A Hesai company’s lidar sensor is installed on the roof of a car in Shenzhen, China, July 10, 2022.

Gao Yu | AFP | Getty Images

It’s been a long road for investors in lidar startups.

After years of discussions and a boom in sensor space SPACs, automakers are finally starting to integrate lidar units into their vehicles. Expect more lidar-equipped models to appear in the coming years.

Lidar, short for light detection and ranging, is a sensor technology that uses invisible laser light to create a detailed 3D map of the sensor’s surroundings. LiDAR sensors are considered an essential part of nearly every autonomous vehicle system currently under development. They also see increasing applications for advanced driver assistance systems and many other areas of robotics.

To cater to the heightened investor interest in self-driving technology, a number of lidar startups have gone public over the past few years through mergers with special purpose acquisition companies (SPACs).Since then, the valuations of these companies have fallen significantly, but some of them — namely innovation, shine and Easter Significant growth could end up happening as automakers scramble to adopt more advanced hands-free driving systems.

While the big bucks are still years away, some of these startups have already distinguished themselves with growing order books, fast-moving technology, and tens of millions of dollars in revenue now or soon.

Market share up for grabs

Israel innovationLaunched via a SPAC merger in late 2020, it could soon see its products on the road: BMW’s hands-free highway driving package for the new 7 Series will launch in Germany by the end of this year and elsewhere in 2024, and will include an Innoviz A lidar sensor, housed in the front grille of a large sedan.

Together with software developed by Innoviz for BMW, the sensor enables the vehicle’s computer brain to continuously observe what is approximately 250 meters in front of the car.

Innoviz CEO Omer Keilaf believes that after the new BMW there will be a wave of vehicles equipped with lidar sensors.

“Technology is critical to safety, and the level of technology differentiation is so high that the player who wins the most business will end up with scale and cost leadership that is difficult to match,” Keilaf said at the Innoviz conference. Earnings call earlier this month .

“We believe that the majority of industry market share will be determined over the next 12 to 18 months,” he said.

Of course, Innoviz won’t capture all the market share. Some of that will go to existing global auto suppliers that may or may not be looking to startups for the technology. In China, the market is already led by local lidar maker Hesai, with revenue of $123.2 million in the first half of 2023.

But the global addressable market may be large enough to leave a significant opportunity for some post-SPAC U.S. startups.

In addition to its partnership with BMW, Innoviz has also signed a major contract with Volkswagen and is in advanced negotiations with several other global automakers.

Analysts polled by Refinitiv expect Innoviz to generate just $6 million in revenue in 2023, but they expect that to rise to $17.1 million in 2024 once shipments to BMW reach full speed.

That beat the expectations of most of the firm’s post-SPAC cohort, but fell well behind the forecasts of the group’s two emerging leaders, shine and Easter.

Large-scale construction

Austin Russell, Chairman and CEO of Luminar Technologies.

Bloomberg | Bloomberg | Getty Images

Luminar, which started shipping its lidar units in November, is ambitious, but as Russell pointed out on a recent earnings call, it doesn’t need huge market share to make money.

“By the end of the decade, our target market penetration is only 3% to 4%,” Russell said. “Because we think that even then we will be able to achieve about $5 billion in revenue and $2.5 billion in EBITDA, and up to $60 billion in forward-looking orders.”

Russell sees Luminar’s forward-looking order book at $3.4 billion at the end of 2022, adding at least another $1 billion by 2023. But most of that revenue is still years away, and the company has a long way to go before it starts reporting profits.

Luminar Chief Financial Officer Tom Fennimore said earlier this month that investors shouldn’t expect Luminar to break even until the end of 2025.

Wall Street thinks Luminar has enough cash to hang on until then, and likes the appearance of the lidar maker’s pipeline: Analysts expect Luminar to generate $84.5 million in revenue this year, growing to $268.4 million by 2024, according to Refinitiv data. Dollar.

look outside the car

Ouster is arguably Luminar’s closest competitor, but it has a different focus and a much smaller market cap of about $250 million.

While waiting for the mass adoption of lidar in the automotive industry, CEO Angus Pacala is also looking for opportunities outside of automotive. Ouster’s lidar units are widely used in autonomous mining trucks and forklifts, drones for mapping, and even in cities, helping to improve pedestrian safety.

But Pacala also thinks the automotive lidar market is about to grow significantly. He said earlier this month that Ouster is about to begin shipping samples of a new low-cost solid-state lidar sensor called DF to automakers. A more advanced version, including a new custom chip, will follow next year.

Wall Street doesn’t expect Ouster to see as much revenue growth as Luminar, but it could still post significant growth, from $82 million in 2023 to $136.3 million in 2024, according to Refinitiv data.

Unlike Luminar and Innoviz, Ouster has yet to announce major orders from automakers. But Pacala thinks DF can bring a lot of new business.

“You don’t need to be first as long as you’re building something that’s sustainable in the long term, and that’s integrated solid-state digital technology,” he said. “So DF is compelling because it’s low-cost, solid-state, digital. .There’s really nothing better in the world than this device, and we’re going to get it into the hands of automakers this quarter.”

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