Earnings Call Transcript
Hesai Group (HSAI)
Earnings Call Transcript - HSAI Q2 2023
Operator, Operator
Thank you for standing by and welcome to the Hesai Group Second Quarter 2023 Earnings Conference Call. All participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. I would now like to hand the conference over to Yuanting Shi. Please go ahead.
Yuanting Shi, IR Director
Thank you, operator. Hello, everyone, and thank you for joining Hesai Group's Second Quarter 2023 Earnings Conference Call. Our earnings release is now available on our IR website at investor.hesaitech.com, as well as via Newswire services. Today, you will hear from our CEO, Dr. David Li, who will start the call with an overview of our recent updates. Next, our Global CFO, Mr. Louis Hsieh, will address our financial results before we open the call for questions. Before we continue, I refer you to the safe harbor statement in our earnings press release, which applies to this call as we will make forward-looking statements. Please also note that the Company will discuss non-GAAP measures today, which are more thoroughly explained and reconciled to the most comparable measures reported on the GAAP in our earnings release and SEC filings. With that, I'm pleased to turn over the call to our CEO, Dr. David Li. David, please go ahead.
Dr. David Li, CEO
Thank you, Yuanting, and thank you everyone for joining our call today. In the second quarter, our team's dedication and hard work resulted in record-breaking quarterly figures. In particular, we achieved unprecedented milestones in our quarterly net revenues, experiencing a surge of over 100% year-over-year. Furthermore, our total LiDAR shipments for the quarter soared to a record, over 52,000 units, marking a 10-fold increase compared to the same period last year. Both our ADAS revenue and shipments also reached all-time highs, with ADAS shipments growing 27x year-over-year, further reinforcing our leading position in delivering high-quality LiDARs for passenger cars. As a result, we are delighted to report that our strong shipments, along with our unwavering focus on operating efficiency, have generated a positive operating cash flow for the second consecutive quarter with a four-fold increase over the prior quarter. Among our six U.S.-listed peers, we take pride in being the sole player with a positive operating cash flow. These financial achievements underscore our commitment to sustainable and profitable growth in the long run. We are also thrilled to be named as the number one global automotive LiDAR supplier for the second consecutive year in a recent report published by Yole Intelligence, a world-renowned independent research company in Europe. We have captured 47% of the worldwide LiDAR market share by revenue in 2022. Yole's report indicated astounding growth of 95% of the global automotive LiDAR market from 2021 to 2022. Meanwhile, we extended our leading position, increasing our global LiDAR market share from 42% in 2021 to 47% in 2022, clearly surpassing the second-largest player at 15%. Furthermore, according to the report, Hesai is projected to be the largest shipper of ADAS LiDAR units again in 2023 with an anticipated volume almost 1.5 times greater than the second-ranked supplier, firmly establishing us as a market leader. This prestigious leadership position is a strong testament to our exceptional capabilities in designing, manufacturing, and shipping high-performance, high-quality LiDAR products at a substantial volume. We take immense pride in our unique ability to meet market demand and consistently exceed customer expectations. Now, let's take a closer look at our second quarter business update. On the ADAS front, we're excited to announce that we have secured a new domestic design win for multiple series-production vehicle models with SAIC Motor. Our partnership with them now includes new intelligent multipurpose vehicles in addition to our previous collaboration on passenger vehicles and battery-electric heavy-duty trucks. Among our 11 ADAS customers, six of them are scheduled to begin shipping new EV models equipped with Hesai LiDAR by the end of 2023. Also, as of the second quarter of 2023, among our 11 ADAS OEM customers, we have achieved ADAS design wins for mass production across over 40 vehicle models, showcasing our commitment to providing top-notch LiDAR products to our valued customers. Internationally, our ADAS LiDAR products have attracted significant interest from global OEMs who acknowledge our proven track record in consistently delivering automotive LiDARs of the highest performance and better quality at scale and meeting production schedules. We are making notable progress in advancing our discussions with leading