Mercedes-Benz is set to create smart driving vehicles for international markets, utilizing Hesai’s lidar sensors, according to a source familiar with the situation. This marks the first instance of a foreign automaker opting for Chinese-made technology for models intended for sale outside of China.
This development comes amid escalating trade tensions, as the U.S. ramps up efforts to limit the use of Chinese components and software in vehicles produced by global manufacturers.
German automakers, significant players in their country’s struggling economy, are eager to maintain their competitive edge.
The source, who requested anonymity due to the sensitive nature of the information, revealed that Mercedes spent months weighing the decision due to potential legal and geopolitical challenges.
Ultimately, the company selected Hesai, the largest lidar manufacturer in China, for its cost-effectiveness and capacity for large-scale production.
A representative from Mercedes-Benz stated that the company does not comment on speculation regarding new suppliers.
Following this news, shares of U.S.-listed Hesai surged by 36.6% in early trading. Additionally, the company projected net revenues of 3-3.5 billion yuan ($415-484 million) for 2025.
Hesai, which competes with U.S.-based Luminar, announced an “exclusive multi-year” agreement on Monday to provide its lidar products to a prominent European automaker, although the name of the company was not disclosed.
Lidar technology employs lasers to create three-dimensional representations of a vehicle’s environment, aiding in navigation around obstacles. These sensors are integral to many self-driving systems currently under development by automakers.
European manufacturers have previously sourced lidar from Hesai for their models sold in China.
To meet the growing demand, Hesai is expanding two production lines in China, aiming for an annual output exceeding 2 million units this year, according to Fan.
The company is establishing production facilities abroad, aiming to have them operational as soon as next year to address the concerns of its clients in China regarding tariffs and logistics challenges, according to Fan. He did not disclose the location of the new overseas factory.
In the fiercely competitive Chinese market, the demand for lidar technology is on the rise as automakers increasingly incorporate smart features into their budget-friendly models.
On Monday, Leapmotor launched sales of its B10 SUV, which includes an advanced smart driving feature, starting at $17,950.
This vehicle is outfitted with Hesai’s ATX lidar, which costs approximately $200 each—making it more affordable than safety belts and airbags, as noted by Fan.
