Innoviz wins $4 billion contract for Volkswagen Lidar

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

Rafael Henrique | SOPA photos | Light Rocket | Getty Images

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

Under the deal, Volkswagen will integrate Innoviz’s latest vehicle lidar unit and its proprietary visualization software into vehicles across its portfolio.

The agreement will run for eight years beginning in the “mid-decade”, when the first Volkswagen Group vehicles equipped with the Innoviz Group are expected to be shipped. Innoviz expects to provide lidar units for between 5 million and 8 million vehicles from the Volkswagen Group during this eight-year period.

Lidar – meaning, light detection and rangefinding – uses an invisible laser beam to scan surrounding areas and create a detailed 3D image. Sensors are essential components of most autonomous driving systems, which compare images generated by lidar to a detailed 3D map to verify the exact location of the vehicle.

With declining development and production costs, sensors have seen wider adoption across vehicles and driver assistance systems β€” leading to fierce competition among a large number of lidar startups for the auto industry.

Innoviz, which went public through a merger with a special purpose acquisition firm in late 2020, had previously announced the deal but did not disclose its client. The lidar manufacturer said in May it had won a deal with “one of the world’s largest auto manufacturers” to become its “direct supplier of lidar across multiple brands”.

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

β€œI think one of the most challenging parts is the fact that we are coming up with a new product, a new generation [of lidar units]And we had to build trust on their part to see it work. That was part of what we did last year,” Keilaf told CNBC. The second part was getting Volkswagen to feel comfortable with Innoviz becoming a direct supplier. ”

The process involved in becoming a direct supplier to a large auto manufacturer is arduous. Generally, the automaker will put a potential new product to the supplier through extensive quality and durability tests. He will also perform due diligence on the business of the potential supplier, accepting the supplier only after he is confident that the company will be in existence and financially stable for the duration of the contract.

Selling directly to a car maker like Volkswagen is new ground for Innoviz. The company has an existing deal with BMW, but that agreement established auto supplier Magna International to manufacture and deliver lidar units from Innoviz to the automaker as an intermediary thing.

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

Qilav said the simplified relationship offers advantages for both Innoviz and Volkswagen.

β€œIn the end, it was convenient, because the new product is really interesting in terms of performance and price,” said Kilav. “And the fact that we’re a direct supplier is also very beneficial in terms of cost reduction. It’s less of a three-way programme.”

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