global OEMs on sourcing arrangements for the next-generation intelligent vehicles. In the second quarter, four additional programs with three leading global OEMs have moved forward to the RFQ phase, and we anticipate final decisions to be made starting in the fourth quarter of 2023. Among our ongoing RFQ engagements, we forged two new strategic development programs with two leading global automotive OEM partners, one from North America and one from Europe. These comprehensive programs encompass long and short-range LiDARs, enabling us to create a comprehensive portfolio of advanced LiDAR solutions that prioritize safety. Development programs like these represent a unique opportunity for us to fine-tune our products around the design of the target vehicle models and offer OEM customers a deeper level of understanding of our technical superiority and engineering capabilities before they make final decisions. Moving onto the autonomous mobility market. In the second quarter, we successfully commenced volume shipments on our latest deal, which represents the largest Robotaxi LiDAR contract in the company's history, with a leading global Robotaxi player, an order we mentioned during our last quarterly earnings call. The entire order spans the next couple of years, and notably, we have already secured contracts to ship LiDARs valued at a couple of hundred million dollars for the year of 2024 alone with an improved gross margin. Next, I'd love to share an update on manufacturing and product upgrades. We remain on track to manufacture our upgraded AT series LiDAR featuring a refined design, extended detection range, and lower power consumption. Full-scale production is anticipated to commence in the third quarter of 2023 at Hertz Center, our in-house manufacturing facility in Hangzhou, which operates at an automation rate of over 90%. This new smarter manufacturing facility is designed to increase our production throughput, further reduce costs, and pave the way for even more scalable production. Anticipating a smooth transition, we expect to begin volume shipments of the upgraded AT128 early in the fourth quarter of this year. In the recent development, we've deepened our longstanding partnership with NVIDIA, which dates back to 2019, through a new venture that seamlessly integrates our cutting-edge LiDAR sensors into their NVIDIA DRIVE and NVIDIA Omniverse ecosystems. Now developers can leverage the NVIDIA platform for more accurate testing of the autonomous vehicle algorithms while significantly shortening the development cycle, facilitating a more efficient and powerful approach to autonomous driving. NVIDIA has been one of our top 10 U.S. customers since 2019. Last but not least, safety remains at the heart of our endeavors. A commitment deeply rooted in our conviction that human life is priceless. Our unwavering dedication to spearheading advanced and comprehensive safety standards in our functional safety, cybersecurity, and product quality truly sets us apart in the industry. The pride we take in our achievement is tangible. We are certified by SGI, the world's leading third-party certification company, as the very first in the LiDAR sector to attain SOP product certification in our products. Furthermore, we're truly honored to lead the themed global ISO automotive LiDAR working group, where we collaborate alongside industry giants like Valeo, BMW, Bosch, Sony, and Volkswagen. Together, we're forging a unified consensus on the testing methods for automotive-grade LiDARs, showcasing our leadership role in shaping the industry's future. It brings us immense pride to shoulder the responsibility of utilizing our technical expertise to drive the establishment of multiple safety standards for the industry. Our devotion to safety knows no bounds. And we continue to push the boundaries to empower a secure and protected future for all. To quickly summarize, our second quarter was truly remarkable. Our operational accomplishments are a testament to the strides that we're making with the record-breaking revenue and LiDAR shipments backed by a steady positive operating cash flow. This is just the beginning of an extraordinary returning half. Our unwavering dedication drives us to build upon these triumphs and seize long-term growth opportunities in the booming ADAS and AM markets. Our commitment to excellence goes beyond the ordinary. It is the relentless pursuit to ensure that our products are synonymous with trust and dependability to safeguard the well-being of every end customer, and to craft a tomorrow where safety is paramount and intelligence drives. Now, I'll turn the call over to Louis to share more details on the financial performance and outlook. Louis, please go ahead.
