Shares of Hesai Group cratered 10.3% to $16.20 after the lidar maker's second-quarter earnings revealed a company growing fast on top but losing ground on profitability — a combination that spooked investors already wary of pricing pressure across China's cutthroat sensor industry.
Revenue Grew, but Selling Prices Kept Falling
Net revenues hit RMB 860.8 million (US$126.9 million), up 21.9% year-over-year , narrowly clearing analyst estimates of $126 million . But the top-line beat masked an uncomfortable truth: growth was "partially offset by a decrease in average selling prices." When you ship far more product but the revenue barely exceeds expectations, each unit is worth less — a sign the lidar price war that already killed U.S. rival Luminar is squeezing even the market leader. Gross margin — the share of revenue left after manufacturing costs — dropped to 40.1% from 42.5% a year ago, eroding the profitability investors had just started celebrating.
ADAS Shipments Disappointed While Robots Picked Up the Slack
ADAS lidar shipments grew 60% while robotics shipments surged 193% year-over-year.
Robotics shipments reached 142,371 units, nearly tripling from 48,531 a year earlier. That robotics boom is promising, but ADAS — the laser sensors embedded in passenger cars for driver-safety features — remains Hesai's bread-and-butter business. A shortfall there signals softer-than-expected adoption by automakers, which matters because management had guided for 2–3 million ADAS shipments for all of 2026.
Weak Q3 Guidance Raised the Real Red Flag The sharpest blow came from below-consensus third-quarter revenue guidance, suggesting the softness isn't a one-quarter blip. Management tried to redirect attention by raising full-year guidance for its newer strategic initiatives — including robotics hardware — from RMB 100 million to RMB 200–300 million. That pivot is real but early-stage; those economics "are pilot-driven and not yet indicative of long-term margins."
The Bigger Picture: Winning on Volume, Losing on Price
The lidar industry is experiencing declining average selling prices "due to market expansion and product mix shifts." Hesai is the scale leader — shipping 1.62 million units last year versus roughly 912,000 for its closest Chinese rival — but scale advantages mean little if margins keep compressing. At $16.20, the stock now trades near its 52-week low of $14.29 , and the question for shareholders is stark: can Hesai's robotics pivot and premium partnerships like its Mercedes-Benz Level 3 supplier deal stabilize margins before the price war erodes what's left?