Innoviz wins $4 billion deal for Volkswagen lidar - prologiseurope

Innoviz wins $4 billion deal for Volkswagen lidar

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

Rafael Henrique | SOPA pictures | Lightrocket | Getty Images

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

Under the deal, Volkswagen will incorporate Innoviz’s latest lidar module and custom sensing software into vehicles across its portfolio.

The deal will run for eight years starting in the “mid-decade,” when the first Innoviz-equipped Volkswagen Group vehicles are expected to be delivered. Innoviz expects to supply lidar units for between 5 million and 8 million Volkswagen Group vehicles over this eight-year period.

Lidar – tagging, photodetection and ranging – uses an invisible laser beam to scan the environment and create an accurate 3D image. The sensors are considered an important part of most autonomous driving systems, which compare the images generated by the lidar with a precise 3D map to check the exact location of the vehicle.

As development and manufacturing costs have fallen, the sensors have seen wider adoption in vehicles and driver assistance systems — leading to fierce competition among a number of Lidar startups for automakers.

Innoviz, which went public through a merger with a special purpose acquisition firm in late 2020, had previously announced the deal but had not disclosed its client. The manufacturer said in May that it had won an agreement with “one of the largest car manufacturers in the world” to “become its direct supplier for many brands”.

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

“I think one of the hardest things has been the fact that we’re bringing a new product, a new generation [of lidar units], and we had to build confidence on their part to see that it’s going. That was part of what we did last year,” Keilaf told CNBC. “The second part was getting Volkswagen comfortable with Innoviz being a direct supplier.”

The process of becoming a direct supplier to a major car manufacturer is difficult. Generally, an automaker will put a potential new supplier’s product through extensive quality and durability testing. It will also conduct due diligence on a potential supplier’s business and approve the supplier only after it is satisfied that the business will be present and financially stable for the duration of the contract.

Selling directly to a car manufacturer like Volkswagen is a new platform for Innoviz. The company has an existing contract with BMW, but that contract has established automaker Magna International, which manufactures and supplies Innoviz lidar modules to the automaker as a sort of middle ground.

For Volkswagen, the lidar modules will be manufactured by contract manufacturers using tooling from – and working directly with – Innoviz, which will then supply the finished modules to Volkswagen itself.

Keilaf said the streamlined relationship offers advantages to both Innoviz and Volkswagen.

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

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