Louis Hsieh, CFO
Thank you, David, and hello, everyone. Let's go through our operating and financial figures for the second quarter. To be mindful of the length of our earnings call today, I encourage listeners to refer to our second quarter earnings press release for further details. We are delighted to see that our net revenues exceeded our guidance, reaching an all-time high of RMB440.3 million, $60.7 million this quarter, up 108.5% year-over-year and 2.4% quarter-over-quarter. In the second quarter, our LiDAR shipments saw an impressive 10-fold surge year-over-year, a 49.6% increase quarter-over-quarter, reaching a record high of 52,106 units, reaffirming our leading position in the global LiDAR industry, with cumulative LiDAR shipments now exceeding 190,000 units. In addition, we attained exceptional milestones with record high ADAS revenues for the second quarter, experiencing a triple-digit year-over-year increase in shipments of ADAS LiDAR, soaring to an astounding 27x year-over-year. Based on reported revenues and shipments in 2022, as well as the first half of 2023, we continue to outpace the competition with higher revenues in LiDAR shipments than our six other U.S. listed LiDAR peers combined. Our gross margin for the second quarter of 2023 exceeded our earlier expectations, reaching 30%. This achievement is a result of better-than-expected ASPs and continuous improvement in our manufacturing cost structure. Even though the gross margin is slightly lower quarter-over-quarter, as expected, due to the commencement of a larger but lower-margin quarter with a leading global Robotaxi company. Furthermore, our unrelenting efforts to improve revenue scalability and cost efficiency resulted in sustained positive operating cash flow for the second consecutive quarter of RMB58.3 million, $8 million. This accomplishment, which is unparalleled in the LiDAR industry, represents a four-fold quarter-over-quarter increase, underscoring our robust financial trajectory to profitability in the long term. Turning to our financial outlook. For the third quarter of 2023, we expect net revenues to be between RMB405 million, $55.9 million, and RMB425 million, $58.6 million, representing a year-over-year of approximately 21.3% to 27.3% growth. The lower-than-normal year-over-year quarterly net revenue growth can be attributable to two primary factors. First, net revenue in Q3 2022 was elevated due to a significant rebound following the Shanghai COVID lockdowns in Q2 2022, resulting in a high base year-over-year comparison for Q3 2023. And second, LiDAR units totaling several million U.S. dollars that were initially scheduled for delivery in Q3 2023 are now anticipated to be delivered in Q4 2023 instead, an adjustment that purely reflects a shift in timing. We are still on track to meet or exceed our revenue target of approximately RMB1.8 billion, or approximately $250 million. It's important to highlight, that the strong growth comes in the face of a challenging currency backdrop, with RMB having weakened about 8% against the U.S. dollar over the past year. Regarding LiDAR shipments, our original goal was to achieve 250,000 for the full year 2023. Due to some delays from our OEM customers, particularly relating to new model releases and the product transition in our updated AT128, which mandates testing and validation by our customers, we are now projecting shipments of approximately 220,000 LiDAR units for the full year 2023. With respect to gross margins, we anticipate the commencement of production of our Hertz factory in Hangzhou in the third quarter of 2023 will further improve our ADAS gross margins as it reaches economies of scale in manufacturing and utilization. We also expect our group-level gross margins to rise in the fourth quarter of 2023. We are now confident that we will exceed our gross margin target of 27% to 30% for the full year 2023, and expect to reach our long-term target of stabilizing the blended gross margin between 30% to 35% in this year, one year ahead of our previous estimate. In summary, our full-year 2023 revenue, gross margin, and operating cash flow have all surpassed our expectations, whereas our LiDAR shipment volume is slightly lower than our initial estimation made at the end of last year. Nonetheless, our business continues to make significant strides, paving a clear path to sustained growth and profitability. The above outlook is based on our current market conditions and reflects the Company's preliminary estimates of market and operating conditions and customer demand, which are all subject to change. This concludes our prepared remarks for today. Operator, we are now ready to take questions.
Operator, Operator
Your first question comes from Tim Hsiao from Morgan Stanley.
