Hesai's Lidar Breakthrough: A Test of the Drone Delivery Boom

The Hesai-Meituan deal is a high-stakes test. It moves lidar from its established role in automotive safety into the far more demanding arena of commercial drone logistics. The goal is to unlock a promised 24/7 low-altitude delivery economy, a market projected to be worth a staggering USD 25 trillion by 2050. For Hesai, this is a critical expansion beyond its core automotive business. For Meituan, it is the technical enabler of a new operational model.

The pivotal technical milestone is a demonstration of nighttime flight relying solely on lidar. During a launch event, Keeta Drone's M-Drone 4L performed a two-kilometer flight with satellite and visual navigation disabled. The drone maintained a navigation positional deviation within 0.25 percent using only its FTX lidar. This is a structural breakthrough. It proves lidar can provide the precise, all-weather positioning required for safe, autonomous operations in complex urban environments after dark-a capability that is currently a major bottleneck for the industry.

This integration is more than a hardware swap. It represents a fundamental shift in sensor fusion strategy. The M-Drone 4L is the world's first commercial delivery drone with lidar as a standardized component. Its system combines the FTX lidar with vision and GNSS for multi-modal perception. The key advantage is that lidar is unaffected by lighting conditions or adverse weather, providing a stable perception layer at night and in rain or fog. This directly addresses a core limitation of vision-based systems.

The commercial implications are immediate. Meituan has already deployed 65 delivery drone routes across multiple cities and completed over 740,000 deliveries. The ability to operate these routes reliably at night would dramatically expand capacity and service windows. For Hesai, the deal validates its technology for a new, high-growth market. The FTX sensor's 66% reduction in weight and twofold increase in resolution are designed to reduce integration complexity and cost, making the technology more viable for mass deployment in 2026.

The bottom line is a bet on lidar as the essential sensor for a new class of autonomous machines. If this drone logistics model proves scalable, it could open a vast new market for lidar manufacturers. The risk, however, is that the operational and regulatory hurdles for 24/7 urban drone delivery are steeper than anticipated. The Hesai-Meituan partnership is the first major field test of that bet.

The Mechanics: From Sensor Integration to Commercial Scale

The deal between Hesai and Meituan is a masterclass in translating sensor performance into tangible commercial economics. The core of the partnership is Hesai's FTX LiDAR, a second-generation pure solid-state sensor engineered for the unique demands of drone logistics. Its key metrics are not just specs but direct cost and integration levers. The sensor is 66 percent lighter than its predecessor, a dramatic reduction that directly lowers the drone's total weight and energy consumption. Simultaneously, it delivers a point rate 2.5 times higher than before, providing the ultra-high resolution needed for precise obstacle detection in complex urban environments.

This performance is the enabler for Meituan's existing operational scale. The company has already operated 65 routes across multiple cities and completed 740,000 commercial orders with its M-Drone 4L. The FTX LiDAR is not a theoretical upgrade; it is the critical component that unlocks the next phase of this network. As Meituan's vice president noted, without LiDAR, drones cannot deliver more versatile nighttime low-altitude logistics services. The sensor's integration allows the drone to maintain precise positioning and navigation around the clock, even when satellite and visual systems are disabled, as demonstrated by a navigation positional deviation within 0.25 percent. This capability is the economic linchpin, transforming the drone from a daytime novelty into a 24/7 delivery asset.

For Hesai, the path to volume sales is now crystallized. The company has set a clear production roadmap, planning to commence mass production and delivery of the FTX in 2026. This timeline is critical. It aligns the sensor's availability with Meituan's likely expansion of its drone network, creating a direct pipeline from manufacturing to commercial deployment. The partnership validates Hesai's pivot beyond automotive, proving its technology can meet the stringent weight, size, and performance requirements of a high-volume logistics operator. The bottom line is a closed-loop system: superior sensor mechanics enable operational scale, which in turn provides a tangible, large-scale customer and a clear production target for the supplier.

