• Fri. Nov 27th, 2020

Dimancherouge

Technology

MicroVision LiDAR Is Worth $2 Billion According To Valuation Of Velodyne And Luminar LiDAR By Ford, Baidu, Hyundai, Volvo (NASDAQ:MVIS)

For outsiders it is usually very difficult or even impossible to determine the value of a company. Especially when it is not based on sales or profits, as in the case of MicroVision (NASDAQ:MVIS), but on intellectual property (patents) and existing technology that will be used in future products. In the case of MicroVision, however, it is essential for shareholders to know the valuation, as the company or parts of it are currently up for sale. In other words, it is important to know the amount a buyer is likely to pay before the sale. The only thing that helps here is to compare the company’s products with those of its competitors. Once this has been done, the company’s valuation can then be derived from the valuations of comparable competing companies. This is what this article tries to do for MicroVision, initially only for the Automotive LiDAR division, i.e. only a part of the company. After a very detailed examination of the competition (companies and products), the valuation of MicroVision is then derived from the known valuations of these companies. The result is that the LiDAR division alone should be worth $2 billion. This is based on the valuation of the company Velodyne (NASDAQ:VLDR), which has been valued at at least $1.8 billion in several financing rounds from 2016 until July 2020 on the occasion of an upcoming IPO. Not by anyone, but by the companies Ford (NYSE:F), Baidu (NASDAQ:BIDU) and Hyundai (OTCPK:HYMLF), which participated in the financing rounds. This is in line with initial estimates, which can be found here and here.

LiDAR: Among other things, LiDAR is used for self-driven cars. Actually, all providers except Tesla (NASDAQ:TSLA). The author will discuss Tesla in a separate article, as well as the Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) subsidiary Waymo. There, the question is what advantage these companies would have from acquiring the MicroVision technology. This article now specifically addresses the aspects that are important for MicroVision shareholders. Namely, what the technology is worth. Therefore, this article first gives a detailed overview of the latest LiDAR systems available on the market and their providers. The MicroVision Automotive LiDAR system is then compared with these. The result is that the MicroVision Automotive LiDAR system has seven times the resolution of the best currently available competitor model. In addition, it is one of the smallest and costs only a fraction of the price of competing systems, which cost several thousand dollars to $25,000 in the better versions. This makes the MicroVision Automotive LDAR system the only one on the market that offers the security, size and price required to be installed in series models of car manufacturers.

Due to the better business outlook, MicroVision must therefore be valued higher than the competition. So, it results in a secured valuation for the MicroVision Automotive LiDAR business of approximately $2 billion, or $13 per share. In addition, there are other MicroVision product lines that are not discussed here.

Let us now look at this in detail on the basis of facts.

Automotive LiDAR is used in self-driven cars.

What are self-driven cars actually?

Common definition of a “self-driving car”:

A self-driving car, also known as an autonomous vehicle (AV), connected and autonomous vehicle (CAV), driverless car, robo-car, or robotic car, is a vehicle that is capable of sensing its environment and moving safely with little or no human input. (Source: Wikipedia)

There are different “levels of driving automation” (compare Wikipedia), ranging from 0 to 5 (excerpts of the definitions according to Wikipedia):

  • Level 3 (“eyes off”): The driver can safely turn their attention away from the driving tasks, e.g. the driver can text or watch a movie.
  • Level 4 (“mind off”): As level 3, but no driver attention is ever required for safety, e.g. the driver may safely go to sleep or leave the driver’s seat. Self-driving is supported only in limited spatial areas (geofenced) or under special circumstances.
  • Level 5 (“steering wheel optional”): No human intervention is required at all. An example would be a robotic taxi that works on all roads all over the world, all year around, in all weather conditions.

These require both additional hardware and software compared to previous vehicles. The actual vehicle (passenger car, truck, etc.) and its structure, as well as its type of drive (combustion engine or electric motor) do not play a significant role and will not be discussed further. Every car can be self-driven regardless of the type of drive. All considerations naturally also apply to trucks.

What is required for self-driven cars?

