Suppliers Navigate Lidar Assembly Challenges
By Nathan Eddy
Illustration courtesy Valeo
November 26, 2025
Light detection and ranging (LiDAR) sensors are a key component of advanced driver assistance systems (ADAS) and autonomous vehicles. The technology spots what human eyes, cameras and radar cannot by scanning a vehicle’s surroundings multiple times per second.
Lidar provides precise 3D mapping and real-time object detection. A vehicle equipped with lidar can measure the gap to an object with centimeter-level precision, which is essential for safe navigation at high speeds or in dense traffic environments.
Lidar works by sending out pulses of laser light and measuring the time it takes for the light to return after reflecting off objects in the environment. By repeating this process thousands or even millions of times per second, it creates a highly detailed map.
Alphabet subsidiary Waymo, for example, integrates laser scanners and lidar sensors into its autonomous ride-hailing vehicles to create a robust three-dimensional view of the surroundings. In its sixth-generation Waymo Driver hardware suite, the company continues to evolve its lidar usage alongside cameras and radar, describing the combined sensor platform as delivering “overlapping fields of view.”
According to Grand View Research, the global lidar market will grow 10 percent annually over the next five years, reaching $4.71 billion by 2030. In addition to being used in cars, trucks, tractors and mobile delivery robots, lidar is important for a variety of aviation and maritime applications. In fact, airborne lidar is projected to account for the largest share (38 percent) of future demand.
The current phase of the market is defined less by consolidation rather than by experimentation. Indeed, automakers and suppliers are scrambling to refine manufacturing processes, improve detection range and resolution, and integrate lidar seamlessly alongside cameras and radar.
Precise Perception Unlike cameras, which rely on visible light, or radar, which provides less detailed resolution, lidar offers precise depth perception and the ability to operate effectively in a range of lighting conditions.
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“Lidar’s strength lies in its use of laser pulses to detect and map objects with a high degree of precision,” says Pedro Pacheco, vice president of research at Gartner Inc. “This makes it especially valuable in situations such as night driving, complex intersections or environments where objects may be partially obscured.”
Lidar plays a critical role in enabling a car to “see” and understand its environment. Self-driving systems combine lidar data with information from cameras, radar and ultrasonic sensors to form what is often called a sensor fusion model.
This integration allows vehicles not only to detect other cars, pedestrians, cyclists and road obstacles, but also to understand their relative speed and positioning. The resulting awareness is fundamental for core ADAS tasks such as lane-keeping, collision avoidance, adaptive cruise control and automated decision-making at intersections.
“Cameras are good at short distances in good light, while radar is good at long distances, but not very precise,” notes Pacheco. “Lidar complements both. That combination is what allows a vehicle to form a comprehensive and reliable picture of its surroundings.”
Advances in design and production are now reducing lidar costs, making it increasingly feasible for mass-market vehicles. However, some technical issues, such as sensor range, weather performance and the need for integration with other systems, are still in the process of development.
And, despite a decade of progress, the auto industry has yet to converge on a dominant technology. Competing architectures, from mechanical spinning systems to solid-state and flash lidar, continue to vie for market share as automakers and suppliers push for reliable, cost-effective devices.
“As the industry advances, lidar’s integration into the broader sensor stack will continue to be central to enabling safer, more capable autonomous driving systems,” predicts Pacheco.
“Lidar is still a new technology for automotive applications, so it requires a lot of innovation in hardware and software,” adds Christophe Minster, vice president of Valeo, a Tier One supplier that mass-produces devices at a state-of-the-art factory in Wemding, Germany. The company has already developed three generations of lidar systems and is now working on a fourth.
“The final technology that will dominate automotive lidar has not yet converged,” claims Minster. “Unlike cameras or radar, which have matured around standardized approaches, lidar remains in the innovation phase.
Hardware must deliver reliable optical performance under harsh operating conditions, while software algorithms must precisely interpret raw data into actionable insights for a vehicle’s control systems.
“This requires very smart hardware, but also very smart algorithms and software elements that need to come together to give the best outcome,” Minster points out.
 Autonomous vehicles use lidar technology to safely navigate. Photo by Austin Weber
Valeo Leads the Way Valeo has been mass-producing lidar devices since 2017, and its products have been deployed in vehicles ranging from the Honda Legend to the Mercedes-Benz S-Class.
Valeo’s approach to manufacturing combines standard automotive processes with highly specialized steps unique to the technology. Each unit goes through roughly 20 production steps, with components that include laser emitters, lenses, receivers, electronics and housings.
