Within the past two years, Opsys has signed major deals with multiple Tier-1s to expand its business in Asia. It has been collaborating with HASCO, one of China’s largest automotive part suppliers, since 2021. In addition, Opsys and OFILM, another leading Chinese automotive parts manufacturer, have been working together and expect to produce LiDAR for production vehicles as soon as next year. Opsys is also working closely with Korean SL Corp, an automotive lighting supplier to integrate LiDAR into taillights.
Why is Opsys’ business growing much faster in Asia than more mature markets like Europe and North America?
In Asia, and especially China, governments have made an affirmative decision to ensure there is rapid deployment of self-driving car technologies, including LiDAR for autonomous vehicles. In China, the country decided it would have LiDAR on a significant number of cars. They identified LiDAR as a key future technology and wanted to make sure Chinese companies were at the forefront of it.
Recently, the Chinese government included LiDAR on a list of technologies that are prohibited from export – another indication that the country considers this technology to be strategically significant for the future. Chinese LiDAR companies already are prominent in global markets, according to the advisory firm AlixPartners. The growth of LiDAR in China is also fostered by Chinese consumers’ high interest and acceptance of new automotive technologies, the firm says.
The Chinese government has actively promoted the automated-vehicle industry through policy incentives. There is a national goal of China and Chinese companies to lead in AVs. Regulations are used to nurture the industry and set standards for its products, providing a more concrete legal framework for both operators and investors. For example, in 2020, China’s National Development and Reform Commission, the Ministry of Industry & Information Technology, and 11 other government bodies jointly issued a national strategy to develop autonomous vehicles, with specific goals that included large-scale production of L3 autonomous vehicles and market launch of L4 AVs by 2025.
But Chinese consumers are now trained to expect the latest, most-advanced technologies in their vehicles. According to McKinsey, 60 percent of Chinese consumers say they would pay up to $10,000 to buy a Level 4 advanced highway pilot. That’s more than 57 percent of US consumers, and much higher than the 36 percent of German car buyers who say the same thing. The skepticism about the viability of self-driving cars that has emerged in the U.S. and Europe hasn’t affected Chinese consumers the same way, McKinsey says. Drivers there are still very enthusiastic about a future involving automated vehicles.
In North America and Europe, by contrast, governments are not as aggressive in setting industrial policy. There has been a historical preference of leaving it to companies to make their own decisions about technology in the marketplace.
Another example of the different approaches to LiDAR can be seen in electric vehicles (EVs). In China, because of planning and policy decisions made more than a decade ago, the country is now a leader in battery production, rare metals processing, and electric-vehicle sales. China produces 54 percent of the world’s EVs. It assembles 66 percent of EV battery cells. It makes 92 percent of the anodes used by EV batteries, and 77 percent of the cathodes. The U.S. and Europe are trying to catch up.
The result of the different continents’ economic approaches means that LiDAR is rolling out on a different timetable as well as on different kinds of cars in the different markets.
The role of national planning of LiDAR in Autonomous Vehicles
In China, because of the national planning and a push to get the technology to market as soon as possible, LiDAR will be employed widely, across many vehicle lines – including mass market models. Whereas in Europe and the US, LiDAR is initially expected to be seen on high-end luxury models only.
This is a common way Western companies offset the high initial costs of a new technology – putting it on the most expensive vehicles first. LiDAR and other advanced technologies become a selling feature that people are willing to pay for. Eventually, history has shown, these features become cheaper to produce with scale and trickle down to lower-priced models.
But all of that takes a while. The result of these different economic approaches is that LiDAR will be on a lot more vehicles, and sooner, in China. In the recent Shanghai Auto-Show, that Opsys was a part of in April, 40 new vehicle models announced they would be including LiDAR. In addition, Tier-1 Chinese companies are starting to boast they are turning a profit from LiDAR technology for the automotive industry.
Either way, whatever the reason, China is arguably leading the world’s mass production rollout of LiDAR, which his good news for Opsys, as the company is paving the way for integrating LiDAR into the ADAS system of Chinese-made autonomous vehicles.