Self-driven cars need to know the essentials:

  • Address/coordinates of the location: Where is the car located?
  • Address/coordinates of the destination: Where should the car go?
  • The way from there to the destination.
  • Where the roadway is located, after all, they should not drive on pavements, for example.
  • Traffic rules, indicated by traffic signs, traffic lights, markings, etc.
  • Where there are obstacles, if necessary, also on the roadway (e.g. other cars), so that the car does not drive into them.

The location, the destination and the route to it can already be calculated and found today using satellite navigation systems such as GPS or Galileo (more precisely) and a navigation system using them. This can already be done very well and free of charge with smartphone apps such as Google Maps or maps from Here Technologies.

The car itself actually only has to find its way in the immediate vicinity up to approx. 200 meters (depending on speed) – if possible, in compliance with traffic regulations and without an accident.

Hardware for autonomous driving

The software for self-driven cars can only be as good as the data it receives. This means that if the hardware cannot see an obstacle, the software cannot react to it. Under certain circumstances, an accident may occur with possibly injured or even dead people (besides material damage). The software must therefore be enabled to “see”. Good enough to see. Humans have eyes for this. Cars can have eyes for it:

  • Cameras
  • Radar systems
  • LiDAR systems
  • Ultrasonic systems

Source: Woodside Capital Partners

Cameras are used to capture images, just like the human eye. Unfortunately, they are still far from being as good as the human eye, i.e. even in difficult lighting conditions, fog, etc.

In addition, cameras have the major disadvantage that they only provide two-dimensional images of the environment. So, the depth information is missing, i.e. how far away something is. It is not completely unimportant whether a wall in front of the car is one meter or one kilometer away. Therefore, with cameras consisting of several images, complex calculations from one image/video first have to identify the obstacles and calculate the depth information. Two-dimensional image pixels must therefore be converted into three-dimensional points and three-dimensional objects. This requires an enormous amount of computing power, which in turn reduces the range of the cars due to the high energy consumption of the very powerful computers required for the real-time analysis of the images. This is particularly negative for cars with electric motors. Radar systems are also very useful, but will not be discussed here because they are already mature. That leaves LiDAR systems.

What is a LiDAR system?

A detailed overview of LiDAR technologies and systems is provided by Wikipedia. For cars, the following two graphics explain this clearly:

Source: Woodside Capital Partners

Source: Woodside Capital Partners

Why does a car need LiDAR?

Contrary to Tesla’s claims, a self-driven car without LiDAR does not appear to be safe or legal. Reasons for using it are:

Lidar balances the weaknesses of today’s sensors. Unlike a camera, it sees just as well in the dark as in the light. It can detect detail better than radar, allowing it to pick out things like pedestrians and cyclists. “You can see this stuff with lidar,” Russell says. A single sensor in a car’s front bumper or windshield might make it a more capable robot than just about anything on dealer lots today. That’s not enough for a fully autonomous system-you’d want 360-degree coverage there-but it could allow for a system that handles highway driving.

History

One of the first companies to start developing self-driven cars, or the software and hardware for them, was Alphabet subsidiary Waymo. The software will not be considered further. However, it is largely unknown that Waymo was also one of the first companies to test LiDAR systems. The current LiDAR system from Waymo is this one:

Source: Waymo LiDAR

Source: Waymo LiDAR

The author assumes that the actual LiDAR system is located in the large box on the roof and is only used in addition to the radiator grille, as the latter is probably too bad (see explanations later).

No car manufacturer will offer a car with any systems on the roof (be it LiDAR or cameras etc.). This has several reasons:

  • The appearance of the car is destroyed.
  • The car is getting higher.
  • Higher energy consumption due to poorer drag coefficient values.

No automaker will also offer cars that have front mounted systems, such as the Waymo LiDAR system in the previous photo. Reasons:

  • The aesthetics of the car are destroyed.
  • The car becomes longer (not unimportant e.g. in Europe).
  • Higher energy consumption due to poorer drag coefficient values.
  • At least in Europe, not permitted for road traffic due to the risk of injury to persons such as pedestrians and cyclists from protruding and hard objects.
  • Sensitivity to collisions: In case of a frontal collision or even the smallest bumpers, the (very expensive) system will be destroyed because it is located in front of the bumper. The LiDAR system itself becomes the bumper. This inevitably leads to high insurance premiums.
  • Rain or dirt can quickly make it “blind”. An automatic effective cleaning seems hardly possible with the design Waymo has chosen. In contrast to systems that are integrated in headlights or inside vehicles, e.g. in the rear-view mirror behind the windscreen.

