The Price of LiDAR Could Go to Zero, Argues Expert—Here’s the Shocking Reason Why
A 99% Price Crash and a Bombshell Claim: Should the Price of LiDAR Be Zero?
The price of LiDAR, once the multi-thousand-dollar crown jewel of autonomous driving, has plummeted by as much as 99.5% in five years, with some units now reportedly costing just $200. Chinese automakers like Xpeng have waged a brutal war on its cost, famously telling suppliers not to even bid if the price was over ~$200. The market seems to be in a relentless race to the bottom.
But what if the bottom isn’t a low price, but no price at all?
In a recent, paradigm-shifting interview, Dr. Gu Jianmin, the CTO of Valeo China, made a shocking assertion that turns the entire price debate on its head: “For an L2 driver-assist system, the price of LiDAR can go directly to zero.”
This isn’t a prediction of a market collapse. It’s a brilliantly simple, and controversial, diagnosis of what LiDAR’s true role is—and isn’t—in the cars we drive today.
The OEM Squeeze that Sparked a Crisis
The pressure from automakers has been merciless. The most symbolic event was Xpeng’s 2024 ultimatum to LiDAR suppliers. After demanding impossibly low prices, the company ultimately abandoned LiDAR altogether for its newer models, pivoting to a pure-vision solution to slash costs. For LiDAR makers, it was a brutal betrayal. Other OEMs have demanded costs as low as 30% of the market price.
This intense pressure from automakers is a direct response to market realities. While LiDAR was once exclusive to high-end luxury vehicles, the push for “smart driving for all” has forced suppliers to drastically cut costs to penetrate the mainstream market. The data clearly shows this trend, with LiDAR adoption growing in mid-range segments while still struggling to enter the highly cost-sensitive sub-200,000 Yuan market.
LiDAR Solution Adoption Rate by Vehicle Price Range (China)
| Price Range (Yuan) | Jan-Aug 2024 | 2023 |
| Over 600k | 1.2% | 1.9% |
| 500k-600k | 9.5% | 4.1% |
| 400k-500k | 11.3% | 30.7% |
| 350k-400k | 8.0% | 35.3% |
| 300k-350k | 12.4% | 26.3% |
| 250k-300k | 11.3% | 33.9% |
| 200k-250k | 8.2% | 4.4% |
| 150k-200k | 0.0% | 1.6% |
Source: Gasgoo Auto Research Institute Intelligent Driving Configuration Database; Gasgoo Auto Research Institute Analysis
The data shows that while LiDAR has made inroads into the mid-market, breaking into the high-volume sub-200,000 Yuan segment—where 70% of China’s EV sales happen—remains the industry’s biggest challenge, fueling the brutal price war.
The Expert’s Bombshell: L2 “Assist” vs. L3 “Automation”
Dr. Gu’s argument cuts through the noise by focusing on the legal and functional distinction between different levels of driving automation.
- For L3+ (True Automation): Where the car is in control under certain conditions, LiDAR is a MUST-HAVE. Its ability to provide redundant perception data is critical for safety. In this segment, performance and reliability are paramount.
- For L2 (Driver Assist): Where the vast majority of today’s “smart cars” operate, the driver is 100% responsible at all times. The system is merely an aid. Therefore, LiDAR is simply NICE-TO-HAVE.
This distinction leads to his stunning conclusion:
“If an entry-level car is particularly cost-sensitive, the L2 driver-assist system can be designed without LiDAR. The price [of the LiDAR] directly returns to zero.”
In other words, the best way to reduce the cost of an optional component on a budget car is to simply remove it. The current price war, he implies, is a futile effort to force an L3-grade component into an L2 market that doesn’t fundamentally require it.
The Smartphone Lesson: LiDAR is Not Destined to Be “Cabbage Price”
So, will LiDAR become a worthless commodity? Dr. Gu predicts it will follow the trajectory of the smartphone market.
Just as scale and technology made basic smartphones incredibly cheap, the same will happen for basic LiDAR units. However, flagship smartphones with cutting-edge cameras and processors still command premium prices. Similarly, high-performance LiDAR, which can see further and with greater precision in all weather conditions, will always be a high-value component for true L3+ autonomous vehicles.
The ultimate value of a LiDAR, he argues, isn’t its price tag, but its utility: its applicability (how well it integrates), usability (the reliability of its data), and durability (its lifespan and performance under harsh conditions).
Conclusion: Beyond the Price War
The brutal price war is a market correction, forcing the industry to question where LiDAR is truly needed. It’s a painful but necessary process of finding the right balance between cost, safety, and market demand.
The future of LiDAR isn’t a race to zero. It’s a race to create the right product for the right application. For the high-stakes world of true autonomous driving, its value is undeniable. For everything else, it remains a choice—and as one expert argues, sometimes the right price for a choice is nothing at all.
Deeper Dive: Recommended Books for a More In-depth Understanding
For those who wish to gain deeper insights into the topics discussed today, here are some expert-recommended books that I have personally reviewed.
[Inevitable: Inside the Messy, Unstoppable Transition to Electric Vehicles]
- Why this book helps understand the topic: The LiDAR price war is a perfect example of the “messy” internal battles within the EV supply chain described in this book. It details how intense cost pressure from automakers forces suppliers into brutal competition, shaping which technologies become mainstream and which remain premium options. This book provides the real-world business context behind the technical arguments.
- 👉 Read book here
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