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Chinese electrical vehicle maker XPeng is upping its self-driving game. On Friday, the company announced a collaboration with Lidar company Livox.

Lidar is laser-based radar used to help enable autonomous driving technology.

Livox isnt publicly traded and is Xpengs (ticker: XPEV) first partner in lidar technology. Livox being selected by a leading Chinese EV manufacturer as a partner isnt necessarily bad news for the publicly traded Lidar players including Veoneer (VNE) and Luminar Technologies (LAZR). As cars get smartercontrolling more of the driving experiencelidar and other sensors should proliferate.

Not everyone is sold on Lidar yet, though. Tesla (TSLA), the most valuable car company in the world, doesnt yet use Lidar sensors. When asked by Morgan Stanley Adam Jonas if the company would use Lidar technology if it was free, CEO Elon Musk replied, I think even if it was free, we wouldnt put it on. Tesla has its own processors, sensors, and software for self-driving applications.

Other sensors that can enable self-driving applications include optical cameras and regular radar. Right now, Lidar tends to be a more expensive option, but the cost of sensors is coming down.

XPeng calls itself a smart EV producer and invests heavily in self-driving technology. It became publicly traded in late August 2020, selling shares at $15. The stock closed 2020 at $42.83, up roughly 185%, far better than comparable gains of the Dow Jones Industrial Average and S&P 500.

XPeng is recently public, and its popular among analysts covering the shares. Two-thirds of them rate the stock at Buy. The average Buy-rating ratio for companies in the Dow is about 57%.

Barrons is more cautious, recently writing that valuations in Chinese EV producers are too high and suggesting that investors take profits. That article appeared in mid-December when XPeng was trading around $44.

XPeng trades for roughly 15 times estimated 2021 sales. Tesla, for comparison, trades for about 14.5 times that number. XPeng peers NIO (NIO) and Li Auto (LI) trade for about 15 times and 8 times estimated 2021 sales, respectively.

Write to Al Root at allen.root@dowjones.com

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Lidar Is Coming To XPeng as Tesla Holds Out on the Self-Driving Technology - Barron's