Even the smaller system at the front of the car not only does not look nice, but it will also have negative properties on the drag coefficient-value, which will become more and more important especially in the future for cars with electric motors. Assuming that, as stated above, it is not suitable for approval in many parts of the world.

Since Waymo LiDAR in its current version is already unapprovable, the Waymo LiDAR system cannot be used in production vehicles and is therefore not for sale.

What can the Waymo LiDAR?

Surprisingly, no one in the public knows what the specifications of the Waymo LiDAR system are, what it can do, and whether it can detect not only cars but also small birds, branches, etc.

With the exception of the “95° vertical field of view,” Waymo does not give any concrete data:

Source: Waymo LiDAR

In response to a request by the author some time ago via the contact form on the website, the author also did not receive any specifications from Waymo.

In a recent article from June 2020, Waymo’s LiDAR strategy is presented. An excerpt:

It’s been well over 16 months since Waymo announced a plan to license its lidar, called Laser Bear Honeycomb, to non-automotive companies. How’s that working out? EE Times recently caught up with Simon Verghese, Waymo’s Lidar Team leader.

Verghese confirmed that Waymo now has multiple design wins. But he was silent on specifics about its lidar technology, pricing or partners. If Waymo is serious about doing business with external customers, why all the secrecy? “You need an NDA,” said Verghese.

The author has the same question as the EETimes: “But he was silent on specifics about its lidar technology, pricing or partners. If Waymo is serious about doing business with external customers, why all the secrecy?” In the article, Waymo only confirmed:

Verghese confirmed that Waymo’s Honeycomb lidar is based on mechanical technology. It comes with a rotating mirror and a turntable.

Since it is not a solid-state LiDAR, it is probably very sensitive to vibrations due to the moving components and is therefore not for sale. It is also questionable whether the mechanics can cover the required temperature ranges for cars from -40° C to +85° C.

It is therefore not surprising that Waymo refuses to disclose specifications or offer a data sheet online for download, as other manufacturers do (e.g. Velodyne, RoboSense and others, compare later).

In particular, Waymo does not disclose the resolution of the LiDAR module. Current LiDAR systems have only a few hundred thousand to a maximum of three million dots per second in resolution (see also later).

In the opinion of the author, this is not sufficient to ensure safe and reliable detection of smaller obstacles, even if several modules are used. Only larger objects can be detected like other cars. However, a car must also be able to avoid branches that reach into the driveway or come to a halt in front of them. The same applies to children and also animals. It is important that the resolution per second is specified for LiDAR systems. However, since these systems scan the area several times per second, the actual resolution in a few milliseconds is only a fraction of this. However, due to its usual speed, a car cannot wait a second to get a complete image of the surroundings, but may have to react in milliseconds. Even if only 1/10 second is assumed as reaction time, only 1/10 of the resolution would be available, which in turn would only be 10,000 to 300,000 points. For comparison: Full HD has 1920 x 1080 pixels = 2,138,400 pixels. UltraHD/4K even has 3,840 x 2,160 pixels = 8,294,400 pixels – this is 60 to 120 times per second. So about 120 to 480 million pixels per second. In contrast to LiDAR systems, today’s cameras can record images with the full resolution several times per second. However, the more images, the more processing power is required (compare before).

Waymo LiDAR: “Failure by Design”

Due to the above features and drawbacks, it does not appear possible to use the Waymo LiDAR system in future production road vehicles. The problem lies in the already incorrect design approach, which cannot be adopted. It would require a completely new development. This makes Waymo no competitor to MicroVision.

What other LiDAR providers are there on the market?

It is difficult to get an overview of the LiDAR systems on the market and their specifications. Hundreds of companies are developing LiDAR systems. However, only a handful or less will survive. An overview from the year 2018 can be found in “The Automotive LiDAR Market” by Woodside Capital Partners.

Source: Woodside Capital Partners

Source: Woodside Capital Partners

Source: Woodside Capital Partners

Designs (mechanical, solid state, etc.):

Source: Woodside Capital Partners

Source: Woodside Capital Partners

Source: Woodside Capital Partners

What other LiDAR systems are available?

