Q2 25' Lidar Landscape report

A new hope: Defense and industrial spending

Each quarter I follow the different lidar companies in the sector to get an understanding of industry trends, and each quarter they never fail to disappoint with fun tidbits and industry trends (here’s Q1 and here’s Q4 24). Innoviz, Luminar, Aeye, Aeva, Hesai, Microvision and Ouster have all reported so let’s explore.

Key trends

A few trends have been consistent for the past few quarters:

1. Everyone is short on cash: All lidar companies are raising cash, have been raising cash or will be raising cash. Most have an ATM function, that they now interestingly enough list as a capital source, so watch out if you’re holding Luminar (do me a favor and just don’t hold Luminar), Microvision, Aeye, Aeva or Innoviz - dilution is on the way!

2. Industrial, traffic management applications and defense spending are the new hope for business wins. Every single lidar company is now focusing on selling to other applications: warehouses, intelligent traffic systems, robotics, airports and train security. None of the promises from Q1 were delivered (MVIS and AEVA in particular…), and the promises continue (naturally). Small problem with this pivot is that Ouster ( OUST 0.00%↑ ) and Hesai ( HSAI 0.00%↑ ) have quite a large lead in the space already. Execution in sales is everything, and it’s not easy to simply switch focus - especially when you’re cost cutting. It’s also a question of form factor - lidars developed for automotive have a cost and durability advantage, but that might not be critical for a system that sits on a traffic light, connected to a power grid and which needs a larger field of view. The requirements for these systems might simply be very different.
   The main pushback is that many of these industries are already knowledgable about lidar and there’s a lot less education needed, faster decision cycles and sales that can convert within a year.

3. L3 is a long time coming… but there’s some hope. No clear L3 announcements have been made, but GM is focusing on it and on the way there. Innoviz mentioned an L3 program they’re bidding for with an SoP of 2027 and VW’s L3 Audi program is just a year and a half away at this point. The only other program of note is Mercedes, which seems to have gone to Hesai. If you want to see what’s happening in this space, watch Mobileye.

4. Related to the delay in L3, is lidar necessary for L2+? Hesai’s sales and majority of units go to safety in L2 and L2+. Why aren’t western OEMs implementing lower cost lidars for an ‘airbag’ like use case? Mobileye and other ADAS systems are probably the answer.
   From Ouster’s conference call:

   Consumer ADAS is still a very difficult market for us to predict, but we've been working for years on products that will be relevant in that market when OEMs are ready to adopt this technology set and mass. And that adoption looks like L2+ and L3 ADAS systems in consumer vehicles. So we're going to have the right products at the right time for them, but it's very difficult to predict exactly when the volumes are going to hit in the United States or in the Western world for that market.

5. Unlike L3, L4 robotaxis and trucks have surprised to the upside are hitting the roads in 2026, with test fleets already on the road in 2025. Aurora started driving autonomously during the quarter and recently launched nightime driving as well.
   Holon’s first autonomous shuttle has arrived in Hamburg - with 9 Innoviz lidars - and is starting to drive. Lyft, Uber, VW, Nuro have all announced partnerships in the space and that’s leaving out the Chinese players who are expanding globally.

   

Bringing the trends together: it’s slow going and cash is king. Everyone is raising capital. BUT winners are already emerging. Keep your position size accordingly.

Now onto some company specific call outs!

Innoviz

INVZ 0.00%↑ reported a very strong quarter, which in my opinion is as good a quarter as can be expected in this sector at the moment:

1. Revenue up

2. Cash burn down

3. Future NRE bookings up

4. Raising cash via ATM = strengthening balance sheet

5. Commercial traction when no one else has advanced anything

Innoviz reported strong revenue growth based on NREs and the early days of shipping test units to their different customers, mainly Mobileye’s Drive L4 customers. They also raised their NRE guidance by $10m. This matters because NRE is future cash flow into the business, which lengthens their runway. Last but not least Innoviz joined the rest of the lidar cohort (minus Ouster) who have an ATM which dilutes shareholders but strengthens the balance sheet. Innoviz’s ATM is for $75m which they’ll be able to sell at their discretion.

Following this quarter, Innoviz is best positioned in the automotive lidar space:

1. They have a strong pipeline of L4 customers based on their integration into Mobileye Drive, and are at the final stage of a L4 trucking agreement (Aurora? Daimler trucks?).

2. They’re the only lidar integrated into an L3 program with SoP in 2026/2027. They’re also the front runner IMO for GM’s program (not announced yet), which would mean that they’re the L3 provider for two of the top five OEMs.