Tim Hsiao, Analyst
Congratulations on another solid quarter. I have two questions. The first one is about the delivery delay because according to the earnings release, there will be several million U.S. dollars sales of LiDAR delayed from the third quarter to the fourth quarter. I think Louis briefly highlighted that, but could you elaborate a little bit more about what caused the delay and what kind of program it is? Is it mechanical or semi-solid state LiDAR? And any real cause to the impact on Hesai's fourth quarter margin. And lastly, do we expect any further delay of other projects from the fourth quarter to sometime next year?
Louis Hsieh, CFO
Thank you, Tim. As far as the delays, they relate to both ADAS LiDAR for the solid state as well as for the AT series. We won't discuss any names, but they will move to Q4. And then I don't, at this point, know of any delays into Q1 of next year. But you can basically expect a large Q4 ADAS delivery number as basically many of our customers will ramp up for next year. You think about it this year, we'll probably have three or four programs that are shipping, that are actual models shipping in ADAS. Next year, by the end of next year, we expect over 30 models. So some of them will begin to accept LiDAR and ramp up in Q4. So it's just been a shift in time, but I won't call out any specific names.
Tim Hsiao, Analyst
Got it. My second question is about the overseas projects because during the presentations, I think David mentioned that the Company has received several RFQs from European and U.S. car makers, and some would turn to confirmed purchase orders likely later this year. So could you please shed some light regarding the rough scale of those projects versus what we currently have in China? And if there is any potential SOP schedule you can share with us?
Louis Hsieh, CFO
David, do you want to take the overseas?
Dr. David Li, CEO
Thank you, Tim. This is David Li. You inquired about the global programs. We have transitioned several RFIs to RFQs, which are the final step before a vendor selection. According to the schedule provided, we expect final decisions to be communicated starting in Q4 of this year, extending into early next year. Additionally, some OEMs are engaging in development projects with us, which goes a step further. This means that for a few selected lenders in the RFQ process, they will work closely with one or two of them to undertake detailed development before making their final choice. This allows them to understand our capabilities better through development work rather than just testing units. This is advantageous for us because Hesai consistently outperforms competitors when our products are tested, particularly in an integrated context. We are currently engaged in two such development projects, one with a European OEM and the other with an American OEM.
Tim Hsiao, Analyst
Got it. David and Louis, looking forward to more productivity in the new project wins.
Operator, Operator
Your next question comes from Olivia Xu from Goldman Sachs.
Olivia Xu, Analyst
Congratulations on the results. My first question is about the pricing. We've seen the intensified pricing competition in the EV space in July and August. How do we see the pricing pressure to LiDAR products into the second half of this year and longer term?
Louis Hsieh, CFO
Thank you, Olivia. I think for the third quarter compared to the second quarter, our pricing remained relatively stable. The large contract with a global robotaxi company did lower our prices and impact our gross margin, but that has already been accounted for. We have seen a stabilization in prices for AT, XT, QT, and Pandar. In fact, the pricing for other customers has been better than expected, which is why our gross margin increased. So far, it's been relatively stable. For the third and fourth quarters, we expect that stability to continue this year due to the longer-term contracts we've signed. As for next year, we will have to wait for the fourth quarter. We are fortunate that prices have stabilized thus far.
Olivia Xu, Analyst
Got it. Yes, my second question is about financials. We see that both sales and marketing and R&D expense were lower in the second quarter versus the first quarter this year. How should we expect the OpEx to trend into the third and fourth quarter this year?
Louis Hsieh, CFO
I think sales and marketing and G&A are certainly under control. So they will continue to trend down as a percentage of revenue. R&D, if it goes up more, it's actually a good sign. That means we're winning programs. So obviously when you win an RFQ, you must put resources into the initial phase for getting the product to SOP. So if we do increase the R&D side, it will be good. Also, Maxwell will open next quarter, and that will mean R&D spending to move and buy testing and validation and calibration equipment and moving it into the new facilities as well as additional headcount. Same thing on the Hertz side. Hertz will begin full-scale operation in September and so, it will require some spending there. But R&D spending at this stage for the rest of this year is actually a good sign. That means we're winning a lot of business.