As of 2018, these LiDAR systems were available with the listed specifications:

Source: Woodside Capital Partners

From the point of view of car manufacturers, the prices charged for the components are probably already alarming. Not even Mercedes, Porsche (OTCPK:POAHF) or Rolls-Royce (OTCPK:RYCEF) can build a component for $8,000-$75,000.

This leaves only the $600 system listed in the previous table. But even this one is probably too expensive for almost all car models. Especially when you consider that several modules are necessary for an all-round view as well as a backup in case one of them fails at full speed, as one of the largest automotive suppliers, Bosch (OTC:BSWQY), also considers necessary. The Waymo LiDAR system is also too expensive. The Waymo LiDAR system is not only a technical failure, as was previously stated, but also an economic flop:

Waymo began manufacturing its own LIDAR sensors in 2011 to reduce cost. At the time, Waymo said it could lower the unit price from $75,000 for an off-the-shelf LIDAR sensor to just $7,500 with its own custom version.

No automaker is going to install a $7,500 LiDAR. Absolutely out of the question.

Likewise, it seems impossible that Waymo or any of the other manufacturers could be able to reduce the cost of their modules to a cost of about $50-$100 per module acceptable to automakers.

The cheapest LiDAR module currently available is probably one from Luminar (LAZR) for about $500 according to this report from Wired: “Luminar says its new lidar sensor will sell for as little as $500, compared with $75,000 for the industry leader.”

Current data for LiDAR systems can be found here:

  • Valeo Ibeo, latest model under development: ibeoNEXT Generic (no resolution specified, except “very high resolution (e.g. 0.05 deg)” which, with “Large FOV (e.g. 60×30 deg)” specified, is probably only 720,000 points per second.
  • Velodyne LiDAR: Current products with their specifications, including the “Alpha Prime,” the “The World’s Most Advanced Sensor”, but which also has a resolution of only ~2,400,000 (1 channel) points per second (~4,800,000 points per second for two channels):

Source: Velodyne LiDAR

  • Not listed in the table above are the new products Velarray and Velabit.
    • Only the Velabit from Velodyne is said to have an acceptable price of $100, but it is not intended for autonomous cars and will probably not have an acceptable resolution: “Velodyne Velabit is an ideal solution for small platforms like the Robotic Research Pegasus Min, an unmanned autonomous robot that uses lidar for localization, mapping and more.”

Source: Velodyne

  • Small enough for cars, announced four years ago and still not available is Velarray:

Source: Velodyne

  • Functionality and specifications are not known, only general information such as: “With a compact form for seamless integration within a vehicle’s body or behind the windshield, we design the VELARRAY system to produce a robust directional image, day or night to meet our customer’s needs. The VELARRAY system has best-in-class range and resolution, allowing for faster object identification and longer braking distance at highway speeds. Mass production is slated for 2020.”

Source: Velodyne

  • This application example shows that one LiDAR sensor is not sufficient, but probably six plus more are needed for redundancy.
  • RoboSense:
    • RS-LiDAR M1: Still much too big, with almost $2,000 in the “simple” version priceless for car manufacturers, only 1,125,000 points per second
    • RS ruby: Price unknown, probably around $25,000, poor resolution with only 2,304,000 points per second (or 4,608,000 points for two channels)
    • RS ruby lite: $12,800, with only 1,440,000 points per second only half the resolution of “ruby” (or 2,880,000 points for two channels)

Source: RoboSense

Source: RoboSense

Source: RoboSense

Source: RoboSense

Source: RoboSense

Source: RoboSense

Source: RoboSense

  • Ouster:
    • OS0: from $6,000, resolution 655,360, 1,310,720 or 2,621,440 points per second
    • OS1: $3,500, resolution as before
    • OS2: $16.000, resolution as before