3. Their cash position is stronger: they’re expected to end 2025 with ~$60m in cash, have reduced their burn to ~$60m a year, and have ~$30m in NRE cash flow booked in 2026. Together with their ATM, they have enough liquidity to get them into 2027. Yes, this is at the expense of current shareholders - Innoviz has a low market cap and $75m in dilution is a LOT. However, this sets them up for longer term health and gives management the flexibility to sell shares in a more timely fashion, and hopefully in a less dilutive one than their previous offerings. This should mean there are no more large offerings out there (barring the existing conversion from the offering in February)

Last quarter I wrote this about Innoviz:

→ Innoviz needs to win new NREs to beat their guidance this year and exit the year with a strong cash position. Based on the slow moving RFQs going on for L3 programs, it’s very unclear if this will happen. Alternatively, they could try and raise debt based on the real volume growth and NRE future cash flow. Either would strengthen the company financially.

Based on this quarter - the above concerns are alleviated. Innoviz has now done what’s needed for a longer term success. I added to my position following the quarter, despite the upcoming dilution, as the longer term prospects for the company just got more bullish.

Aeva

Aeva was a big surprise last quarter with a massive run up to ~$1B in market cap. This quarter instead of reporting earning they hosted an entire investor day. I’m a fan of these sessions, as they help analysts understand the industry, technology and company more in depth. FMCW lidar is still an early stage science project and this helps folks wrap their heads around it.

Some highlights from the investor day:

• FMCW is deemed by the company to be THE differentiator. Technologically this is different from time of flight lidar and enables speed detection as well as distance and location.

• Aeva also has some decent industry support. They’re working with LG Innotech as strategic investor and partner and focusing beyond automotive: defense, manufacturing, automation and even consumer are in line of sight. Additionally, they’re working currently with Daimler truck and Torc (is Innoviz going to take Daimler Truck from them…? Probably not, but perhaps they’ll offer their short range lidar).

• Top 10 global OEM in development LOI - I believe this is Mercedes.

• Collaboration with Bendix on ADAS in trucking.

• In manufacturing working with SIC, Nikon, LMI. This should speed their GTM and scale.

• Speaking of scale, they’re targeting a manufacturing facility that can produce 100k units. If they can pull this off that would be massive since one of the pushbacks against FMCW has been that it’s a science project and can’t actually be manufactured at scale.

• Aeva hosted some of their customers - Daimler America, Torc and Bendix - and while they didn’t say anything groundbreaking, it’s good to see some customers in the space out there and talking openly about lidar partners. Here’d Daimler America:

  At Daimler Truck, we keep the world moving towards a safer and more efficient future, and that future depends on having the right technology and the right partners. For the past eighteen months, we've been working closely with AEVA on their production program.

  Together, we're integrating their 4d LiDAR technology into our autonomous ReadyTrack platform. And I'm really pleased to say progress is going strong. We're hitting our joint milestones and have already incorporated their LiDAR technology into our next iteration of trucks based on the fifth generation Freightliner Cascadia.

  With Aeva’s start of production planned for 2026, they are a major contributor and enabler of the market launch for our autonomous trucks in 2027. The ultra long range LiDAR technology enables Level four autonomous driving at highway speeds to detect objects at a far distance and leave sufficient reaction time for the virtual driver. We have full confidence in AEVA. Their state of the art technology, their team and their ability to deliver at scale have been key to this partnership.

  We are proud to continue to grow this partnership with Aeva and bring the next generation of autonomous driving technology to life in our autonomous ready Freightliner Cascadia. And we will do that safely, efficiently and at scale.

That’s all you can ask to hear from a customer at an investor event. Two interesting points: this is predicated on Aeva hitting production in 2026, which is TBD, and apparently for long range lidar, not the short range lidar that all trucks come with as well, so perhaps there’s room for two lidar players for trucking?

FMCW lidar still needs to come down in cost to be a real competitor for time of flight sensors. The benefit of developing on common tech platforms is the decreasing cost curve they’re on. This isn’t necessary the case for FMCW. When it comes to the vaunted defense, industrial and traffic use cases, it’s not clear to me why FMCW is always needed over something simpler that’s cheaper.

Aeva boosted their cash position in the quarter with, what else, an ATM. They have ~$50m in cash, 31.2m in burn in most recent quarter and a 1$25m in a credit facility with another 32m expected from LG investment. Overall they seem fine, but as with other lidar companies - beware the dilution.

What I enjoyed in the investor day was the financial presentation on their automotive TAM. Unlike other lidar companies, they forecast TAM for automotive realistically. Each program won is only around 150m annually - at scale.

In general, Aeva generates a lot of interest but they need to deliver on the actual technical capability and feasibility of FMCW.

Aeye

Aeye has taken a different approach to most of the independent lidar players. They’ve gone the asset light approach and partnered with Liteon as their tier 1 manufacturing partner. What this means is that they've gone asset-light with greatly reduced capex but also greatly reduced upside. To put that in numbers, their expected cash burn for the year is only $26M vs the $60-$150 that other LiDAR players are expected to burn.

This quarter they diluted, sold shares and “boosted” liquidity to a total of $125m counting debt, ATM facilities. Again beware dilution.

Unlike Innoviz or even Aeva, Aeye’s traction seems…weird to non existent.