“One very specific element is what we call the end of line,” says Minster. “Lidar is a measurement device [that] needs a reference.
“Even after all the components have been assembled, the device has no value until it has a reference point to ensure that a measurement is correct,” explains Minster. “That validation process involves a complex calibration and simulation system designed to confirm accuracy over long distances.”
The Wemding plant is highly automated, so despite the complexity of assembly, only a small number of operators are needed.
“The challenge is to ensure profitability and to scale up manufacturing to adjust to demand,” says Minster, noting that collaboration with automakers can begin up to three years before a new vehicle reaches the market. Placement on or within each particular vehicle varies by region and manufacturer preference.
“In Asia, it’s popular to integrate lidar in the roof,” notes Minster. “That’s much less common in Europe and North America, where this reminds people of a taxi and doesn’t make the car very appealing.”
In Europe and the United Sates, automotive engineers try to hide high-tech sensors to preserve the styling of the vehicle. Because of this, Valeo supports multiple configurations to match those demands.
“We are capable of integrating lidar in the roof if a customer wants it,” says Minster. “We’re also working on integration behind the windshield, which is not easy, because it’s a crowded area. But, it has some advantages.”
It is also possible to integrate lidar into the bumper or front grille, a solution many automotive engineers is the best answer, because the device is hidden.
Drawing from its decades of experience in automotive sensing technology, Minster says Valeo has benefited from expertise across sensor types.
“We have experience integrating cameras behind the windshield, radars in the grille and ultrasonics in the bumper,” Minster points out. “We are never starting from scratch.”
The company is also developing lidar systems that are smaller, lighter and easier to integrate without compromising performance.
For instance, Valeo is now exploring lidar-on-chip designs, a major shift that could eliminate bulky optical assemblies and reduce both size and weight.
“As long as you have an optical system, you have physical limits to how much you can reduce the size and weight,” says Minster. “The more you integrate, the smaller and lighter it becomes.”
That integration, however, comes with trade-offs. More integration also means more upfront investment that can only be justified when a certain scale and volume has been reached.
“It’s always a balance between performance, optimization, cost and the affordability that car makers demand,” laments Minster.
One major evolution under way is the move toward solid-state systems that eliminate the need for moving parts.
“Going full solid state would help reduce size, optimize cost and make the parts easier to manufacture,” claims Minster. He says the next phase of lidar development at Valeo will focus on maintaining the range and accuracy needed for automated driving, while delivering sensors compact and cost-effective enough for large-scale deployment across global vehicle platforms.
 Lidar units send out pulses of laser light, then measure the time it takes for the light to return after reflecting off objects in the path of a vehicle. Photo courtesy Waymo LLC
China Suppliers Dominate China is the world's largest market for lidar, far outpacing Europe and North America in both volume and the number of vehicles equipped with the technology. While European automakers such as Audi, BMW, Mercedes-Benz and Volvo offer only a handful of lidar-equipped vehicles, the picture is very different in China. Local automakers like Chery, Li Auto, Nio and XPeng widely use the technology in their vehicles.
“If you want to offer ADAS in China, the norm is that you use lidar,” says Pacheco. “In some cases, you even have cars that use three lidar devices—one for the front and one on each side. That is quite a lot compared to what you see in the West.”
This strong domestic demand has fueled the rise of Chinese lidar suppliers such as Hesai and RoboSense, which supply multiple automakers throughout the country. Hesai, the world’s No. 1 supplier, recently became the first company to produce 1 million lidar units. Its in-cabin products are used in the Cadillac VISTIQ sport utility vehicle, among other applications.
“Traditionally, you don’t have Western automakers working with Chinese lidar providers,” notes Pacheco. “But, in China, these companies [do business with] several different automakers. In in terms of volume, this makes the Chinese market much more interesting than the West at the moment.”
Economies of scale have also allowed Chinese suppliers to significantly reduce costs.
“Chinese providers managed to lower the cost of lidar,” says Pacheco. “It’s not at the same level as radar or cameras, but they lowered it enough to make it more attractive, and that opens the door for more applications going forward.”
Chinese lidar manufacturers are also at the forefront of innovation. For instance, at the recent IAA Mobility show in Munich, Hesai Technology showcased several products that it plans to mass-produce next year.
The ETX model features 800 channels and a 1,300-foot range at 10 percent reflectivity. It is designed for L3 and L4 autonomous driving applications, and features a compact 1.2-inch height for behind-the-windshield integration.
