This May 13, 2014 file photo shows a row of Google self-driving Lexus cars at a Google event outside the Computer History Museum in Mountain View, Calif. AP

Infineon Technologies has acquired Dutch electronics company Innoluce BV, a designer of miniature "lidar" laser-scanning modules that the German chip giant says can help it to cut dramatically the cost of sensor systems for driverless cars.

The deal will help to reduce the cost of light detection and ranging sensors (lidar) for use in guidance systems for mass-market vehicles, the head of the German company's automotive business said on Tuesday .

Infineon can deliver lidar for use in fully autonomous driving over the next five years for $25, a tiny fraction of the thousands of dollars the technology now costs, automotive chief Peter Schiefer told investors on a conference call.

"We intend to make lidar an affordable feature for every new-built car worldwide," Schiefer said.

Lidar employs laser beams to measure the distance to objects near a vehicle, enabling car control systems to identify road ways, traffic signs, pavement markings, and overhead bridges and other potential obstacles.

Infineon said lidar, together with its existing radar and camera sensors, gives it the three complimentary building blocks needed for more advanced driver assistance features and for eventual driverless navigation systems due within five years.

Schiefer said lidar provided important back-up features in the event camera or radar sensors fail to detect on-coming objects.

"It is not just the camera and the radar. The contribution of lidar has to do with redundancy requirements," he said.

As a result, the company forecasts it can charge far less for lidar than it will for camera and radar. It estimated camera modules in autonomous cars would average around $195 per vehicle, with radar adding another $165 and lidar just $25.

Infineon estimates the total bill for materials for chips will average $550 per driverless car.

Early versions of lidar developed by Silicon Valley-based firm Velodyne that were used by Google in its self-driving car project cost $75,000 per vehicle.

Newer versions of lidar sensors cost just one-tenth of that price and Velodyne and rivals such as Quanergy are aiming to drive the cost down to hundreds of dollars per unit by miniaturising the bulky roof-top devices into semiconductors.

Innoluce produces the micro-electro-mechanical systems (MEMS) modules that incorporate tiny mirrors controlled by a computer chip that can be used to direct laser beams in the sensor systems.

Financial terms of the purchase of Innoluce, a spin-off from the electronics group Philips, were not disclosed. The company was founded in 2010 and is based in Nijmegen, on the Dutch-German border.

Infineon's biggest rivals in the car market are also racing to develop chips to control and drive the sensors required for autonomous driving, including NXP and STMicroelectronics. (Editing by Greg Mahlich and Jane Merriman)