Innoviz Technologies Sees Lidar Momentum Rebounding as Defense, Physical AI Demand Grows

Key Points

• Interested in Innoviz Technologies Ltd.? Here are five stocks we like better.

• Innoviz sees lidar demand rebounding in automotive as Level 3 and Level 4 autonomy programs regain momentum, with U.S. automakers reengaging and German OEMs already pushing ahead.

• The company says its biggest near-term growth opportunity may be in security and defense, where lidar can help with perimeter security, drone detection and other “Physical AI” use cases that need better real-world perception than cameras or radar alone.

• Innoviz is positioning its next-gen InnovizThree lidar for behind-the-windshield installation, aiming to cut costs by 35% while appealing to automakers that want easier integration and cleaner vehicle design.

Innoviz Technologies (NASDAQ:INVZ) Chief Financial Officer Eldar Cegla said the lidar industry is seeing renewed momentum in automotive applications and growing demand in non-automotive markets tied to “Physical AI,” during a fireside chat at TD Cowen’s TMT Conference.

Speaking with TD Cowen analyst Itay Michaeli, Cegla described Physical AI as systems that must interact with the real world in real time and therefore require strong perception capabilities. He said cameras remain widely used, but 3D sensors such as lidar can provide an AI system with a more detailed view of its surroundings by pinpointing objects in the environment.

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Cegla said the automotive lidar market has gone through a hype cycle and a subsequent slowdown, but is now in a more mature phase. He said the industry has a better understanding of the sensors required to support safe autonomous driving, with companies such as Mobileye and NVIDIA providing computing platforms that use sensor data to make driving decisions.

Defense and Security Seen as Near-Term Growth Areas

Cegla said Innoviz began expanding its market focus beyond automotive more than a year ago, initially exploring areas such as smart cities, intelligent transportation systems and construction. More recently, he said the company has seen growing demand from security and defense applications, including situational awareness, perimeter security and automated systems that must navigate their environments.

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“We see that there is a real sense of urgency in these kinds of applications and an actual missing link or sensory level, which is not accommodated for by cameras and radars because they have certain shortcomings,” Cegla said.

In non-automotive markets, Cegla said Innoviz does not intend to act as a Tier 1 supplier as it does in automotive programs. Instead, the company expects to supply lidar products and related software to larger integrators as a Tier 2 or Tier 3 participant.

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He said the company is especially focused on perimeter security, where existing systems often use radar to detect activity and cameras to focus on specific areas. Cegla said radar can generate false alarms in ground-based environments with vegetation, fences and other sources of noise, while lidar can offer resolution, field of view and resilience at a similar price point.

Cegla also highlighted drone detection as a key opportunity. He said drones can be difficult to detect because they are small and often fly close to the ground, creating challenges for radar-based systems. He said lidar can help distinguish drones from other objects, though he noted that effective solutions require strong performance in range, resolution, frame rate and outdoor operation.

Higher ASPs Outside Automotive

Asked about pricing and margins, Cegla said the automotive market remains Innoviz’s largest opportunity in terms of volume and aggregate revenue, but also carries significant pricing pressure. He said automotive lidar units sold at high volumes are priced in the hundreds of dollars.

By contrast, he said security and defense programs currently involve lower volumes, typically in the thousands or tens of thousands of units, but can support average selling prices of several thousand dollars. Cegla said that mix can provide a meaningful contribution to revenue and a more favorable gross margin profile.

Cegla said sales cycles in non-automotive markets can also be shorter than in automotive. While automotive programs can take four or five years from initial engagement to start of production, he said some non-automotive opportunities can move from first meeting to pilot and deployment agreement within months, depending on the program.

On software, Cegla said Innoviz offers a range of software capabilities and has experience with perception in automotive, but is currently relying on partners for some non-automotive perception layers. He cited Cogniteam as a partner providing perception software, with Innoviz offering lidar and software together as a solution. He said software can be priced as an add-on and may include maintenance or recurring revenue elements.

Automotive Momentum Returning in Level 3 and Level 4

Cegla said Level 3 autonomous features are already becoming part of the expected offering among German automakers, citing Mercedes, Volkswagen, Audi, Porsche and BMW. In the U.S., he said automakers including Ford, General Motors and Rivian are reengaging with Level 3 plans, while Stellantis has “taken a step back” in that respect.

He said the U.S. market had experienced delays, but he believes momentum is returning as automakers view autonomous features as a competitive differentiator against German and Chinese manufacturers. He added that Japanese and Korean automakers may adopt the technology later.

For Level 4 commercial applications such as robotaxis, shuttles and trucks, Cegla said the business model can justify higher sensor and compute costs because the vehicles can operate without drivers and be monetized continuously. He pointed to Volkswagen’s ID. Buzz program with Mobileye, which he said is expected to launch toward the end of this year or the beginning of next year, as an example of a platform with strategic importance.

InnovizThree Targets Behind-the-Windshield Placement

Cegla said InnovizThree, the company’s next-generation lidar, is designed to fit behind the windshield, which he called “sort of the holy grail of the industry.” He said automakers generally prefer that placement because it avoids exterior design changes, benefits from windshield wipers and existing cleaning systems, and positions the sensor higher on the vehicle than grille-mounted alternatives.

He said InnovizThree is designed to match the performance of InnovizTwo while reducing cost by 35%. The company is also offering the option to integrate a camera into the lidar unit, which Cegla said could save space and simplify vehicle integration.

Cegla said feedback from automakers has been strong, describing “great enthusiasm” from OEMs that have seen or tested the product.

Competition and 2030 Outlook

Cegla said the competitive landscape in automotive lidar outside China has narrowed significantly, with many companies having disappeared or stopped serving the automotive market. He said only two or three companies are now positioned to serve automotive programs, including Innoviz.

Outside automotive, he said there are many lidar providers, but argued that an automotive-grade lidar with strong performance in range, resolution, power consumption and form factor can be a strong competitor, particularly in security and defense.

Without providing formal guidance, Cegla said Innoviz’s projection is for “hundreds of thousands of units a year” by 2030, potentially north of 500,000 units, while noting that the company still needs to win programs and aggregate those volumes.

About Innoviz Technologies (NASDAQ:INVZ)

Innoviz Technologies Ltd. (NASDAQ: INVZ) is a developer of high-performance solid-state LiDAR sensors and perception software designed to support advanced driver assistance systems (ADAS) and autonomous driving applications. The company’s core business focuses on providing automotive-grade LiDAR hardware, along with software algorithms that enable accurate 3D mapping, object detection and environmental perception in real time. Innoviz’s technology is tailored for integration into passenger vehicles, commercial fleets and other mobility platforms seeking improved safety and autonomy.

Founded in 2016 and headquartered in Rosh Ha’ayin, Israel, Innoviz has emerged as a key supplier to leading global automakers and Tier 1 suppliers.

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