The ETX is based on Hesai’s fourth-generation platform, which combines laser emission, single-photon detection and signal processing modules. It incorporates photon vector technology to improve photon efficiency and extend range by 30 percent; addressable photon isolation to reduce false positives by 95 percent; and an intelligent point cloud engine that filters more than 99.9 percent of environmental noise from rain, fog, dust or exhaust.
During IAA Mobility, Hesai also introduced the solid-state FTX, which is designed to expand the field of view in L3 and L4 vehicles, and the ATX, a lidar system for L2-assisted driving.
 This state-of-the-art factory in Germany mass-produces lidar units that are used by numerous automakers. Photo courtesy Valeo
Inside Innoviz Innoviz Technologies Ltd. is an Israeli company that has spent the past decade refining how lidar sensors are designed and mass-produced. It has supplied automakers ranging from BMW to Volkswagen. The company’s InnovizTwo product line includes both long-range (up to 984 feet) and short-to-mid-range (328 feet or less) lidar.
Innoviz works closely with automakers to ensure that its units integrate seamlessly into each vehicle’s unique body design and electronic architecture.
“The positioning or location of the lidar is important,” says Adili Armon, vice president of engineering at Innoviz. “Whether it’s on top of the roof or at the corners, it highly affects the design of the unit and its components.”
The company builds flexibility into every product. That enables engineers to modify the main component to meet a new requirement without extensive reworking.
Developing each new model also requires iterative testing between simulation and physical prototyping.
“We have an in-house optical lab,” explains Armon. “We do a lot of tests backed up with simulation. It goes back and forth between simulation and doing the actual tests.”
Those tests take place both in the lab and on the road in different terrains, different environments and weather conditions.
Most of Innoviz’s products are assembled in Thailand by Fabrinet, a contract manufacturer that specializes in electronics.
“The manufacturing journey begins with the build of materials—the parts themselves,” explains Armon. “We commonly use die-casting for the metal parts, injection molding for plastic parts and surface-mount technology for electrical boards. First and most important are the optical components—lenses, filters and mirrors.
“Those are supported by the mechanical and electronic structure,” says Armon. “Mechanical parts include the housing, the barrels that the optical components sit in and the scanning module that creates the field of view. Electronics tie it all together.”
 Automation ensures that optical components are precisely aligned. Photo courtesy Valeo
Assembly requires robotic screwdriving and adhesive dispensing, in addition to several steps that require soldering and welding. Work proceeds in parallel across subassembly lines, each focusing on a distinct function. To ensure quality, approximately 70 percent of the assembly line is automated.
Active alignment is a critical step in the production process where the optical parts are precisely positioned. Real-time optical performance feedback enables assemblers to optimize the process with robotics.
Instead of using traditional fixed x-y-z coordinates, the system automatically determines the exact position of the lens in front of the laser that produces the maximum beam power..
The test and inspection process is also highly automated. Innoviz and Fabrinet use functional testers and automated optical inspection (AOI) systems at multiple points on the assembly line.
“We have a connectivity tester to verify that we have good signal running in the lidar, that all the PCBs are well connected,” says Armon. “The AOI verifies that everything was assembled right—it checks for the presence of O-rings and screws, or to make sure a flex connector was well connected. AOI also performs measurements and inspects dimensions.”
The goal is to have minimum variance in production so that each device is identical. Once each product is fully assembled, it goes to a fully functional test, which is also 100 percent automated.
Innovitz has been using artificial intelligence technology to improve product development and manufacturing workflow. Engineers use AI to accelerate both optical design and factory operations, rapidly generating and evaluating countless iterations, optimizing designs for specific parameters like optic simulation, material usage or cost, and even reducing development time with code writing.
“A job that would take a few weeks in the past can sometimes be done in a minute with AI,” claims Armon. “On the production floor, AI-driven computer vision supports quality control and predictive maintenance.
Quality control systems use AI tools to track and detect anomalies in machine and tester data, unlocking faster engineering responses for defects.
“We use AI to check test plans, choose between rule vs. learned tools, and advise us on sensors and test equipment,” says Armon. “It saves a huge amount of time and helps solve debugging issues quickly.”
 Lidar components include laser emitters, lenses, receivers and electronics. Illustration courtesy Hesai Technology
Made in San Francisco When Ouster Inc. was a start-up company a decade ago, it faced a fundamental challenge. Lidar was still an expensive, fragile, analog technology. Building it at scale required painstaking alignment of hundreds of discrete parts, each one capable of throwing off an entire unit if even slightly misaligned.
