ab Global Research Powered by 19 August 2025 YES UBS Evidence Lab China Auto Parts Sector APAC Focus: LiDARs - The eyes of smart driving Smart driving has been a key theme in the auto supply chain since 2020. Under the theme, companies related to smart cockpit, smart driving controller, and head-up display have seen substantial growth over the past 5 years. We believe the next product poised for substantial growth under the smart driving theme could be LiDAR - a sensor that enhances the reliability of smart ...

Summary of Hesai Group (HSAI) Earnings Call Company Overview - **Company**: Hesai Group (HSAI) - **Industry**: LiDAR solutions provider, focusing on applications in advanced driver assistance systems (ADAS), autonomous mobility, and robotics Key Financial Highlights - **2Q25 Performance**: - Product revenue increased by 5% compared to guidance, driven by a 17% increase in LiDAR shipments - Gross margin reached 42.5%, up 3.7 percentage points from guidance, attributed to cost reductions and higher scale - Sales and marketing expenses decreased by 21%, indicating improved cost control and brand recognition [1][4] - **Revenue Figures**: - Total revenue for 2Q25 was Rmb 706 million, a 54% year-over-year increase [8] - Non-GAAP net income for 2Q25 was Rmb 73 million, an increase of 268% year-over-year [8] Future Outlook - **Volume Projections**: - Expected total LiDAR shipments of 1 million units in 2H25, representing a 182% year-over-year increase [3] - Enhanced customer diversification, reducing dependency on a single large OEM [3] - **Margin Expectations**: - Projected gross margin of 40.5% in 2H25, higher than previous expectations due to better cost management [3] - Operating margin expected to improve to 9.7% in 2H25 from 3.2% in 2Q25 [3] Investment Thesis - **Market Position**: - Hesai holds a 37% revenue market share in the global LiDAR market as of 2023 [12] - Anticipated benefits from the acceleration of the navigation on autopilot (NOA) adoption in the China NEV market starting in 2025 [12] - **Valuation**: - Current trading at a 2026E P/E of 20x, compared to a global average of 30x for smart EV suppliers [14] - Target price raised to US$26.3, implying a 13% upside from the current price of US$23.32 [4][11] Key Risks - Potential risks include slower LiDAR adoption, intensified competition, customer pricing pressure, and policy risks [14][15] Additional Insights - **Robotics Business**: - 49k units of robotics LiDAR shipped in 2Q25, a 744% year-over-year increase [9][13] - Ranked No.1 in China for robotics LiDAR shipments in 1H25 [13] - **Design Wins**: - Secured numerous design wins for 20 models from 9 leading OEMs, including significant partnerships with Li Auto and Xiaomi [9][13] - **Balance Sheet**: - Ended 2Q25 with Rmb 2.1 billion in net cash, with a cash conversion cycle shortening to 145 days [5][7] This summary encapsulates the key points from the earnings call, highlighting Hesai Group's financial performance, future outlook, investment thesis, and associated risks.

Core Viewpoint - Pony AI Inc. is set to report its unaudited financial results for the second quarter of 2025 on August 12, 2025, before the U.S. market opens [1] Group 1: Financial Reporting - The earnings conference call will take place on August 12, 2025, at 8:00 A.M. U.S. Eastern Time [2] - Participants can register online to join the call and will receive a confirmation email with dial-in details [2] - A replay of the conference call will be available until August 19, 2025, with specific dial-in numbers provided for access [3] Group 2: Company Overview - Pony AI Inc. is recognized as a global leader in the commercialization of autonomous mobility, utilizing its Virtual Driver technology [4] - The company aims to develop a sustainable business model for mass production and deployment of autonomous vehicles across various transportation use cases [4] - Founded in 2016, Pony AI has expanded its operations in regions including China, Europe, East Asia, and the Middle East [4]

Core Insights - Pony.ai has received a permit for fully driverless commercial Robotaxi services in Shanghai's Pudong New Area, marking a significant milestone in the company's efforts to commercialize autonomous mobility in a major urban market in China [1][2] - The company is now the only one with fully driverless commercial Robotaxi service permits in all four tier-one cities in China: Beijing, Shanghai, Guangzhou, and Shenzhen [2] - The launch of services will begin in the Jinqiao and Huamu areas, which are strategically located near key financial and commercial hubs, providing substantial commercial opportunities [3] Company Overview - Pony.ai is a global leader in the commercialization of autonomous mobility, utilizing its vehicle-agnostic Virtual Driver technology to develop a sustainable business model for mass production and deployment of autonomous vehicles [4] - Founded in 2016, the company has expanded its operations across various regions, including China, Europe, East Asia, and the Middle East, ensuring broad accessibility to its advanced technology [4]

Core Viewpoint - Micropolis Holding Co. has signed a Memorandum of Understanding with Hader Security and Communication Systems to form a strategic partnership aimed at integrating AI and autonomous mobility with reliable communication infrastructure for public and private sectors [1][4]. Group 1: Partnership Details - The partnership will leverage Micropolis' expertise in AI and autonomous robotics alongside HSCS's capabilities in mission-critical communications technologies to deliver integrated, high-performance solutions globally [3][5]. - The collaboration will focus on designing, developing, and deploying integrated robotic and communication solutions across various sectors, while also identifying joint business opportunities [4]. Group 2: Company Profiles - Micropolis Holding Co. specializes in unmanned ground vehicles, AI systems, and smart infrastructure for urban, security, and industrial applications, with capabilities spanning mechatronics, embedded systems, and AI software [6]. - Hader Security and Communication Systems is a leading provider of integrated security and communication solutions in the UAE, focusing on state-of-the-art technologies for critical infrastructure and government operations [8].