Operator, Operator
Your next question comes from Bin Wang from Credit Suisse.
Bin Wang, Analyst
I've got two financial questions. Number one, can you provide third quarter volume guidance, because you provided revenue. Can you provide the volume for the LiDAR? That's number one. Number two is about service revenue. Why such a big jump in the second quarter revenue compared to the first quarter or previous quarter as well? So do you change accounting to determine the service revenue?
Louis Hsieh, CFO
First question on the units. We don't typically provide units guidance, but it will be lower likely than Q2. That's why the revenue is slightly lower because of the shift in timing. Q4, the units will be quite high. But my best guess would be the units will be somewhere between 45,000 and 48,000 units. And then on the services revenue, I didn't see any specific bump up. Do you know why the services revenue went up in Q2?
Dr. David Li, CEO
I didn't really see it.
Louis Hsieh, CFO
Okay. So it relates to a specific project where we're working to build basically. It's a new software development program. So that one, we haven't really disclosed yet, but that's the reason. It's not significant in our business yet.
Operator, Operator
Your next question comes from Leping Huang from Huatai.
Leping Huang, Analyst
The first question is also about the margin outlook in the next few quarters. So you mentioned it's due to a one-time big order from one major customer in the second quarter. What should we look at the margin outlook in the next few quarters? Will it stabilize in this below 30% range? And since we see further price cuts on the OEM side in these days. How does this translate into your margin?
Louis Hsieh, CFO
Yes. I think for us, Q3, we'll see a dip in margin as we've already telegraphed to everyone. I would expect Q3 gross margin to be somewhere between 20% and 25%. And then Q4 will bump up. Q4, with the Hertz facility running and also with the new version of AT in the market, you should see a bump up in gross margin back to 30% to 35%. So for the full year of 2023, we did 38% gross margin in Q1, 30% in Q2. Q3 will be our low point, 20% to 25%. Q4 will be back to 30% to 35%. And so for the full year, we will exceed 30% gross margins. So we will hit our long-term target of 30% to 35% gross margins for the whole year, and Q4 will do that because of the size and the volume shipments in Q4. For long-term gross margins next year, we expect it to be in the range of 30% to 35%, because the enhanced AT will be shipping in large volume. So if we ship 220,000 total LiDAR this year, next year we'd probably expect a double on that to over 400,000. So things will be at scale. Therefore, gross margin will go up with the new enhanced AT product. Second is the large robotaxi business. We will also have an enhanced Pandar product, which we will begin to ship in Q1 of next year, and that will also improve margins. So between the two, with our revised enhanced products in AT and Pandar, you will see a gross margin stabilization between 30% to 35%. In fact, 2024 should be higher than 2023 in gross margin. So that's why we're moving very quickly on a clear path to profitability by the second half of 2024.
Leping Huang, Analyst
The second question is about whether you have any visibility on your outlook for 2024, especially since you previously postponed some revenue to the fourth quarter based on the latest market conditions.
Louis Hsieh, CFO
I believe that Q4 2023 will be our largest quarter to date. We have achieved approximately $120 million in the first two quarters and our annual target is $250 million. It's important to note that when we made that projection last year, the RMB was around 6.7, which translates to over $270 million. Therefore, we anticipate exceeding our original forecast. In this context, Q4 will see the highest shipping of ADAS units as preparations for 2024 intensify. We expect to reach the $250 million target with robust Q4 deliveries and revenue. For 2024, our preliminary estimate is that unit sales will surpass 400,000, nearly doubling from this year. Revenue growth should be between 60% and 80% year-over-year, with our goals set between $400 million and $450 million, indicating 60% to 75% growth. Overall, we foresee a strong 2024.
Operator, Operator
Your next question comes from Tim Hsiao from Morgan Stanley.
