Equipping Tomorrow Vehicles

04 March 2020

Bottom line:

LiDAR is reaching maturity after having been considered an expensive and high-end technology. Robotic vehicles for inventory management, together with autonomous vehicles are the key end markets, however low-cost (which started to fall sharply as of late) products are needed for LiDAR to take-off.

Being the most advanced and precise 3D sensing technology, LiDAR has just started to enter several high growth sectors. The lower the price and the higher the adoption in the next few years. We are closely monitoring the market but Alphabet’s Waymo is likely one of the winners in this race.

LiDAR: A Military Technology In Your Hand

When tech maturity translates into lower costs…and increased adoption

Light Detection And Ranging (LiDAR) technology is reaching maturity after having been considered an experimental, expensive and high-end technology. Like radar, LiDAR was initially developed for military uses, but it is now getting used in civil applications.

Costs are dropping significantly, with cheapest LiDARs now priced at $100.
This unlocks new fields of use for LiDAR technologies.

Not only equipping tomorrow vehicles

Automotive suppliers are developing low-cost LiDAR solutions for cars. Other industries such as windmills operators use it for optimizing turbine positioning. Inventory management systems use of this technology for counting objects on a shelf or move them with high accuracy.

Warehouse management, a $20bn market could be disrupted by LiDAR.
Non-military air and land vehicles deploy LiDAR to understand and navigate their surroundings.

The sweet spot in a fast-growing market

In our latest issue we wrote about 3D optical sensing, the largest booming technology in the sensors market. Looking further down the value chain, LiDAR have the highest growth potential as the inflection point nears.

The LiDAR market is expected to be worth $6.3bn by 2024, with 29% CAGR.
The automotive and robotic vehicles sectors are the most important, with CAGR of 60% and 58% respectively.

Click the image to enlarge

Multiple High Tech Components

Simple though complex device

LiDAR devices are made up of three key elements, all of which are high-end parts of sophisticated technologies: laser, optics with scanner, and photodetector with receiver electronics.

It uses visible infrared (IR) and ultraviolet (UV) light that scans a surface. The reflected signal is then read by a sensor and the scene (picture) is reconstructed.
It can sense all sorts of materials, including metallic and non-metallic objects, minerals, water such as rain or cloud, wind, and chemical compounds.
The resolution can be extremely high, up to 30cm2 from a distance of 1km.

Reaching maturity to satisfy the most demanding market

Automakers are known to be very demanding customers: component suppliers have been pushed to improve their LiDAR systems across the board.

Lasers are changing from Edge Emitting Lasers, prone to diffraction and less precise, to Vertical Cavity Surface Emitting Lasers, which increase accuracy.
The more advanced MEMS are replacing optical scanners.
Standard detectors are substituted by the more precise, and less prone to error, single-photon avalanche diode.

Getting as cheap as possible

The debate around LiDAR revolves around cost-benefit metrics with detractors saying that it costs too much. But the cost is never a long-term issue in technology, as the higher the volumes and the lower the prices. This happens now for LiDAR.

Velodyne has launched a $100 LiDAR at CES last January.
Drone manufacturer DJI is selling its LiDAR, Livox, starting at $599.
Intel’s LiDAR is available from $349.

Who’s In The Game

A fragmented market landscape but Waymo might eventually win the race

The LiDAR market gets more and more crowded as the technology is moving from its experimental phase to being industrialized.

Google’s Waymo might win the race as it has the best technology at the best price.
Velodyne, Bosch, Denso, and Valeo are some other players in the automotive market, which is expected to be a $2bn market opportunity by 2023.
Pure players, like Velodyne, Quanergy, and Robosense, have a range of products servicing other markets, like Robotic vehicles.

The largest opportunity lies in custom robots

As the technology matures, a plethora of LiDAR markets develop, opening new opportunities.

Custom robots for warehouse management notably is a market that can greatly benefit from LiDAR technology. This market alone is worth $3-4bn.
Topography represents a $1.2bn opportunity, where LiDAR attracts interest from oil & gas players.

Competition is tough, very tough

LiDAR is not the only technology able to sense the surrounding. Radar, GPS, Camera, Ultrasound talking to an AI chip can offer the same degree or even more details than LiDAR and are currently still cheaper.

The industry leader Velodyne sells its top-end product at $75k. Intel’s Mobileye solutions sells at $1k. For cars, low-end LiDARs are the key for their adoption.
None of them though is reliable as LiDAR in all conditions, such as in bad weather or in dark conditions.

Click the image to enlarge

Catalysts

Autonomous vehicle. Car manufacturers are pushing the development of ADAS (Advanced Driver-Assistance Systems) solutions. LiDAR's are part of the equation that will make AVs a reality.
Warehouse automation. Automation and inventory management will push the adoption of LiDAR technologies, as it adds an extra eye to look after inventories.
Artificial intelligence. AI will use LiDAR input, together with other sensing technologies, to improve the driving experience by making it safer.

Risks

Regulation. Autonomous Vehicles represent the biggest LiDAR opportunity, but regulation may hinder ADAS adoption and thus slowdown the takeoff of LiDAR.
Lack of credibility and high prices. Tens of startups are developing LiDAR, but no big name (including Alphabet’s Waymo) has come out with a precise cost-effective solution.
Cannibalizing technologies. The three main components of LiDAR are very complex devices. Their function can be replaced by

Sources:
Yole, Reuters, IHS, McKinsey «Automotive software and electronics 2030» , Business Insider Digital Health Intelligence

Companies mentioned in this article:
Alphabet Waymo (GOOG US), Bosch (not listed), Denso (6902:JP), DJI (not listed), Intel (INTC:US), Quanergy (not listed), Robosense (not listed), Valeo (FR:FP), Velodyne (Not listed)

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