(Bloomberg) — Volkswagen AG ordered $4 billion worth of lidar from Innoviz Technologies Ltd., sending the Israeli sensor supplier’s shares soaring in early trading.
The deal with VW’s software unit Cariad boosts Innoviz’s total future orders to $6.6 billion, and there’s potential for the amount to grow if the company ends up supplying to more VW group brands, Chief Executive Officer Omer Keilaf said in an interview. Innoviz shares surged as much as 46% to $5.83 before the start of regular trading Tuesday.
Innoviz, which also has a lidar agreement with BMW AG, will supply the sensors and integrate the software that makes them operate in VW’s vehicles. That’s a step up for Innoviz, which in the past relied on Magna International Inc. to embed its technology.
“Doing that vertical integration removes a lot of pressure for us, because we are able to reduce the pricing while still keeping a very nice margin for us,” Keilaf said.
Lidar — laser-based sensors that help vehicles detect their surroundings — are among the most expensive components that enable advanced driver-assistance features and autonomous driving systems. The slower-than-expected rollout of robotaxis has led a wave of lidar startups that have gone public to focus on selling carmakers hardware and software for features such as hands-free driving on highways.
Related: With Robotaxis Still a Distant Dream, Lidar Makes Itself Useful
Innoviz, which went public via a reverse merger last year, is hiring a third-party contractor to manufacture the lidar sensors, Keilaf said, declining to disclose the name of the company.
VW established Cariad in 2020 to consolidate its software efforts. The unit is working with Robert Bosch GmbH to bring hands-free driving functions to the carmaker’s fleet starting in 2023. VW swapped out its Chief Executive Officer Herbert Diess last month after software issues delayed important models.
(Updates with early trading in the first deck headline and first paragraph.)
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