Hesai Group (Nasdaq: HSAI) reported first-quarter lidar shipments surged 141% year-over-year to 472,000 units and confirmed its role as a strategic supplier for Mercedes-Benz’s Level 3 autonomous vehicles, solidifying its position in the high-end automotive market.
"I am thrilled to announce that Hesai has officially entered a new era of growth and possibility," CEO Yifan Li said on the company's earnings call. "2026 marks a transformative chapter for us as we initiate a strategic paradigm shift evolving from spatial perception to spatial intelligence."
The company's results exceeded its own guidance, with revenue climbing 30% from a year earlier to RMB 681 million ($99 million). Hesai maintained profitability for the fourth consecutive quarter on a GAAP basis, reporting net income of RMB 18 million. The company also announced a new design win from another top-tier European automaker for over 1 million lidar units.
The dual European OEM deals are a significant validation of Hesai's technology, transitioning it from a component supplier to a core infrastructure partner for Level 3 autonomy, which requires significantly more sensor content per vehicle—between $350 and $1,000 compared to roughly $200 for Level 2 systems. For the second quarter, Hesai guided for revenue of RMB 850 million to RMB 900 million and reaffirmed its full-year shipment forecast of 3 million to 3.5 million units.
Beyond its core lidar business, Hesai detailed a strategic expansion into "physical AI" through a new reporting segment called Strategic Growth Initiatives (SGI). This includes Kosmo, an "AI algorithm-integrated spatial intelligence device" for creating photorealistic 3D environments, and new robotic actuation modules. Management expects the SGI segment to begin contributing revenue in the second quarter and generate approximately RMB 100 million for the full year 2026, with a target of RMB 500 million in 2027.
The company also highlighted its new Picasso chip, a 6D full-color SPAD-SoC that fuses color and 3D geometry at the chip level. This technology is designed to address complex edge cases for autonomous systems and is already part of a design win with KargoBot for transport robots. Hesai's ETX lidar, equipped with the Picasso chip, is expected to enter mass production in the second half of 2026.
The new supply agreements will be supported by Hesai's new manufacturing center in Thailand, which is expected to begin production in early 2027 to serve its growing global customer base, including Chinese automakers like Xiaomi expanding overseas.
The strong earnings and major design wins show Hesai is successfully converting its market share into long-term supply agreements with top global automakers. Investors will now watch for the initial revenue from the new SGI business in Q2 and the production ramp of the new European programs beginning in 2027.
This article is for informational purposes only and does not constitute investment advice.
