Innoviz Technologies Ltd (INVZ)

[WeTheMarket]

Innoviz CEO outlines LiDAR landscape, long-term opportunity
Nov. 10, 2022
https://seekingalpha.com/news/3905926-innoviz-ceo-outlines-lidar-landscape-long-term-opportunity



In a crowded space for LiDAR technology companies, Innoviz (NASDAQ:INVZ) CEO Omer Keilaf is eminently confident in his company’s ability to outcompete.

“We see the industry as in a ‘winner takes most’ situation, given it is a technology that is very complicated and each company has very differentiated technology. Automakers’ appetite for choosing simply new technology is not high, which is why you are likely to see convergence around just a few players,” he told SeekingAlpha in an interview. “Airbags, which are in every car, are only offered by two suppliers, for example, and there are similar dynamics with ADAS scanners and brakes…anything that is related to functional safety tends to consolidate around two main suppliers.”

As such, the industry that now courts names like Luminar Technologies (LAZR), Cepton (CPTN) as well as proposed merger partners Ouster (OUST) and Velodyne (VLDR) is likely to be a more sparsely populated industry in the near future. Keilaf projected a “major shakeout” to come within the next twelve months.

Key to Competition
Given this stiff competition and propensity for the industry to whittle down to fewer players, Keilaf indicated a need to focus on technologies that can be used in the near term. While L5 technology is, of course, the end-goal, it is not likely to support young companies as they seek to lead the LiDAR industry in the near term.

“You want your customer to be able to ship their products eventually, otherwise you are just selling R&D capabilities,” he said. “The more relaxed the use case is, the more comfortable the automaker is going to be with the safety and validation of the technology to actually launch these capabilities.”

He noted that the Volkswagen (OTCPK:VWAGY) Cariad unit, BMW (OTCPK:BMWYY), as well as additional German and Asian automakers to be named later as key wins for Innoviz that signify the uptake among major automakers. Keilaf said that the German automakers are usually first movers in this space and offer a great deal of credibility to Innoviz (INVZ) and its LiDAR offerings given their pre-eminent status among automakers.

During the earnings call on Wednesday, Keilaf highlighted a $6.9B order book and a pipeline that includes 12 programs in the RFI or RFQ process and “two to three expected to make a decision in the next six months.”

Musings on Musk
In conversation, a consistent critic of LiDAR in Elon Musk inevitably entered the discussion.

“Lidar is a fool's errand,” Musk said during a 2019 event. “Anyone relying on lidar is doomed.”

Instead, the Tesla (TSLA) CEO suggested that autonomous vehicles would primarily need to focus on cameras, mimicking the human eye. The idea that LiDAR is a “crutch” for autonomous vehicles was seconded by analysts at ARK Invest. More recently, former AI chief Andrej Karpathy explained the automaker's choice to eschew LiDAR as rooted in concerns on supply chain and price among other issues. In the interview he went as far as to argue that other automakers may follow Tesla's (TLSA) lead in dropping sensors.

However, Keilaf was more skeptical about the impetus for Musk and Karpathy's pronouncements.

“There is nothing behind these statements. When [Tesla] was a younger company, of course they needed to make ambitious statements and strong claims. Also there was no LiDAR available at the right price or from an industrialization point of view,” Keilaf commented. “At the time this was the right decision in terms of building the car based upon those factors.”

In the future, he expects that Musk will need to adjust his perspective on LiDAR technologies based upon both safety requirements and industry dynamics.

“Relying on an image sensor that could be blurred by a drop of water or affected by low-light conditions, these are non-rare conditions that could cause failure,” Keilaf concluded. “They will have to go to LiDAR eventually. It will be a difficult mistake for them to admit, but they will have to admit it eventually. They offer Level 2 today, which they call FSD, but in reality it is Level 2. It is in no way concerning to us because in reality there are so many automakers making the decision on LiDAR already, so [his statements] are just something that brings more attention to our technology, so that is nice.”

Shares of the Israeli technology company carried nearly 13% higher near Thursday's market close.