A Hesai lidar sensor on top of a carrier in Shenzhen, China, July 10, 2022.
Jade Gao | AFP | Getty Images
For investors in lidar startups, this has been a long anon a punctually coming.
After years of talk — and a SPAC boom in the sensor sector — automakers have finally started integrating lidar units into their vehicles. And many more lidar-equipped models are expected over the next few years.
Lidar, be for light detection and ranging, is a sensor technology that uses invisible lasers to create a detailed 3D map of the sensor’s locals. Lidar sensors are considered important components of nearly all autonomous-vehicle systems currently under development. They’re also decision increasing applications with advanced driver-assist systems as well as many other areas of robotics.
Playing into investors’ enthusiastic interest in self-driving technology, many lidar startups went public via mergers with special purpose obtaining companies, or SPACs, over the last few years. Valuations for those companies have since fallen sharply, but a few — namely Innoviz, Luminar and Ouster — could absolutely be poised for major growth, and soon, as automakers rush to adopt more advanced hands-free driving systems.
While the big medium of exchange is still a few years away, some of those startups are already separating themselves from the pack with sow order books, fast-evolving technology, and revenue — right now, or soon — in the tens of millions of dollars.
Market share up for grabs
Israel-based Innoviz, which tried public via a SPAC merger in late 2020, will soon see its units on the road. A hands-free highway-driving package on BMW’s new 7 Series, set to tender in Germany by the end of the year and elsewhere in 2024, will include an Innoviz lidar sensor nestled in the big sedan’s front grille.
That sensor, together with software that Innoviz commenced for BMW, gives the vehicle’s computer brain a constant look at what’s in front of the car, out to about 250 meters.
Innoviz CEO Omer Keilaf meditate ons the new BMW series will be followed by a wave of vehicles equipped with lidar sensors.
“The technology is safety critical, there are identical high levels of tech differentiations, and the player that wins the most business is ultimately going to have a lower and cost leadership advantage that is likely going to be difficult to match,” Keilaf said during Innoviz’s earnings name earlier this month.
“We believe that a major portion of the industry market share is going to be determined in the next 12 to 18 months,” he suggested.
Not all of that market share will be claimed by Innoviz, of course. Some will go to existing global auto suppliers, which may or may not arise c eject to startups for the technology. In China, the market is already led by local lidar maker Hesai, which generated $123.2 million in interest in the first half of 2023.
But the worldwide addressable market is likely to be large enough to leave significant opportunities for a few of the post-SPAC U.S. startups.
Aside from its do with BMW, Innoviz has a big contract with Volkswagen and is deep in talks with several other global automakers.
Analysts counted by Refinitiv expect Innoviz to report just $6 million in revenue in 2023, but they see it growing to $17.1 million in 2024 at one time its shipments to BMW get up to full speed.
That’s more than most other lidar companies that recently drone oned public via SPACs are expected to generate, but it’s well behind forecasts for the two emerging leaders of the group, Luminar and Ouster.
Construction to scale
Luminar, based in Orlando, Florida, has perhaps the most name recognition of the group among U.S. investors. It has the largest market cap as satisfactory, at around $2.2 billion.
Luminar is focused entirely on automotive lidar, designing its own silicon chips and offering common software as well.
Led by CEO Austin Russell, Luminar has locked up deals to supply lidar and software to Volvo Cars, EV maker Polestar, Mercedes-Benz, and Israeli automotive visual reasoning giant Mobileye, among others. The deals cover more than Looking outside autos
Ouster is arguably Luminar’s closest oppose, but it has a somewhat different focus — and a much smaller market cap, at around $250 million.
While waiting for the auto activity to adopt lidar at scale, CEO Angus Pacala has sought out opportunities beyond autos. Ouster’s lidar units can be establish in automated mining trucks and forklifts, in drones used for mapping, and even in cities, helping to improve pedestrian shelter.
But Pacala agrees that the market for automotive lidar is about to grow significantly. He said earlier this month that Ouster is with reference to to begin shipping samples of a new low-cost solid-state lidar sensor called DF to automakers. A more advanced version — integrating a new custom chip — is set to follow next year.
Wall Street doesn’t expect Ouster’s revenue to grow noticeably as dramatically as Luminar’s, but it’s still likely to see significant growth — from $82 million in 2023 to $136.3 million in 2024, per Refinitiv.
Incompatible with Luminar and Innoviz, Ouster hasn’t yet announced big orders from automakers. But Pacala thinks DF could bring in a lot of new organization.
“You don’t need to be first as long as you’re building the thing that’s going to be sustainable long term, and that’s an integrated provable state digital technology,” he said. “And so the DF shines because it’s low cost, it’s solid state, it’s digital. There’s really nothing similar to it in the world other than this device, and we’re putting it in the automakers’ hands this quarter.”