
Twenty years have passed since the first DARPA Grand Challenge in 2004. It was the world’s first driverless car competition and was followed by succeeding challenges with academic and corporate sponsors. Subsequently, many companies were then founded to create hardware and software solutions with the aspiration of developing self-driving cars. It is not too much to say that the DARPA Grand Challenge revolutionized the automotive industry. In 2020 ‒ at the peak of the frenzy over the potential for autonomous vehicles (AVs) ‒ there were about 80 manufacturers of Light Detection and Ranging (LiDAR) sensors for AVs. Today there are less than 20. Some LiDAR companies have since acquired smaller ones, while most have just disappeared.
Challenges in Navigating the Road to Autonomy with Autonomous Vehicles
LiDAR development is a long, difficult, multi-disciplinary process that requires expertise in many fields: optics, artificial intelligence (AI), computer vision, VLSI design, hardware design, embedded software, mechanical engineering, robotics, automation, manufacturing, and more. Many components must be developed in-house to ensure compliance with the extremely challenging performance requirements. The cycle to develop and manufacture a LiDAR system can easily take five years. The time from sample production to mass production by the autonomous vehicle manufacturer can add another few years.
LiDARs are not off-the-shelf products. While there is a basic core design, the LiDAR’s design must be tweaked because every vehicle program has its requirements. Thus, LiDAR manufacturers must have sufficient staff available for each vehicle program.
Furthermore, the LiDAR manufacturer’s success depends on their customer, the AV manufacturer. For these reasons, LiDAR manufacturers require a huge investment to survive and cross the chasm from start-up to profitability.
Unchecked spending, cost overruns, crashes, faulty software design, and unsustainable business models have plagued AV developers and manufacturers. These and many more reasons can be understood in the context of the Original Equipment Manufacturer’s (OEM) other priorities, such as fleet electrification, adding new ADAS features, shifting supply chains due to geopolitical concerns, etc. This has resulted in delayed programs which have stalled the integration of LiDARs into the vehicles. Many programs that were supposed to come to market have been delayed by at least two years.
Getting to the Finish Line
The ability of the current LiDAR survivors to thrive despite consolidation in the market depends on many factors: having enough cash until they break even; pushing the technological limits to improve performance and reliability; investing heavily in cost reduction and industrialization of the manufacturing processes; and flawlessly executing their business plans.
The market for large-scale deployment of SAE Level 3 (L3) AVs for conditional driving automation is expected to start taking off in 2026 and 2027. Frost & Sullivan estimates the Total Addressable Market (TAM) for ADAS and AV LIDARs to be 197 million units in 2030. Therefore, the reward for those who survive further shakeups is huge.
Innoviz: A Winner Among the Few Survivors
Despite a tremulous market, Innoviz is poised to lead the pack. The past quarter has seen a major trajectory including an announcement in December with Mobileye highlighting they will offer their customers Innoviz long-range and medium-range LiDARs as part of their Mobileye Drive ADAS platform. Furthermore, in late December Innoviz announced a multi-year NRE (Non-Recurring Engineering services) payment plan of approximately $80 million with key existing customers. This announcement strengthens Innoviz’s leading position in the LiDAR market in general and in the autonomous vehicle industry in particular. The InnovizOne™ LiDAR has been on the road in Germany in the BMW 7 Series since March 2024. Innoviz is currently designing long-range and short-range InnovizTwo LiDARs into vehicles for brands within the Volkswagen Group.
The shakeup which has eliminated many competitors has created a reality on the ground. OEMs want to be sure that their LiDAR manufacturer’s products are mature, that they know how to mass-produce low-cost LiDARs, and that they have enough funds to continue operating until breakeven.
But the main takeaway for survivors is that future consolidation is inevitable and only LiDAR manufacturers with existing OEM programs will likely receive future business and those who haven’t been nominated by an OEM have missed the boat and will most likely disappear.