Tim Hsiao, Analyst
Thanks for giving me another opportunity to ask the follow-up questions. So I actually have another two related to the operation. So the first one is about the client concentration, because despite the 11 ADAS customers, I think David just mentioned earlier, currently the single largest customer contributes a big chunk of Hesai's ADAS revenue. So looking forward, should we expect more diversified sales mates in 2024 or such sales concentration, in your view, might continue to be the case given increasing divergence in performance of Hesai's end customers? We noticed that probably one or two of them are doing very well. So this is my first question.
Louis Hsieh, CFO
Yes, I think for this year you're correct, Tim. The concentration is well over 50% on the ADAS side in one customer and about 50% on the robotaxi side in one customer. We obviously expect some diversification in 2024 because right now only three or four models are shipping SOP. By 2024, by the end, over 30 models will be shipping. And we have one of over 45 models in our pipeline. So you can see that obviously with more models shipping in 2024, the concentration in ADAS will diminish. Also the same thing on the robotaxi side. We have hundreds of customers on the robotaxi side and industrial robotics side. And so the concentration we would expect to lower in 2024 although these two customers on ADAS and robotaxi obviously are our biggest two customers. But we do expect some reduction in the percentage.
Tim Hsiao, Analyst
Yes. My second question is about the product itself because I just want to check that are most orders of ADAS LiDARs in our order backlog still standardized product and do we see increasing requirements for product customizations by our clients or most OEMs or car makers still fine with the standardized products? So going forward, do you expect the Company to have more co-developed or bespoke projects with OEM that could probably help the company tie up with the car makers in the long term?
Louis Hsieh, CFO
Yes, I think you're seeing a bifurcation in the standard versus optional side. So for the high-end models, for the highest end models in most of these OEMs, I think LiDAR will become more and more increasingly a standard feature. For cars that are in mid-range or lower, you will see it as an optional feature. But over time, as you will see, as the market moves to L3 and L4 LiDAR becomes a necessity. So for one of our customers, for the NOA product, the navigation on autopilot, it requires LiDAR. So if you want that feature to be able to drive hands-free in the city or on your commute or in parking, you're going to need LiDAR. And you'll see that as the features become rich and the functionality increases across the OEM spectrum that LiDAR will be seen as a necessity. But right now I would say it's for the high-end cars. You'll see that in our largest ADAS customer and others is standard. But for products that are not the highest level as far as their price point, you will see it as an option. Even on the option, the take-up rate for us has been about 30% plus. So it's not bad.
Dr. David Li, CEO
Louis?
Louis Hsieh, CFO
Yes, go ahead, David.
Dr. David Li, CEO
I think he is asking whether we're providing a customized product or standardized product to the customer.
Louis Hsieh, CFO
Yes, that's right.
Dr. David Li, CEO
The short answer is that we always provide a standardized product in the sense that it's the same platform with the same specifications. When we upgrade from the current AT128 to the newer version, everyone also transitions to it. Ultimately, it revolves around achieving economies of scale and improving efficiency. We consistently aim to deliver the same product to all customers without any customization regarding performance and definitely no customization concerning reliability. The only area that may vary is communication, as different customers might interact with our LiDARs in distinct ways regarding data. That's the only difference. Beyond that, we encourage everyone to use the same platform so that we can focus on refining a single product for every generation. This has always been our strategy.
Operator, Operator
Your next question comes from Yang Kong from CICC.
Yang Kong, Analyst
I'm Yang from CICC and congrats on your achievement. Would you like to share with us your opinion about the relationship between 4D radar and LiDAR? Because as far as I know, Li Auto has used 4D radar on its L7 model. So would you think this will be a trend in the future and how this will impact on LiDAR future volumes?
Louis Hsieh, CFO
David, you want to take this?
