Nobody could have predicted the events of 2020, and how a global pandemic would cause unprecedented detours, and sometimes all out roadblocks, for companies serving the autonomous and automated vehicle market. It’s been a wild ride — one that’s catalyzed market investment and clarified the business dynamics that will lead to sustained profitability. We sat down with several members of AEye’s executive team for a reset on where the market is today, and where it’s headed in 2021 when it comes to technology, business, operations, marketing and finance.
Nate Ramanathan, SVP of Operations, on Supply Chain
As the vaccines come out and as we get ourselves accustomed to the new way of living, we are going to be in a place where the autonomous industry is very real and a true value adder to the new way of living. The subcomponent suppliers in this supply chain will be looking at, how do I invest in additional lines, putting in new facilities? They have to scale up quickly to capture the lion’s share of the market, because economy of scale is going to be a huge driver of cost. The automotive industry runs in long cycles, 5–7 years for a program or a particular component, and if they want to play in this game, they need to have production lines that can scale up rapidly, yet lean, extremely efficient, and agile to adopt new changes in designs. We’re talking about 92 million vehicles being produced throughout the world, if we add the adjacent industries that will benefit from LiDAR sensors — that number will grow by an order of magnitude. To handle such a large demand, the supply chain maturity has to come first.
One thing we know from the history of the automotive industry over the past 100 years: they make the supply chain lean, efficient, and provide reliable products at lowest cost. The LiDAR industry is in that path right now. Consolidation at the downstream companies will start happening in mid-2021. As the cost pressure increases, the sub-tier suppliers normally try to vertically integrate themselves to become cost efficient. In that process, they will lean out the supply chain and remove inefficiencies. Some of that has already started happening in the 3rd and 4th Tier of the Supply Chain. Sometimes people throw in numbers like $100 LiDAR hardware. Is it doable? Of course, it is doable, but sub-tier suppliers have to become efficient, scale up, and be ready for it to make it a reality. As the industry is looking at pricing the product in 2032 and beyond, the sub-tier suppliers in this industry are looking at all possibilities to reduce cost and provide the market with a reliable product. This consolidation process can take several years. This industry is just scratching the surface of possibilities. As the market matures, this supply chain will be very strong.
Bob Brown, CFO, on Finance
The government has been very supportive of the Fed and Treasury in terms of putting capital into the market, so there’s been a tremendous amount of liquidity that’s come into the capital markets, and that’s obviously helped to sustain the equity markets and has done good things for the bond market. We’re seeing ultra low interest rates and a lot of interest in high tech investments. People are in more of a “risk on” mindset than the “risk off” mindset they had when the pandemic first hit, which has generated interest in high growth, high tech businesses such as ours, and that’s been one of the positive things that has come out of this from a capital markets perspective.
Another development has been the advent of the SPAC market. We’ve seen some of our peers go public through the SPAC mechanism. There’s also been areas like EVs, and a number of other related auto tech businesses that have gone public either directly or through a SPAC. Prior to this year, there weren’t a lot of opportunities in the public markets to invest in auto tech. Now the public markets can invest pretty substantially in the sector, and a lot of that is related to the SPAC activity that we’ve seen.
There’s going to be a lot of competition in the space, particularly as the economy starts to grow beyond just the positive things we’ve seen in the capital markets. Hopefully we see Main Street start to recover as well, and we’re already seeing more companies getting funded, more competition for people, competition for customers. We’ll continue to see more M&A activity and more IPO activity as business executives gain confidence, particularly if we start to see the core economy recover more strongly and, certainly, with the vaccine coming out. I think the combination of those things will make people more bullish in 2021.
Jordan Greene, VP of Strategy & Partnerships, on LiDAR
I think that there is not necessarily a one size fits all solution: you’re going to have short range, low end LiDAR; you’re going to have mid range, medium performance; and you’re going to have long range, high performance LiDAR, and they’re all going to find their place.
There are so many different markets that they’re all going to start evolving to incorporate LiDAR in them because it’s the only deterministic sensor. It’s the only sensor that you have active sensing that is reliable and the ability to actually get concrete range information, to get resolution at range. When you have that capability, it’s not a question of if you would use it, it’s a question of when you would use it, and what’s the right price point, and what the right functionality is that you need for your specific application — it could be phones, it could be infrastructure, it could be construction, it could be aerospace, it could be anything. It just depends on what the problem is that you’re trying to solve and what the price point is that you’re willing to pay for it.
In the next few years, as those markets evolve and start to incorporate LiDAR and begin to grow, I think that you’re going to see a segmentation of LiDAR into different buckets of performance and cost, and you’re going to see areas or markets or domains that you would have never imagined using LiDAR in the most unique ways. You’ll see it in every environment. Again, it’s a question of when, not if.
Steve Lambright, CMO, on post-COVID Marketing
There’s going to be a huge amount of pent-up demand when things start opening up — when everyone’s gotten the vaccine and they’re able to go out and see and meet and greet people again — to be with other human beings. I think marketing has an opportunity in the last half of 2021 to find ways of leveraging this desire to meet that appetite for human interaction.
That being said, I think virtual components of events are here to stay. Within AEye, we started doing interactive demos and engaging customers over the Discord gaming platform this year.
We’ve connected our demo vehicles to Discord so that we can do live, interactive Discord demos from Interstate 580 in the USA or from anywhere in the world, allowing attendees to engage with our engineers in real time. It’s unique and has truly transformed how we think about product marketing. I think this type of experience is here to stay.
Future events will be hybrid, with a real-time, personal portion, as well as a virtual connection. I think there’s going to be a really interesting opportunity for events to differentiate themselves based on how they manage that hybrid environment.
To hear more from diverse industry experts on what’s ahead for ADAS and autonomy, technology and business model drivers, and challenges and opportunities to look for in 2021, tune into AEye Insights.
AEye is the premier provider of high-performance, AI-driven LiDAR systems for vehicle autonomy, advanced driver-assistance systems (ADAS), and robotic vision applications. AEye’s smart, software-configurable iDAR™ (Intelligent Detection and Ranging) platform combines solid-state, active LiDAR, an optionally fused low-light HD camera, and integrated deterministic artificial intelligence to capture more intelligent information with less data, enabling faster, more accurate, and more reliable perception. The company is backed by world-renowned investors including Kleiner Perkins Caufield & Byers, Taiwania Capital, GM Ventures, Intel Capital, Continental AG, Hella Ventures, LG Electronics, Aisin, Airbus Ventures, SK hynix, Subaru-SBI, and Tyche Partners.
