Even the top player in the radar industry is now facing sluggish sales and can barely move its products.
The sluggish automotive market has also dragged Hesai, a lidar supplier, into losses.
On November 10, Hesai Technology released its financial report for the third quarter of 2026, with both shipment volume and revenue falling below the lower end of its guidance and missing market expectations.
The financial report shows that Hesai shipped 729,700 lidar units in the quarter. Although this figure represented a 65.3% year-on-year increase, it was still lower than the 800,000 to 850,000 units previously estimated by the management. Its operating revenue in the quarter reached 1.068 billion yuan, up 34.3% year-on-year, which was also below the lower end of the 1.1 billion yuan guidance set in the previous quarter.
The management explained on the earnings call that some car manufacturers lowered their sales targets this year, leading to lower-than-expected lidar procurement volume. At the same time, the rising proportion of shipments of low-priced products also caused Hesai's revenue growth rate to lag significantly behind its shipment growth rate.
New competitors are coming on strong and continuously challenging the "top lidar player". In the third quarter of this year, RoboSense and Innovusion delivered about 595,600 and 268,900 lidar units respectively, with year-on-year growth rates both exceeding 200%, far higher than that of Hesai.
Fortunately, Hesai still maintained its profitability. In the third quarter, Hesai's comprehensive gross margin stood at 41%, rising for two consecutive quarters month on month. The operating profit of its core lidar business reached 145 million yuan, up 88% year-on-year.
Hesai Technology Financial Report
However, Hesai's overall net profit in the quarter was only 80.79 million yuan, down 68.5% year-on-year. This was mainly affected by a one-time income of about 185 million yuan in the same period last year. Excluding this part of income, the net profit this year increased by about 14% year-on-year.
Part of the profit was offset by losses from new businesses. In the third quarter, the revenue of Hesai's Strategic Growth Initiative (SGI), which includes robot power modules and Kosmo, doubled month on month to 90.51 million yuan, but its operating loss also expanded from 64.04 million yuan in the previous quarter to 82.89 million yuan.
Li Yifan, founder and CEO of Hesai, is full of confidence in SGI. The cumulative revenue of SGI this year has reached 135 million yuan, exceeding the full-year target of 100 million yuan set at the beginning of the year. The management predicted on the earnings call that the full-year revenue target of SGI this year will be 200 million to 300 million yuan, and it will reach 100 million US dollars next year and achieve break-even.
One of the Victims of the Automotive Market
In March this year, Hesai raised its full-year lidar shipment forecast to 3 million to 3.5 million units. At that time, it had just become the first lidar company in the industry to achieve full-year GAAP profitability, selling 1.62 million lidar units in one year. The management optimistically predicted that lidar shipments for automotive and robot use would both double in 2026.
Now, the expectation has failed as expected. By the end of the third quarter of this year, Hesai's cumulative lidar shipments were only 1.83 million units. To reach the lower end of the previous forecast, Hesai needs to sell at least 1.17 million more units in the last three months of the year. On last night's earnings call, the management tacitly did not mention the 3 million unit target anymore.
"The overall automotive market is weaker than we expected at the beginning of the year," said Fan Peng, CFO of Hesai, on the earnings call. Since the beginning of this year, many automakers, including some of their customers, have lowered their full-year sales targets. "When car manufacturers reduce car production, the corresponding procurement volume of ADAS lidar will naturally be affected."
The good days of the automotive market are gone forever. Data released by the China Passenger Car Association shows that retail sales in China's passenger car market reached 1.643 million units in October this year, down 27.1% year-on-year. The cumulative retail sales of passenger cars in the first 10 months of this year reached 14.978 million units, down 22.3% year-on-year.
With the shipment growth rate no longer maintaining high levels, Hesai failed to stabilize its revenue side. The revenue of Hesai's lidar business in the quarter was 978 million yuan, up 22.9% year-on-year, 42 percentage points lower than the shipment growth rate. Calculated by dividing the revenue of the lidar segment by the total shipment volume, the average revenue per unit is about 1,340 yuan, far lower than the about 1,802 yuan in the same period last year, but slightly higher than the about 1,300 yuan in the second quarter of this year.