Dr. David Li, CEO
Yes, sure. We follow the development of any of the new sensors on the vehicles very closely, and 4D radar has definitely been one of the interesting options. But let's just talk about the specs, right? So I think one of the things 4D radar is really good at is that it doesn't have any moving parts and it's performing relatively better in the more difficult weather. But other than that, I think the biggest challenge for 4D radar today is if you just look at the image of it, resolution wise, when I say resolution, it's how many points per second from LiDAR, right. That's one of the most important specs of LiDAR or a camera. 4D radar is roughly 1% resolution of a good LiDAR, which means that the image you see is going to be kind of blurry because the resolution is so bad. It's like you take off your glasses and you look at what's in front of you. Yes, you get an idea of what's going on. But for safety, if you fully rely on that, it's going to be difficult. And I can name quite a few cases that 4D radar's resolution simply isn't good enough, and then for a camera alone, it doesn't fully give you the 100% confidence in detecting them. That's where really LiDARs come in, right? LiDARs are not about the 99% of the scenario, and safety is always about the last 1% or maybe the 1% of the 1% of the scenario where LiDAR performs much better than any other alternative. And I am not seeing 4D radar to match the resolution of LiDAR anytime soon, if ever. I won't be able to comment on the rationales behind why Li Auto is using some of the 4D radars, but I think it's sufficient to say that even for the L7 model, the Max version also have our LiDARs on. And at least we haven't seen the trend that any of the 4D radar is replacing LiDAR at all. So this is our view and if you just simply look at it, whether you can use 4D radar to do the driving and if you look at a point cloud, you get a much clearer picture.
Operator, Operator
Your next question comes from Jessie Lowe from BMO Securities.
Unidentified Analyst, Analyst
So my first question will be for the new partners you mentioned happened in the second quarter, the two leading global OEMs. So I guess it's difficult to share the news. But how is their attitude and expectation in the cooperation in terms of the launch time on the model equipped with the LiDAR model, price range, potential end market and also their ideal cause on adopting LiDAR in their mind?
Louis Hsieh, CFO
David?
Dr. David Li, CEO
Yes. First, I can't provide specific names, but I can comment on the other questions. For the global OEM, the timeline typically ranges from late 2025 to 2027, which is later than what we see with Chinese OEMs that usually have shorter development cycles. Regarding the process and their mindset, it's quite interesting because traditional global OEMs are typically seen as conservative, with lengthy vetting procedures, and they often decide on LiDAR several years in advance compared to their Chinese counterparts. Additionally, some of these OEMs may already have prior relationships with competitors in the LiDAR market. From what I've been informed, they recognize the complexity of this selection process and understand that making the correct choice isn't straightforward, which is why they are proceeding with caution at this stage. I have also mentioned earlier that during the RFI and RFQ phases, they are now requesting more concrete evidence. In the past, having impressive presentations and good samples was sufficient, but now the OEMs need to see comprehensive proof, especially regarding production capabilities, which is reasonable given that the LiDAR industry is evolving. Some companies, including us, are already shipping in larger volumes, while others are not, and this discrepancy is significant to them. Previously, without any shipping, reliance was only on sample evaluations. Now, they invest time auditing our factory and assessing our production capabilities, particularly the quality of the components we've delivered. As a company, we've shipped nearly 200,000 sensors so far, including over 100 on the ADAS side. The OEMs express their concern about the quality of our products, especially since many competitors are far behind us in terms of scale. They want assurance that we are delivering automotive-grade quality. Ultimately, the only way to determine that quality is by evaluating the reliability of our sensors. It's challenging to predict quality, as it can only be confirmed after enough units have been shipped and analyzed. We are among the few competitors able to tell OEMs that we have shipped in significant quantities and invite them to review our performance to ensure we meet their standards. This unique position in discussions, I believe, contributes to our advanced standing not just in RFQ but also in the development phase. Hopefully, this will lead to positive results in the next quarter or two.
Louis Hsieh, CFO
I want to emphasize that these development agreements are for significantly larger volumes in the long term compared to the initial agreements that were based on presentations. Those earlier projects were essentially tests to validate the LiDAR concept. The upcoming projects are much larger and platform-based, which means they will span more models and higher volume vehicles. So, the stakes have grown considerably since then, and the potential rewards are much greater.