Source: Ouster

  • Luminar: (Audi uses Luminar systems):
    • Will launch the new model “Iris” (“resolution up to 200 points per square degree”) in 2022, which will cost about $1,000: “Iris will cost less than $1,000 per unit for production vehicles seeking serious autonomy, and for $500 you can get a more limited version for more limited purposes like driver assistance, or ADAS. Luminar says Iris is ‘slated to launch commercially on production vehicles beginning in 2022,’ but that doesn’t mean necessarily that it’s shipping to customers right now. The company is negotiating more than a billion dollars in contracts at present, a representative told me, and 2022 would be the earliest that vehicles with Iris could be made available.”
    • Hydra is available for developers (“resolution up to 200 points per square degree”)
  • Innoviz:
    • InnovizPro: 178.000 points per second, size: 73x66x165mm, price unknown
    • InnovizOne (available 2021): resolution 7.5 million points per second (single), size: 45x110x95 mm, price unknown
  • Aurora: “Aurora Introduces New LiDAR And Vehicle Platform”: “The specs could be 120 degree field of vision, 450 meters range, 2.4 million points per second for $20,000 per unit.”
  • Countless other companies that develop LiDAR systems, all of which, as far as we know, do not offer sufficient resolutions either, such as:
    • Bosch presented a LiDAR system at the CES 2020, details are unknown. Rumor has it to be MEMS-based. If so, it will have only a fraction of the resolution of MicroVision’s MEMS-LiDAR, because Bosch MEMS projectors also have a much lower resolution.
    • Osram and
    • Strobe, bought by GM (NYSE:GM) three years ago, no data available until today
    • Scantinel: Press release, resolution unknown
    • Many more are listed in “The Automotive LiDAR Market” by Woodside Capital Partners
    • And so on

No manufacturer offers (single channel) resolution of more than 3 million dots per second.

All RoboSense products are with $1,898, $12,800 and about $25,000 much too expensive for serial models of car manufacturers. The same is true for Ouster models with prices starting at $3,500, $6,000 and $16,000. Aurora also charges astronomical $20,000, making it uninteresting for carmakers.

The Velarray from Velodyne is the only one that stands out from the crowd of competing products. However, it does not seem to be good enough. In particular, Velodyne remains silent on the dissolution despite at least four years of development time.

This is not only the opinion of the author, but also of the professional and financial world. From a report by Mergermarket dated August 04, 2020:

An automotive sector banker noted that while lidar had been very “topical” for a while because it promised to provide autonomous driving systems that could see far ahead with high accuracy, “I don’t think anyone has been able to deliver a solution that delivers that kind of functionality” yet. These technologies could deliver highly effective autonomous driving systems in the future but still need more development, he explained.

There will be consolidation in automotive lidar as companies work refining these products, he said. There aren’t many deep-pocketed lidar companies, he added. He named Innoviz as one of the main companies that has a contract with tier 1 auto companies, as well as Continental AG (OTCPK:CTTAY), Magna International (NYSE:MGA), and Valeo (OTCPK:VLEEY).

MicroVision

MicroVision already offers a solid state LiDAR system for smart home devices, which has a standard 15.5 million dots per second resolution at a range of 10 meters, with an optional 20 million dots per second resolution, and is smaller than a smartphone: – Source: MicroVision

On the basis of this, MicroVision is now developing a version for automobiles that has a range of over 200 meters and offers a resolution of 20 million points per second even in full sunlight. This is about 7 times (!) the resolution of all competing products (compare market overview before). MicroVision confirmed this on August 04, 2020, in the already mentioned report of Mergermarket:

MicroVision is planning a demonstration of its lidar technology for automotive applications, which was originally set for November 2020 but has been pushed back to 1Q21 because of the pandemic, he said. It is not a finished product but a demonstration that the company’s technology can capture 20m data points per second; current lidar systems can capture about 1m to 3m, he said. That increased data sensing capability will improve automotive “active safety” features such as automatic emergency braking, active cruise control, and sensing the difference between a car on the road swerving or changing lanes, and advance other capabilities, he explained.

This module is based on the MicroVision MEMS technology, which has been proven over many years, and probably allows even higher resolutions if the Gen 4 engine is used instead of the Gen 3 engine

It is so small that it can be mounted in the rear-view mirrors behind the windscreen. Just like in headlights, etc. This maintains the aesthetics and the drag coefficient-value of a car.