Ouster disrupted the market by developing digital lidar technology that relied on semiconductors instead of electromechanical components. Its engineers designed an integrated chip that could handle 128 lines of resolution on a single semiconductor. Multiple electronic components, such as 128 lasers and 128 detectors, were replaced by a single chip.
“The shift from analog to digital lidar also redefined how the system functions as a device,” says Mark Frichtl, chief technology officer at Ouster. “That transition to using chips really made lidar much more like a camera.”
Each Ouster device contains a laser array, a receiver chip, supporting electronics and the processing capability to interpret data in real time.
“The lidar itself is like a very small laptop,” explains Frichtl. “It has an operating system and it delivers the data out via an Ethernet communication link to the end user.”
Despite the computational power inside, the form factor is compact—half the size of a coffee mug. That small footprint gives Ouster flexibility across multiple use cases—from autonomous vehicles and delivery robots to port automation and traffic infrastructure.
Ouster’s OS product line is designed to fit into multiple applications without modification, an approach that drives design decisions toward smaller, more efficient sensors.
At the heart of Ouster’s production is its factory in San Francisco’s Mission District, where the company designs, assembles and tests its digital sensors. While that facility handles design, testing and U.S. production, Ouster also works with Benchmark Electronics in Thailand for higher-volume global manufacturing.
“Our domestic manufacturing footprint is not that large in terms of physical space,” Frichtl points out. “We accomplished that through a ton of manufacturing engineering. We had to build the machines that built the machine.”
That meant designing not just the lidar itself, but the alignment, inspection and calibration equipment used to assemble it. Each component—whether laser, detector or lens—is placed with micron-level accuracy and repeatedly checked for position throughout the process.
“You put a component in a specific place, and you measure where it is, and you check later in the process that it’s still exactly there,” says Frichtl. “You do that over and over again for lasers, detectors, lenses—everything you’re putting together in the device.”
 Artificial intelligence and vision system technology ensures that stringent quality standards are met. Photo courtesy Ouster Inc.
This meticulous verification ensures that Ouster’s sensors meet the punishing conditions required for real-world environments, from alfalfa fields to zinc mines.
“They have very wide temperature ranges and lots of shock and vibration,” notes Frichtl. “We have all sorts of checks during the assembly process that it’s going to meet those requirements.
“Harsh operating conditions make everything about design very difficult,” says Frichtl. “We have an extraordinary level of planning and analysis on every design decision that we make.”
Part of the process of receiving certification, for instance, is showing the certifying body all the work that’s been done--down to how adhesive was chosen for attaching one component to another.
“You have to prove it will survive that incredible temperature range and the stresses from all the shock and vibration,” explains Frichtl. “We test every part—individually and collectively—to confirm performance under stress.
“You get a lens in, and you throw it on a shock and vibration table and just see how much you have to crank up the dial before it rattles apart,” says Frichtl. “You do that with every single part of the lidar, and then the whole unit itself. It’s very extensive and very expensive for the organization, but it leads to a better product for the end customer.”
Every lidar that rolls off Ouster’s assembly line goes through rigorous validation in San Francisco, then it leverages third-party labs to do checks on their own tests.
“We just want to be completely certain—this thing will never break, and it will always tell you if something’s going wrong,” says Frichtl.
That philosophy translates to functional safety. If a device ever fails, it alerts the user.
“You want something that’s functionally safe if you’re going to trust your life on it,” warns Frichtl. “If you have an automatic braking system in a car, that system either must work all the time or alert the user that it’s off. That’s true for every safety-critical component in a vehicle.”
The testing process is lengthy—most of it time spent verifying durability rather than assembly itself.
“The manufacturing time is probably measured in minutes or hours, but you put the lidar in an oven and wait a long time and just check that it didn’t change at all,” says Frichtl.
According to Frichtl, automation is critical to how Ouster builds consistency at scale.
“Because we’re doing such precision placement, all of the tools are heavily automated,” explains Frichtl. “Machines perform the micron-level alignments, while human operators supervise the process.”
Artificial intelligence also plays a role—particularly computer vision systems embedded in Ouster’s production equipment. The goal, says Frichtl, is to continually improve equipment performance and throughput.
“We’re constantly improving our equipment to reduce the takt time and increase throughput,” claims Frichtl. “As lidar technology has matured, [we have] expanded beyond hardware to include perception software that interprets data directly.”
Ouster’s manufacturing process remains its secret sauce that underscores the company’s confidence in its production system.
“Designing production processes that are scalable, efficient and repeatable is something you need to be proud of,” says Frichtl. “It creates a better product for the customer—faster, lower cost, more reliable. It’s core to what we do.”
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