharpa’s voting rights, the transactions between the two parties are still related transactions.

In August this year, Sharpa announced a cumulative financing of 4.5 billion yuan, with a post-money valuation of over 22 billion yuan. Investors include Internet companies such as Alibaba, Meituan, Tencent, JD.com, and Transsion, as well as leading investment institutions such as Sequoia China, Qiming Venture Partners, Meituan Longzhu, and Guanghe Venture Capital.

Currently, Sharpa has released products including the D01 humanoid robot and W02 dexterous hand, both of which use Hesai’s power modules. Li Yifan admitted during the earnings call that Sharpa is still the largest customer of Hesai Power Modules.

In fact, revenue from Hesai's entire strategic growth business is almost in sync with Sharpa's deal size. In the second quarter of this year, the strategic growth business recognized revenue of 44.94 million yuan for the first time, all of which came from robot power modules. According to Hesai’s semi-annual report, in the first half of 2026, Hesai sold robot power modules to Sharpa and provided related manufacturing and support services, confirming revenue of RMB 44.9 million.

In the third quarter, Hesai's strategic growth business revenue doubled to 90.51 million yuan from the previous quarter, and revenue from related parties reached 90.32 million yuan during the same period, a difference of only about 190,000 yuan. Combined with the related-party transactions disclosed in the semi-annual report, this income is likely to come from Sharpa.

Even due to the continuous expansion of the transaction volume between the two parties, Hesai had to urgently increase the upper limit of related transactions with Sharpa in the middle of the year. In July this year, Hesai proposed to increase the upper limit of related-party transactions between the two parties in 2026 from 100 million yuan to 300 million yuan, and to increase the cost plus profit margin of related products and services.

Li Yifan did not shy away from the relationship with Sharpa on the earnings call, but stressed that they will not rely on just one customer. "The robot performance demonstrated by Sharpa has also attracted the attention of some leading AI companies. These companies have recently announced their own humanoid robot strategies, and we have already contacted some of them." Li Yifan said.

As for the Kosmo platform, which just contributed revenue this quarter, it is still in the early stages of implementation. In October this year, Hesai officially released the Kosmo spatial intelligence platform in an attempt to expand its revenue sources into space camera sales, software subscriptions and 3D asset licensing. Currently, Kosmo has cooperated with Pixar RenderMan, Galaxy Universal and Amap. Li Yifan said that this year Kosmo will still focus on hardware sales.

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