Increasing volume while falling price is a common problem in the entire automotive industry, and lidar manufacturers are no exception. In the first half of this year, RoboSense's lidar sales volume increased by 169.6% year-on-year, but its revenue only increased by 30.2%. In the same period, Innovusion's shipment volume increased by 364.8% year-on-year, but its revenue only increased by 127.9%.
As intelligent driving is gradually penetrating into lower-priced car models, profit decline seems inevitable. This year, Hesai's AT series lidar has obtained new designated orders from Wuling, leading to an increase in shipments of low-priced products. Hesai's gross margin in the third quarter was 41%, down 1.1 percentage points from the same period last year. The financial report attributes the decline in gross margin to the rising proportion of revenue from low-margin products.
The contribution of robot lidar may have mitigated the impact of the weak automotive market on Hesai's profits to a certain extent. Fan Peng revealed on the earnings call that although the shipment volume of robot lidar is much lower than that of automotive products, due to higher average selling price and gross margin, robot lidar is expected to contribute about 50% of the revenue of the lidar business this year.
Hesai Technology Financial Report
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, down 35.6% month on month, mainly because a lawn mowing robot customer reduced procurement due to operational problems. However, the shipment of high-end lidar for Robotaxi and humanoid robots was better than expected, and the higher selling price offset part 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, up 88% year-on-year, and the operating profit margin increased from about 9.7% in the same period last year to 14.9%. In addition, although the group's operating expenses increased by 46% year-on-year, the new investment mainly flowed to strategic growth businesses. According to Fan Peng, after excluding this part of investment, the operating expenses of the core lidar business actually decreased year-on-year.
Hesai is no longer willing to engage in price wars. Fan Peng said on the earnings call that after years of self-developed chips and core components to reduce costs, Hesai's space to achieve significant cost reduction through technological progress in the future has been relatively limited. Continuing to reduce the selling price at all costs may damage product quality and reliability. "We are not willing to make such trade-offs."
Fan Peng said that the price competition in the ADAS lidar market is gradually becoming rational. According to the signed contracts for 2027, it is expected that the price and profit margin of the ATX series products will be further stabilized, and the profit margin next year will be the same as this year.
With no more space for cost reduction, Hesai can only pin its hopes on selling more expensive and more lidar units. It disclosed in the financial report that the high-end ET series has obtained new designated orders from five automakers, with total on-hand orders exceeding 1 million units. Another way is to equip one car with more lidar units. Hesai's FT series for lateral and blind spot perception has obtained new designated orders from Leapmotor and a European automaker.
Li Yifan believes that lidar is still the business foundation of Hesai, and it can continue to make stable profits and generate cash flow. He said that with the implementation of L3 level autonomous driving, it will bring growth to the high-end lidar market. At the same time, equipping more lidar units per vehicle, the expansion to lower-priced car models and export markets will all promote the growth of Hesai's lidar business.
However, none of these seem sufficient to offset the weakness of the overall automotive market. Hesai expects its fourth-quarter revenue to be 1.1 billion to 1.15 billion yuan. Calculated based on the 1.001 billion yuan in the same period last year, the year-on-year growth rate is about 10% to 15%, far lower than the 34.3% growth rate in the third quarter. Calculated according to the latest guidance, Hesai's full-year revenue growth rate in 2026 will be about 22.5% to 24.2%, which is also lower than the 45.8% in 2025.
Sharpa Supports the Robot Business
At Hesai's second-quarter earnings call three months ago, Li Yifan, founder of Hesai, expounded the company's new vision: to expand from a lidar supplier to a full-stack infrastructure platform for robots and physical AI.
According to Li Yifan's description, this platform consists of three parts: perception, understanding and action, corresponding to Hesai's current three businesses: lidar, Kosmo spatial intelligence, and robot power modules.
