Luminar Technologies is the current leader in automotive LiDAR sporting safety-first stalwart customers Volvo and Mercedes Benz, plus some newcomers to the game like SAIC's Rising Auto, which offers the R7 in China today with available Luminar LiDAR. The company recently reported that it is designed into more than 20 vehicle models.
Today, Luminar announced the successful bring-up of a new, highly automated, high-volume manufacturing facility in Monterrey, Mexico. This new factory is dedicated to the production of Luminar's Iris sensors and is operated by Celestica, one of Luminar's strategic contract manufacturing partners.
The company says the new 118,000 square feet facility will have an initial capacity for up to 250,000 sensors per year and is expandable to approximately 500,000. Celestica is also in the process of building an additional extension to the high-volume factory for Luminar to enable state-of-the-art testing for performance and quality while enabling the opportunity for further capacity expansion into the millions annually in the future.
I believe this announcement marks a significant milestone for Luminar as it continues to deliver on its program milestones and shows global automakers that Luminar is uniquely positioned to support their series production programs. The company says it expects to establish the next phase of its capacity installation in the Asia Pacific region and will report continued progress during its first-quarter business update on May 9, 2023.
But will it get any credit for this announcement even though its prime competitors are discussing manufacturing from PowerPoint slides?
It’s tough to be the leader. I worked at AltaVista during the Dot.com 1.0 Era and companies like mine and Yahoo, Excite, Ask Jeeves and the other relevant portals and search engines were trying to figure out how Google was doing it with search. Some of these companies threw barbs like “there’s no money in search,” “there’s no way they can afford to do that,” “they copied the tech from Altavista” or “these kids don’t know how to run a real business.” Even investment banking firms were lining up to take pot shots at Google as they had backed a Google competitor. We all know where Google ended up. It won and took down my employer, AltaVista, that is a distant memory.
I am seeing some similar activity regarding Luminar. I am not a financial analyst, but rather a technology industry analyst, but even from my vantage point, Luminar isn’t getting the credit it deserves. The stock was up 94% from customer announcements after its recent investor day. Its competitors noticed and appeared visibly upset as they publicly took pot shots at Luminar.
Then, one of 12 sell-side analysts downgraded the stock while most maintained “heavyweight” ratings from FactSet. The downgrade thesis appears to be one of questioning the ability of early-market premium pricing and valuation premiums. I had a real job for over 20 years in product management, product marketing and corporate strategy and let me tell you, if you are early, you do get a pricing premium over the other competitors, especially if your feature set are better and you can actually manufacture the product. Look at the pricing premium NVIDIA still gets for its AI training chips. Look at Qualcomm in the early days of 5G- premium. Then as the market matures, the lower-cost competitors come in and fill in the gaps. Companies like NVIDIA and Qualcomm are just moving to the next new technology as we saw with Generative AI and 6G.
What people need to better understand is that these early contracts for LiDAR are longer term contracts, some up to 15 years in length with pricing already pre-determined over that timeframe. Does Volvo and Mercedes want “cheapest and later” or the “best and now” when it comes to the safety of its passengers? I will let you decide. Hopefully, you aren’t thinking too long.
The uproar got so bad that Luminar CFO published a blog, addressing some of the “misconceptions.” I won’t call any of the mudslinging as I saw it with my own eyes with Google Search versus the world.
The net-net of all of this is Luminar is clearly ahead of the pack on many variables, the most important to me is that it is actually shipping to brands like Volvo and Mercedes Benz and now, it has achieved the milestone of bringing up their high-volume manufacturing facility in Mexico with other sites on the way. This is while many of its relevant competitors aren’t shipping anything to relevant automakers. Let the mudslinging commence.