Innoviz Wins $4 Billion Lidar Contract

In this photo illustration, an Innoviz Technologies logo is displayed on a smartphone.

Rafael Henrique | SOPA images | Light rocket | Getty Images

Israeli lidar maker Innoviz announced on Tuesday that it has won a contract to supply lidar units and related autonomous driving software to a unit of Volkswagen, in a deal worth $4 billion over eight years. .

Under the deal, Volkswagen will include Innoviz’s latest autolidar unit and its own perception software in vehicles in its portfolio.

The deal will run for eight years, starting “mid-decade”, when the Volkswagen Group’s first vehicles with Innoviz are expected to ship. Innoviz expects to supply lidar units for between 5 million and 8 million vehicles of the Volkswagen Group over that eight-year period.

Lidar – meaning, light detection and range – uses an invisible laser beam to scan the environment and construct a detailed three-dimensional image. The sensors are considered critical components of most autonomous driving systems, comparing the images generated by lidar with a detailed three-dimensional map to verify the precise location of the vehicle.

As development and manufacturing costs have fallen, the sensors have gained wider adoption in vehicles and driver assistance systems, leading to fierce competition among a slew of lidar automaker startups.

Innoviz, which went public in late 2020 through a merger with a special-purpose acquisition company, had previously announced the deal but had not disclosed its client. The lidar maker said in May that it had won a deal with “one of the largest automakers in the world” to “become its direct multi-brand lidar supplier”.

Innoviz CEO Omer Keilaf said the company’s deal with Volkswagen’s software company Cariad came about after more than two years of testing and due diligence.

“I think one of the most challenging parts was the fact that we’re coming up with a new product, a new generation [of lidar units], and we had to build trust on their side to see it work. That was part of what we’ve been doing over the past year,” Keilaf told CNBC. “The second part was making sure Volkswagen was comfortable with Innoviz becoming a direct supplier.”

The process of becoming a direct supplier to a major automaker is a tedious one. In general, an automaker will subject a potential new supplier’s product to extensive quality and durability testing. It will also do due diligence on the potential supplier’s business, not accepting the supplier until it is confident that the business will be close and financially stable for the duration of the contract.

Selling directly to a car manufacturer like Volkswagen is new territory for Innoviz. The company has an existing deal with BMW, but that deal created auto supplier Magna International, which manufactures and supplies Innoviz’s lidar units to the automaker as a sort of middleman.

For Volkswagen, the lidar units will be made by contract manufacturers using tools supplied by – and working directly with – Innoviz, who will then supply the completed units to Volkswagen itself.

Keilaf said a streamlined relationship benefits both Innoviz and Volkswagen.

“In the end it was a good fit because the new product is really intriguing in terms of performance and price,” said Keilaf. “And the fact that we’re a direct supplier is also very helpful in cutting costs. It’s less of a three-way program.”

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