Among them, the robot power module is the fastest growing business. It is a core component used in robot joints and dexterous hands. According to Li Yifan, this is a potential trillion-dollar market. "A full-size humanoid robot may need more than 100 sets of power modules, and the cost of these components may even account for more than half of the BOM of the whole machine."
In the second quarter of this year, Hesai began to deliver power modules for dexterous hands to customers and recognized revenue for the first time, with cumulative deliveries exceeding 10,000 sets in the quarter. In the third quarter, Hesai said that the full-body joint modules have also entered the mass production stage.
The financial report shows that in the third quarter, Hesai delivered 23,405 sets of robot power modules, up 97% month on month, with cumulative deliveries of 35,295 sets in the first three quarters. At present, Hesai has increased its monthly production capacity to 10,000 sets, and the management expects the full-year shipment volume next year to reach six digits.
Hesai Technology Financial Report
But the problem is that at present, most of these power modules are mainly sold to another company founded by Hesai's founding team — Sharpa.
In 2024, the year after Hesai went public, Li Yifan, CEO of Hesai, Xiang Shaoqing, CTO of Hesai, and Sun Kai, chief scientist of Hesai, jointly founded the robot company Sharpa, which the media called "the three starting a second business together".
Sharpa first received investment from Hesai. In April 2025, Hesai invested about 100 million yuan to obtain about 10% equity of Sharpa. But in August of the same year, Hesai sold all its shares at a price of about 276 million yuan. However, since the founders of Hesai still jointly hold the majority voting rights of Sharpa indirectly, the transaction between the two parties is still a related party transaction.
In August this year, Sharpa announced that it had raised a total of 4.5 billion yuan, with a post-investment valuation of more than 22 billion yuan. Its investors include Internet companies such as Alibaba, Meituan, Tencent, JD and Transsion, as well as leading investment institutions such as HSG, Qiming Venture Partners, Meituan Longzhu and Guanghe Venture Capital.
At present, Sharpa's released products include D01 humanoid robot and W02 dexterous hand, all of which use Hesai's power modules. Li Yifan admitted on the earnings call that Sharpa is still the largest customer of Hesai's power modules.
In fact, the revenue of Hesai's entire strategic growth business is almost synchronized with the transaction scale of Sharpa. In the second quarter of this year, the strategic growth business recognized 44.94 million yuan of revenue for the first time, all 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, recognizing revenue of 44.9 million yuan.
In the third quarter, the revenue of Hesai's strategic growth business doubled month on month to 90.51 million yuan, and the revenue from related parties in the same period reached 90.32 million yuan, with a difference of only about 190,000 yuan. Combined with the related party transaction situation disclosed in the semi-annual report, this revenue is most likely from Sharpa.
Hesai Technology Financial Report
Even due to the continuous expansion of the transaction volume between the two parties, Hesai had to urgently raise the upper limit of related party transactions with Sharpa in the middle of the year. In July this year, Hesai proposed to raise the upper limit of related party transactions between the two parties in 2026 from 100 million yuan to 300 million yuan, and raise the cost plus profit margin of related products and services.
Li Yifan did not avoid the relationship with Sharpa on the earnings call, but emphasized that they will not rely on only one customer. "The robot performance demonstrated by Sharpa has also attracted the attention of some leading AI companies. These companies have recently successively announced their own humanoid robot strategies, and we have already contacted some of them," said Li Yifan.
As for the Kosmo platform, which just contributed revenue this quarter, it is still in the initial stage of implementation. In October this year, Hesai officially released the Kosmo spatial intelligence platform, trying to expand its revenue sources to spatial camera sales, software subscriptions and 3D asset licensing. At present, Kosmo has launched cooperation with Pixar RenderMan, Galaxy General and AutoNavi. Li Yifan said that Kosmo will still focus on hardware sales this year.
This article is from the WeChat official account <