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In the past few months, five LiDAR companies – Aeva, Innoviz, Luminar, Ouster, Velodyne – have already gone or will soon go public via a special purpose acquisition company (SPAC). There are pros and cons of going public via SPAC, as we detail here, and a key figure in the autonomous vehicle industry doesn’t think the trend will end well for LiDAR makers.

Kyle Vogt, co-founder, president & CTO at Cruise, posted a thread on Twitter earlier this week about the “interesting thing happening in the LIDAR industry right now.” Vogt said the LiDAR industry will eventually consolidate, similar to what the robotaxi industry has gone through the last two years.

The LiDAR companies are being valued based on projected revenues. The issue, according to Vogt, is the projected revenue comes from “entirely overlapping potential customers, with very little discount applied to future projections.” Here’s how Vogt sees these companies overlapping:

• They all target ADAS or robotaxi market as the top [or] one of the top revenue sources
• Each company offers value-added software for perception
• Each company is counting on today’s nascent industry adoption of LIDAR to balloon

Vogt posted images of public pitches from each of the five LiDAR companies to highlight his points. Here is Vogt’s Twitter thread if you want to read the entire thing.

Most companies working on autonomous vehicles consider LiDAR (light detection and ranging) as a key piece of the technology stack, including Cruise. In 2017 it acquired a LiDAR company called Strobe. Vogt wrote that “Strobe’s new chip-scale LIDAR technology will significantly enhance the capabilities of our self-driving cars. But perhaps more importantly, by collapsing the entire sensor down to a single chip, we’ll reduce the cost of each LIDAR on our self-driving cars by 99%.”

LiDAR uses laser pulses to build a 3D model of the environment around the car, helping it see other objects in the environment, including cars, cyclists and pedestrians. Tesla CEO Elon Musk is the most high-profile LiDAR detractor. Its vehicles, which can be equipped with Autopilot or Full Self-Driving beta software, don’t have LiDAR. They instead rely on radar, GPS, maps and other cameras and sensors. “LiDAR is a fool’s errand,” Musk said in 2020. “Anyone relying on LiDAR is doomed. Doomed! [They are] expensive sensors that are unnecessary. It’s like having a whole bunch of expensive appendices. Like, one appendix is bad, well now you have a whole bunch of them, it’s ridiculous, you’ll see.”

Perhaps applications other than autonomous vehicles will soon emerge as the go-to market for LiDAR technology, especially as unit prices continue to drop. But Vogt doesn’t think going public via SPAC will help long term.

“What does this mean? First, I have great respect for all of these companies. They’re each innovating in different ways, and competition is great for the industry. Robotaxis will have an enormous positive impact on society, so it’s critical to see progress here.

“But we saw a consolidation/collapse of the robotaxi space over the last 24 months (down to a handful of players), and LIDAR is next. This probably means lower market caps for most of these [companies], which sucks for everyone involved, but may the best product win!”

Despite COVID-19 throwing many autonomous vehicle companies for a loop in 2020, Cruise managed to have a productive year. In January 2020, Cruise introduced its Origin ride-sharing vehicle, a result of a collaboration among Cruise, GM, and Honda. In mid-2020, Cruise acquired German radar manufacturer Astyx. In November, it announced a partnership with Walmart to test an autonomous delivery service that will start in early 2021 in Scottsdale, Arizona.

And in early December, Cruise began testing its autonomous vehicles without a human safety driver behind the wheel. A Cruise employee is still sitting in the passenger seat with access to an emergency stop button, but it has to start somewhere. More than five years of testing and driving more than 2 million miles on the streets of San Francisco led to the moment below.