Gearing up: Autonomous vehicles drive a global LiDAR revolution
“LiDAR is entering its next growth phase, driven by robotaxi demand and the early mainstreaming of autonomy. Beyond mobility, robotics is emerging as a key incremental growth vector, with other applications such as agriculture providing longer-term upside. Chinese suppliers are at the forefront, combining rapid innovation with execution at scale,” said Karthik Kannan, Head of Global Automotive Industry, Institutional Banking Group, DBS Bank.
Driverless vehicles that can smoothly navigate urban environments with minimal human intervention are no longer a distant vision – they are rapidly becoming reality. This shift is being propelled by the explosive advancement of LiDAR technology; Short for “light detection and ranging” systems, LiDAR is a remote sensing system with wide-ranging applications spanning urban planning, environmental monitoring, industrial automation and most crucially, autonomous driving. Its ability to generate high-precision, real-time 3D perception has the potential to fundamentally reshape mobility while raising safety standards across the industry.
As automotive OEMs race towards more advanced levels of automation in their offerings and global regulators step up their mandates on Advanced Driver Assistance Systems/Autonomous Driving (ADAS/AD), LiDAR is set to benefit from heightened demand. Between 2025-2030, global LiDAR sales are projected to grow at a 25% CAGR to become a ~US$8.0 billion market.1
2025 marked a pivotal year for LiDAR adoption, underpinned by rapid scale-up from Chinese LiDAR suppliers such as Hesai and Robosense, which accelerated mass production of affordable LiDAR solutions. Looking ahead to 2026, LiDAR adoption is set to deepen after China issued its first L3 market-access permits for passenger vehicles in 4Q25, thereby allowing official L3 on-road programmes for selected Chinese automakers. With L3 models expected to integrate multiple LiDAR sensors per vehicle, the next phase of L3 acceleration is poised to become a major structural driver of LiDAR demand.
Figure 1: Lidar is set to benefit from growing automotive & robotics markets
Why is LiDAR critical to autonomous systems?
LiDAR plays a central role in enabling ADAS/AD. By providing high-precision, real-time data on object distance, relative speed, lane markings, traffic signs and surrounding obstacles, LiDAR allows vehicle systems to accurately perceive their environment. This real-time information is then processed to enable key safety features such as blind-spot detection, automatic emergency braking (AEB) and adaptive cruise control.
As LiDAR becomes increasingly recommended for higher-level ADAS/AD capabilities and as system costs continue to decline, adoption is set to scale rapidly. Industry forecasts indicate that nearly 80 million vehicles sold annually could be equipped with LiDAR by 2040, supporting a 38% CAGR in automotive LiDAR passenger-vehicle sales through 2029.2
Figure 2: Passenger vehicles equipped with LiDAR is expected to be on the rise globally
Government regulations to accelerate the automotive LiDAR market
The mass adoption of ADAS/AD is being reinforced by major regulatory developments in key markets, particularly China, US and the EU.3
In China, regulatory momentum has accelerated in recent years, including the decision to mandate Automatic Emergency Braking Systems (AEBS) in light-duty vehicles by 2028. Although China’s AEBS installation already exceeds 50%, the introduction of stricter requirements – especially for night-time and low-visibility scenarios – could serve as a structural catalyst for LiDAR adoption.4 Momentum strengthened further in 4Q25, when authorities issued the first batch of L3 conditional-driving automation approvals, enabling Changan Automobile and BAIC to begin on-road pilot operations of their L3 vehicle models. Beyond regulation, China continue to advance ADAS/AD readiness through dedicated testing zones and pilot areas for robotaxis and self-driving vehicles in major cities such as Beijing, Shanghai, Guangzhou, and Shenzhen.5
The LiDAR future
Several emerging trends are shaping the LiDAR landscape. China's leadership in the LiDAR industry is set to strengthen, supported by its deliberate push into ADAS, autonomous driving and robotics. A key driver of this success has been the aggressive effort by Chinese LiDAR suppliers to scale affordable, mass-market LiDAR products. Hesai and Robosense, for example, have already launched and mass-produced LiDAR products priced at ~USD200 a unit, significantly below the >USD500 price points still common among global suppliers.
Although still nascent, the robotics sector is emerging as a meaningful new growth driver for the LiDAR market. Robotics LiDAR is projected to grow at a 20% CAGR through 2030, supported by new product developments from Hesai and Robosense and reinforced by China’s expanding leadership in robotics R&D. This creates an additional layer of structural demand beyond automotive ADAS and autonomous driving.6
LiDAR is set to become a foundational technology for the next generation of intelligent vehicles and robotics. The sector’s momentum has already fuelled a strong global rally, and growth is poised to broaden further as regulators and industry innovators accelerate the transition toward mass adoption of LiDAR-enabled mobility and automation.
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1 DBS, China / Hong Kong Industry Focus: Regional Auto Sector, 13 March 2025.
2 DBS, China / Hong Kong Industry Focus: Regional Auto Sector, 13 March 2025.
3 https://leddartech.com/white-paper-raw-data-sensor-fusion-and-perception-for-ncap-that-drives-road-safetypart-1/
4 DBS, China/Hong Kong Industry Focus: Regional Auto Sector, 26 June 2025.
5 https://www.intertraffic.com/news/autonomous-driving/china-the-global-leader-in-autonomous-vehicles
6 DBS, China / Hong Kong Industry Focus: Regional Auto Sector, 13 March 2025.