Unidentified Analyst, Analyst
Yes, sure. My second question pertains to the number of sensors equipped on a vehicle. I recall comments about reducing the sensor count by 50% and achieving ADAS functions through algorithm evaluation or progress in 2024 to 2025. Have we received any related feedback or thoughts from our current OEM clients? Additionally, as they have begun collaborating with Volkswagen, which is beneficial for their supply chain, do we see any potential to explore opportunities like this?
Louis Hsieh, CFO
I didn't catch the question. David, you want to handle that?
Dr. David Li, CEO
Yes, I will respond to the question. We cannot comment on each customer specifically. However, regarding the trend of reducing the number of LiDARs on vehicles, most of our current customers are utilizing one LiDAR instead of two. This typically aligns with a strategy focused on long-range applications, like highway driving. As these companies evolve, many are contemplating the addition of more LiDARs around the vehicle to meet varied operational design domains. I believe the functionality of different ADAS vehicles is progressing rapidly, allowing them to manage a wider array of situations, including low-speed urban driving and even last-mile valet parking. For these applications, more than just forward-facing long-range coverage is necessary, which naturally leads to an increased number of LiDARs. This is the trend we are observing. Ultimately, it depends on how quickly the OEMs can deploy their software and fully release these functions to customers. We already see some clients starting this year with three LiDARs, indicating a definite shift.
Operator, Operator
Your next question comes from Yi Lu from JPMorgan.
Yi Lu, Analyst
This is Yi Lu from JPMorgan. I actually have two questions. The first is that could you give me more guidance regarding the delivery pipeline from six OEMs by end of this year to 11 OEMs by end of next year? Because I'm actually curious if we may have some seasonal volatility on shipment throughout the next year, if any large order from one single client, and whether there will be potential downside risk if that order got late. That's my first question.
Louis Hsieh, CFO
I think for 2024 we expect 10 or 11 OEMs to be shipping by then. And you know we have one customer as our largest customer. I think the risk there is not high as far as the delays. They're obviously selling very, very well. So, so long as they do well, we will do well. I think the overall total number of shipments for ADAS LiDAR should be in the range of 380,000 to 420,000 units for next year, and that's between 11 OEMs. And then for the robotaxi side, should be well over 30,000 units. 30,000 to 40,000 units. That's your question or you want more questions? Yes, okay.
Yi Lu, Analyst
Yes, that helps. And my second question is that could you give us more updates regarding the XT series and FT series? Any orders on that part and what is expected through time?
Louis Hsieh, CFO
XT has performed very well, showing growth rates of 30% to 40% a year in units, with strong pricing. QT is also showing good performance. The products below Pandar, particularly in the robotaxi segment, are doing exceptionally well. In the first two quarters, we have sold over 12,000 units, and we expect to exceed 25,000 units for the entire year in the non-ADAS LiDAR category. The Pandar, XT, and QT are all selling effectively, with XT likely outperforming QT. While we do not provide a breakdown of specific total units, we anticipate that the combined sales of these three will be around 25,000 or more units this year.
Yi Lu, Analyst
And so that confirmed that it's about FT better than QT?
Louis Hsieh, CFO
Yes. FT is supposed to be released this quarter. To be perfectly honest, the number of units that we'll deliver won't be high. That's one of the ones that will miss the target. We originally forecasted 10,000 units, and it'll come in well short of that. So, yes, FT, we still have a couple of customers for it, but the volume will be much lower than originally forecast.
Operator, Operator
There are no further questions at this time. I'll now hand back to the Company for closing remarks.
Yuanting Shi, IR Director
Thank you once again for joining us today. If you have further questions, please feel free to contact our Investor Relations team. This concludes today's call, and we look forward to speaking to you again next quarter. Thank you and goodbye.
Operator, Operator
Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.