- They finally became part of Nvidia’s platform

- They won some academic research contest that’s sponsored by GM (among others)

I mean…c’mon. I’d prefer it if management simply said we’re hard at work and this is a slow moving industry. Importantly, Aeye’s Apollo does have the form factor that fits behind the windshield, which is what the industry really wants - not in the grille or the infamous Luminar hump.

In terms of their GTM and traction Aeye seem farther behind: they integrated with Nvidia Drive last quarter, have no OEM announcements to make (neither does LiteOn). This could all change quickly and I’m sure that having a tier 1 partnership helps GTM.

Microvision

Microvision never disappoint. Me at least. They disappoint their investors every quarter. Yet again, no commercial announcements. They dropped mentioning the thousands of units they’re all ready to ship with ZF. Instead we got commentary from the CFO about how their stock is benefiting from increased trading volume as well as macro investing commentary on the small cap space.

Number two, a global portfolio rebalancing that seems to be at play for large financial institutions. As a result of which, small to mid cap companies are expected to continue to benefit from this trend.

Microvision does however add helpful commentary on the space usually, which is why I listen closely to the call. If you recall last quarter they mentioned that regarding the 7 RFQs they were involved in that “We remain engaged in 7 RFQs for automotive programs and make incremental progress. This has been really slow going because of OEMs focus shifting to their global plans".

This quarter they flat out said that RFQs are being reformulated. CTO Glenn, who has a very rich background in vision sensors and safety systems such as radar, says that the RFQs that they are seeing now, which are reformulated, are much more mature since OEMs are finally figuring out what to prioritize in terms of the spec that they're looking for. So the RFQs now show an increased maturity in the OEM mindset and therefore a higher likelihood of these actually being the RFQs that will lead to real deals.

But…

This means that timelines are being pushed out and SoP is most likely 2028 (smaller volumes) - 2029 (most likely). Some RFQs could convert this year but who knows. This tracks with what we’ve seen from Mobileye and the rest of the lidar space. It simply seems that beyond the VW SoP aimed for Q3 2026, and perhaps GM, there isn’t a large scale L3 program coming soon.

This makes the need for NRE revenue and other product lines that generate revenues paramount.

I’ll end Microvision with a bullish note. They’re shifting focus to defense, and this actually does seem interesting. Management mentioned drone swarming, and you know what? This could actually be a good market for them. There is a real problem in conflict zones of drone swarming in GPS-denied areas. As the CTO on the call points out, they believe they have the technology stacked to both map with their LIDAR and sensor fusion, as well as transmit that data to other drones in the air and provide a command and control kind of drone for a drone swarm.

That is a very compelling product for drone swarming. If Microvision can deliver that in aerospace and defense, that will be a cool use case. They claim that this is also relevant for other form factors like logistics, but I'm much more skeptical since simply because in non-conflict related areas, it just makes much more sense and lowers the total cost of the system to map it out and put RFQ chips and provide a more structured environment for the robots, much like Amazon has done with Kiva Systems.

Luminar

Luminar finally kicked out Austin Russel as CEO. Why it took them so long to take this action is beyond me. It seems the new CEO is trying to be the adult in the room by resetting expectations, lowering guidance and diluting the company to hell to deal with the debt. We always knew this was going to happen, sorry shareholders. Luminar shows all the drawbacks and screw ups in the lidar ecosystem:

1. Betting your company on a high end low volume customer - Volvo - which lowered their own forecast of cars shipped to ~5000 units a quarter. That’s just no where near the volume needed for a sensor company.

2. Betting on your own manufacturing facility…c’mon. Hesai does their own manufacturing and that’s because they’re at a million sensors.

Let’s not waste more space on Luminar.

Ouster

Ouster has been doing a great job in the industrial and smart city applications. They’re growing revenue 30+% and approaching cash breakeven this year. As a pure play lidar player it’s an interesting company. As an automotive lidar supplier it’s been less interesting. Although they provide lidar for May Mobility which is trying to scale with Lyft.

Will Ouster be able to improve their value chain and technology faster than other lidar players can reach distribution? Tough to tell. They now have 1000+ customers and a strong pipeline.

Hesai

Hesai is absolutely smashing it. They’re the only profitable lidar player, shipping 1.2 million units. Interestingly enough, they’re well aware that their current $200 price point for their lidar will need to 2.5x to ~$500 to represent the BoM for a better lidar which they’ll need to ship to western OEMs or to Chinese ones who are focused on L3.

Hesai is making inroads with their newer long range lidars, especially with the Chinese JVs of global OEMs: GM, Toyota and Audi. The European OEM (yet to be announced but probably Mercedes) is the only non China program for Hesai, where they progressed from B to C sample in a timely fashion. This will be a large proving point for Hesai.

Portfolio implications

I’ve been a long time holder of Innoviz, and this quarter improves my confidence in Innoviz. They’re still on track and by far the leader in the western lidar markets. However it’s still a market undergoing large shifts that’s developing slowly. Caution is still the better part of valor until a clear path to cash flow breakeven can be seen. I’ve added a bit to my position during the quarter based on the clearer visibility and will be a buyer of weakness.