Hesai, a Shanghai- and California-based lidar maker, has raised $190 million in its upsized initial public offering (IPO) on the Nasdaq stock exchange.
Background
Founded in 2013, Hesai is one of the leading players in the lidar industry, providing sensing technology critical to autonomous driving and advanced driver-assistant systems. The company has been expanding rapidly, with estimates suggesting it shipped over 100,000 units between 2017 and 2022.
IPO Details
Hesai’s IPO was upsized from $150 million to $190 million, with the shares priced at $11 each. The company plans to use the funds raised for research and development, marketing, and general corporate purposes.
Industry Gloominess
The lidar industry has been facing challenges in recent years, with several players struggling to turn a profit due to intense competition and pricing pressures from major automakers. Despite this, Hesai’s IPO was well-received by investors, indicating growing confidence in the company’s prospects.
Challenges Facing Hesai
Cost-Pressure and Pricing Competition
Hesai faces significant pressure on its pricing due to cost-cutting initiatives adopted by its customers. The company’s gross margin slipped from 57.5% in 2020 to 44% in the first nine months of 2022.
Dependence on a Limited Number of Customers and Products
Hesai’s revenues are heavily dependent on a limited number of customers and products, making it vulnerable to changes in market demand and customer preferences.
Government Incentives and Subsidies
The company’s Chinese customers, who focus on developing new energy vehicles (NEVs), have been entitled to government incentives and subsidies. However, these incentives are being phased out, which may negatively impact Hesai’s business.
Conclusion
Hesai’s successful IPO is a testament to the growing demand for lidar technology in the automotive industry. Despite facing challenges in the market, the company has shown resilience and adaptability. As the lidar industry continues to evolve, it will be interesting to see how Hesai navigates these challenges and maintains its growth trajectory.