Austin Russell may be just 24 years old, but he’s been helming his lidar laser scanner company since dropping out of Stanford at 17, and he’s no longer interested in running Luminar Technologies as a startup. Being a component company—selling a widget to a major supplier, which then sells it to an automaker—won’t do either. Russell wants Luminar to be one of those suppliers, known as the Tier 1 companies, that sell directly to automakers—to compete with, rather than work with, the likes of Bosch and Continental.

That’s a reasonable aspiration, Russell says, because Luminar offers more than a hunk of hardware that shoots lasers into the world and measures how long they take to bounce back. It also provides the software that takes the resulting “point cloud” of data and translates it into useful information: car here, truck there, pedestrian over yonder. What Russell calls “perception as a service” isn’t meant for those developing fully driverless vehicles. Companies like Waymo and Cruise are plenty capable of that classification work. It’s for automakers who want to use lidar to let their customers take their eyes off the road a bit, as on divided highways. Current “semiautonomous” systems require the human always watch the road, because the radars on which they rely have trouble detecting things like stopped firetrucks. Because lidar sees in much greater detail than radar, it could make the cars capable enough to drive without that constant supervision.

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Russell wants Luminar to be the go-to provider for automakers interested in such systems, which he says will start hitting dealer lots in mid-2022. “We want to make it easy for them,” he says. Meaning not just offering the laser but the intelligence that makes it useful.

Luminar’s shift in focus is just one result of the evolution of an industry that barely existed a decade ago but which is now populated by dozens of companies, each promising the gift of sight to the many types of self-driving vehicles poised to hit the streets in the coming years. Of late, the lidar industry has shown signs of consolidation, and some see a shakeout coming. Shahin Farshchi, a partner at venture capital firm Lux who invests in lidar company Aeva—which recently showed off a lidar system that fits on a single chip—wagers that for every 10 companies, three will fold, four will be acquired for modest sums, and the remainder will produce impressive returns.

Courtesy of Luminar

Russell says he has been approached by a half-dozen competitors asking if Luminar would be interested in acquiring them. The biggest self-driving developers, including Waymo, Cruise, Argo, and Aurora, have either acquired lidar companies or developed their own tech in-house. The flow of venture capital has slowed, according to Crunchbase data. And at least one player, Israel’s Oryx, flat out folded last summer.

So far, there’s been a lack of high-profile washouts, and who will fail, merge, or survive is far from clear. That’s largely because the differences among lidar makers consist not just of business strategies but approaches to the technology itself. A developer can fire its laser pulses at 900 or 1,550 nanometers (or anywhere in between), and make its receivers out of silicon or ingaas. Frequency Modulated Continuous Wave lidar, the tech of choice for Aeva, Aurora’s Blackmore, and Cruise’s Strobe, detects an object’s velocity along with its shape. Russell says Luminar has developed the same capability, with a different approach. Australia’s Baraja uses the physics of prisms to see the world. Sense Photonics is one company working on a “flash” lidar, which sends out many laser points simultaneously, taking in information much like a camera.

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Moreover, the lidar market will create a honeycomb of niches, based on who is using a vehicle and how (to say nothing of the robotics and other industries). Luminar focuses on long-distance vision, key for highway driving. France’s Valeo has logged $564 million worth of orders for its lidars, which work best for shorter distances. Israeli’s Innoviz has partnered with auto industry supplier Magna and landed a contract to produce sensors for BMW. Velodyne, which pioneered lidar for automotive purposes starting in the 2005 Darpa Grand Challenge, produces a wide array of products, starting at just $100.

“The market leaders are pulling away a bit,” says Mike Ramsey, an industry analyst with Gartner. But the big differences among these companies, and the wide variety of opportunities for success, are keeping many of them alive.

Who gets culled may hinge less on choices about nanometers and materials than on drudgier realities, says Matt Johnson-Roberson, CEO of Refraction AI, which is developing an autonomous delivery vehicle. “I’m less interested in 1,500 nanometers versus 900 versus whatever,” he says, than in whether it works, is affordable, and is available. The industry has collectively failed to hit that mark so far, though it’s getting closer. Whoever makes it first will likely get Johnson-Roberson’s business. “I’ll use whatever’s best,” he says. “I have no brand loyalty.”

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