Core Viewpoint - Pony.ai has achieved a significant milestone with the mass production of its seventh-generation Robotaxi, moving closer to its goal of expanding its fleet to 1,000 vehicles by the end of 2025, which sets the stage for large-scale commercial deployment [1][5]. Group 1: Production and Testing - The Gen-7 Robotaxi models from Guangzhou Automobile Group (GAC) and Beijing Automotive Industry Corporation (BAIC) have entered mass production, showcasing the successful integration of Pony.ai's autonomous driving technology [2]. - Road testing for the Gen-7 Robotaxi has commenced in Guangzhou and Shenzhen, marking a transition from controlled environments to real-world traffic scenarios [3]. Group 2: Technological Advancements - The Gen-7 autonomous driving system features three key advancements: the use of 100% automotive-grade components, a 70% reduction in bill-of-materials (BOM) costs for the autonomous driving kit compared to the previous generation, and a platform-based design that allows for rapid adaptation across various vehicle models [4]. Group 3: Strategic Goals - The year 2025 is designated as the "year of mass production" for Pony.ai, with plans to build a fleet of over 1,000 vehicles by year-end, indicating a focus on scalable growth and significant commercial opportunities [5].

Company Overview - Nebius Group NV is an AI infrastructure startup backed by Nvidia, focusing on autonomous mobility and decentralized AI [1][5] - The U.S.-based subsidiary, Avride Inc., powers real-world robotaxis and delivery bots for Uber and Uber Eats, with operations in Austin, Dallas, and Jersey City [2][3] Technology and Operations - Avride's self-driving vehicles are retrofitted Hyundai Ioniq 5s equipped with advanced sensors and custom compute hardware [3] - The company is also deploying delivery robots that can navigate urban environments, with operations extending from the U.S. to Seoul [3] Strategic Partnerships - In March 2025, Nebius formed a strategic partnership with Hyundai to develop commercial robotaxis, enhancing its market position [4] - All manufacturing of delivery robots is conducted in Taiwan, strengthening its supply chain capabilities [4] Market Position and Investment Sentiment - Nebius aims to establish itself as the leading AI operating system for autonomous mobility, leveraging Nvidia's support and avoiding the constraints of legacy automakers [5] - The company's growth is viewed positively by contrarian investors, especially as Jim Cramer has opted not to invest, which some interpret as a bullish signal [6]

Core Viewpoint - The partnership between Spectrum and Nexar aims to enhance road intelligence through improved network connectivity, enabling faster data delivery and insights for vehicle safety and autonomy [1][2]. Group 1: Partnership Details - Spectrum provides Nexar access to its extensive managed wireless network, which includes over 17 million secure wireless access points, facilitating efficient data transfer [3]. - The collaboration is expected to scale Nexar's data delivery capabilities across the United States, transforming everyday vehicles into data-generating assets for various applications [2][5]. Group 2: Technological Advancements - Nexar's AI platform captures anonymized road insights that can be utilized by insurers, mobility platforms, and cities to enhance safety and operational efficiency [2]. - The partnership is positioned to support time-sensitive, high-volume data transfer, which is crucial for the development of autonomous vehicle technologies [3][4]. Group 3: Industry Impact - This collaboration reflects Spectrum's strategy to leverage its network through innovative partnerships, contributing to the evolution of connected mobility solutions [4]. - The partnership aligns with Nexar's ongoing expansion into commercial fleets and urban environments, promoting the use of data-rich vehicles for insurance, mapping, and autonomous vehicle development [5].

Group 1: Tesla - Tesla's robotaxi model is characterized by vertical integration, controlling all aspects of production from battery manufacturing to software development [1][2] - The company launched its Robotaxi service in Austin, TX, with a limited debut featuring over 10 Model Ys during an invite-only event [2] Group 2: Uber - Uber operates primarily as a platform connecting riders with drivers or autonomous vehicles, without manufacturing vehicles or developing autonomous technology at scale [3] - The platform's model allows for rapid scaling but presents risks related to driver retention and profit margins, especially if autonomous rides become cheaper than human-driven ones [4] Group 3: Waymo - Waymo, a subsidiary of Alphabet, operates its own fleet of high-end robotaxis equipped with advanced LiDAR and sensor technology, focusing on safety and technological sophistication [4][5] - The high cost of Waymo's vehicles complicates scaling, leading the company to partner with platforms like Uber to expand its customer base [5] - Waymo's robotaxis are integrated into Uber's platform in cities like Austin and Atlanta, with plans for further expansion, while also being available through its own Waymo One app in other markets [5][6]

Core Insights - Nikesh Arora, CEO of Palo Alto Networks, has joined Uber's board of directors, indicating a strategic move for the company amid executive changes [1][2] - The appointment comes during a significant executive shakeup at Uber, including the departure of head of delivery Pierre-Dimitri Gore-Coty after 13 years and the promotion of Andrew Macdonald to president and COO [2] - Arora expressed enthusiasm about joining Uber at a pivotal time for the company, particularly in the realm of autonomous mobility [3] Company Developments - Uber is undergoing a broader executive restructuring, which includes notable leadership changes [2] - The addition of Arora to the board is seen as a strategic enhancement, given his extensive experience in technology and leadership roles at major companies [3][4] - Uber's CEO, Dara Khosrowshahi, praised Arora's capabilities and expressed excitement about his contributions to the company's long-term strategy [4]