The Regulatory and Competitive Guardrails

The investment thesis for drone delivery hinges on a nascent market's explosive growth. But China's new regulatory framework, effective May 1, 2026, acts as a powerful guardrail that could reshape the competitive landscape. The rules mandate a software kill switch and continuous transmission of flight data to authorities, creating a high-compliance barrier. This isn't optional oversight; it's embedded enforcement that renders unregistered aircraft physically inoperable. For a company like VisionWave, this means the entire business model must be re-engineered to meet these standards, a costly and time-consuming process that favors incumbents with existing compliance infrastructure.

The competitive moat is already deep. Hesai, a key supplier, has a strategic cooperation agreement with Meituan dating back to 2021. This isn't a fleeting partnership but a multi-year anchor that provides Hesai with a stable, high-volume customer as the autonomous delivery industry scales. Meituan's own autonomous delivery project, which had already deployed 100 vehicles by September 2021, creates a direct, long-term demand stream. This deep integration gives Hesai a significant advantage in a market where hardware reliability and technical suitability are paramount for deployment across diverse and challenging environments.

The market is pricing in this reality with extreme sensitivity. Hesai trades at a PE TTM of 248 and a PS TTM of 10.3. These are not metrics for a mature, low-growth business. They reflect a premium placed on future growth and execution, but also a high degree of vulnerability. The valuation is a bet that Hesai can successfully navigate the scaling challenges of supplying a massive, regulated market. Any stumble in meeting Meituan's deployment targets or in adapting to new regulatory demands could see these multiples contract sharply.

The bottom line is that the regulatory and competitive guardrails are formidable. China's approach to drone control is fundamentally different from the West's, prioritizing centralized oversight over privacy. This creates a compliance barrier that will slow new entrants. Simultaneously, the deep, multi-year partnerships with anchor customers like Meituan create a stable but potentially insular ecosystem. For VisionWave, the path to profitability isn't just about technology or market size; it's about the immense cost and complexity of building a compliant, scalable operation from the ground up in a market already dominated by established players.

Valuation and Catalysts: Pricing the Long-Term Vision

Hesai's valuation is a bet on a future that hasn't arrived. The company trades at a PE TTM of 248.269 and a PS TTM of 10.3278, metrics that reflect a premium for growth and potential, not current earnings. With a negative PE Static of -34.6979, the market is explicitly pricing in the absence of near-term profitability. This creates a high-stakes dynamic: the partnership with Meituan's Keeta Drone is not just a new customer-it is the primary near-term catalyst that must validate the long-term thesis and justify this multiple.

The core investment question is straightforward: can this drone delivery partnership translate into a material, recurring revenue stream? The evidence points to a potential inflection point in 2026. Hesai has committed to commence mass production and delivery of its FTX LiDAR sensor in 2026. This is the critical timeline. The revenue from this deal is contingent on Meituan's public expansion of its drone network, which is already underway with 65 delivery drone routes across multiple cities and 740,000 deliveries completed. The partnership's success hinges on Meituan scaling this network, which in turn drives demand for Hesai's sensors. For Hesai, this represents a crucial de-risking of its growth story from a single, cyclical automotive market into a new, potentially recurring revenue stream.

The primary risk, however, is that drone delivery remains a niche, capital-intensive service with limited economics. The technology is proven in demonstration, but the path to profitability for the service provider is untested at scale. If Meituan's network expansion stalls or fails to achieve the necessary density to make deliveries cost-competitive, the demand for Hesai's LiDAR could plateau. The company's premium valuation assumes this partnership becomes a significant contributor to its top line. If it remains a small, experimental project, the valuation disconnect will widen.

The bottom line is a binary near-term catalyst. The 2026 mass production launch of the FTX sensor and Meituan's public expansion of its drone network are the first tangible steps toward proving the thesis. Until then, Hesai's stock will trade on the promise of a new market, not its reality. The valuation premium is a bet that this partnership will scale; the risk is that it won't.