LiDAR provides detailed, quantifiable 3D sensing for high-level vehicle autonomy.

LiDAR, or light detection and ranging, is an active remote sensing method that uses light  emission and return data for measuring objects’ exact distance, thus forming highresolution 3D ‘point cloud’ without substantial backend processing. We view LiDAR as an essential sensor for high-level autonomy (Level 3 and Level 4), given it is more precise and detailed than millimeter-wave radar, and lower light condition requirements than camera. We like LiDAR sensors’ structural growth. We believe two drivers—increasing highlevel vehicle autonomy penetration and falling LiDAR selling price—should boost LiDAR demand in China. We estimate China’s auto-related LiDAR sales volume to see a 9-year CAGR of 85% to 86 mn units in 2021-30. We estimate the ‘Level 2 and above’ aut onomous driving systems penetration rate to rise from 12% in 2020 to 60% by 2025, followed by 100% in 2030. We estimate average LiDAR selling price to fall from estimated Rmb7,000 in 2020 to Rmb1,200 in 2025, followed by Rmb600 in 2030, on economy of scale, and technology  innovations, integrating multiple components into a single chip and maturing solid-state designs (i.e., OPA and Flash).