Lidar, or laser-based radar, is a key enabling technology for self-driving cars. It’s also expensive: Together, a single lidar sensor and the computing system needed to run it can run more than $1,000 per vehicle. Executives across the auto industry estimate that lidar costs would need to fall by half in order for the technology to be more widely adopted.
That said, the new Xpeng vehicle costs considerably less than what consumers might pay for a vehicle made by fellow EV producer Tesla(TSLA). A Chinese-built Tesla Model 3, for example, starts at roughly 250,000 Yuan before government subsidies.
Unlike Xpeng, Tesla vehicles do not use lidar. Instead, they use cameras to power their driver assistance functions, such as adaptive cruise control and lane-keeping assistance. New Street Research analyst Pierre Ferragu believes that’s a smart choice for now. “Humans are supervising the cameras,” he tells Barron’s.
Ferragu knows that Tesla’s systems—along with the driver assistance systems of every other auto maker—don’t enable full self-driving at this point. Drivers need to stay engaged and watch the roads. And to achieve true autonomous driving, auto regulators will require “redundancy.” In Tesla’s case, the redundancy required is human drivers, not expensive new systems.
However, Ferragu believes when lidar is eventually cheaper, Tesla CEO Elon Musk will adopt the technology and use it to help power Tesla’s transition to offering fully self-driving cars. Ferragu noted that one of his own tweets explaining this scenario was liked by Musk himself.
While customers can’t yet buy fully autonomous vehicles, winning in self-driving features is both a competitive and financial issue for companies. Self-driving features can generate recurring sales: Tesla is planning to offer the highest levels of its self-driving features on a subscription basis.
And while lidar itself is currently unable to give cars fully self-driving capabilities, the tech can still play a valuable role: If an EV maker is known for possessing leading technology, the company’s image—and stock—could get a boost.
XPeng shares could use a lift: The stock is down about 9% so far this year, while theS&P 500 andDow Jones Industrial Average have gained 15% and 13%, respectively. Still, XPeng shares, at about $39, are up significantly from the company’s August 2020 $15 IPO price. The stock has also gained more than 25% over the past three months.
“Popularizing smart EVs and shaping the mobility experience of the future has been always our goal,” said Henry Xia, cofounder and president of XPeng, in a news release. “The P5 will further enrich our product offering, and will redefine our driving experience by integrating everyday living situations with the digital cockpit, transforming the vehicle into a multi-function living space.”
China, for its part, has the largest market in the world for both EVs and new cars in general. What’s more, June new energy vehicle, or NEV, penetration hit 14% of Chinese retail sales, according to industry data reviewed by Citigroup analyst Jeff Chung. (NEV is how China refers to zero- or low-emission vehicles such as EVs, plug-in hybrids and fuel-cell- powered vehicles.)
Chinese EV stocks have been outperforming Tesla lately, due in part to strong sales results. Two Chinese EV makers, NIO (NIO) and Li Auto (LI), shares are up about 19% and 57%, respectively, over the past three months. Tesla stock is down about 13% over the same span.
Write to allen.root@dowjones.com