Due to the COVID-19 pandemic, MicroVision had not received a $100 million order for interactive projectors for smart speakers earlier this year (interview by Mergermarket on August 4, 2020 with MicroVision’s CEO):

In February, MicroVision had been in the “final closing” for a supply agreement with a customer in its interactive display segment for a smart speaker related product, Sharma said. But as the COVID-19 outbreak spread through China, uncertainty about future consumer demand led the customer to put the deal on hold, he said.

Previously, MicroVision had already got into financial difficulties due to management errors. For example, the company sold a development to Microsoft (NASDAQ:MSFT) at approximately $50 million below development costs.

As a result, employees had to be dismissed. As a result, the supervisory board decided to sell the company. Subsequently, the board decided to engage an advisor to explore alternatives.

The entire company or the individual product lines are sold:

  • AR
  • Smart glasses
  • Projectors
  • Interactive projectors
  • Consumer LiDAR
  • Automotive LiDAR

As mentioned at the beginning, only the product line for automotive LiDAR is considered here. See the two articles “MicroVision Serves 5 Future Markets” and ” MicroVision: In The Right Markets At The Right Time”.

MicroVision introduces the LiDAR system in this video:

Details: Since the system is so small, it can be installed in the rear-view mirror (!) behind the windscreen, for example. The size is comparable to that of smartphones. Size of the consumer version: 64 x 26 x 23 mm (compare excerpt from the previous data sheet). The installation situation is marked here:

Source: MicroVision on YouTube

It has a range of over 200 meters in full sunlight and a resolution of 20 million points per second, which is approximately seven times higher than that of the competitor products listed above:

Source: MicroVision on YouTube

For this purpose, it supports a “Dynamic Field of View”:

Source: MicroVision on YouTube

At a glance:

Source: MicroVision on YouTube

On the basis of Resolution, Size, Price (about $50-$100; similar to the consumer LiDAR and projectors)

MicroVision has the only LiDAR system on the market that is suitable for series models of car manufacturers.

Only the one from MicroVision offers the required resolution, size and price, so car manufacturers would install it. Without this system, probably no software for self-driven cars can be sold.

In addition, MicroVision has nearly 500 patents for MEMS applications, so it is very likely that competitors will not be allowed to replicate such a system.

Added to this is MicroVision’s great time advantage, which allows for a shortened time to market. Although development has been delayed for a short time, it will probably be possible to make up the shortfall quickly by increasing the development department after a company acquisition. Even with a backlog, MicroVision still has a very large lead over all its competitors.

So, whoever owns this LiDAR system will have a decisive competitive advantage. It may even make it possible to sell software for self-driven cars in the first place, as the software is otherwise “blind” unless you want to rely on cameras and possibly radar systems alone. A self-driven car without a LiDAR system does not appear to be eligible for registration in many parts of the world, especially in Europe. Note: It is not Tesla that decides what may be sold, but the national registration authorities.

The MicroVision CEO on 05 August 2020:

disruptive nature of our Automotive Lidar that would output more than 20 million points per second at 30 Hz, have a range greater than 200 meters operable in full sunlight, output a velocity field in addition to point cloud, and will include three scanning fields of view in a single Lidar hardware.

Sales process

According to a report by “Mergermarket”, there is a strong interest from “top tier” companies in MicroVision’s LiDAR division. Excerpt from the report dated August 4, 2020:

MicroVision attracts auto and augmented reality bidders for potential sale, CEO says

August 4, 2020

MicroVision, a Redmond, Washington-based laser sensing technology company, is seeing strong interest from bidders in the automotive and augmented reality space, said CEO Sumit Sharma.

The USD 336m market cap company announced in April that it had engaged Craig Hallum to sell all or part of the company, which holds IP and technology for laser sensing and scanning in four segments: automotive, augmented reality, consumer and interactive display.

How much should the LiDAR division of MicroVision cost?

Here you can find comparative values from comparable companies that are updated almost daily.

The value of the MicroVision LiDAR division would probably have to be higher than that of the competition due to the better specification of the module (smaller, cheaper and seven times higher resolution than all others on the market). Although the module is still in development, it can certainly be completed in the short term if MicroVision can expand the development team following a takeover.

Velodyne LiDAR was valued at$1.8 billion in early July 2020:

Pursuant to the business combination, GRAF will acquire Velodyne through a reverse merger in which Velodyne is ascribed an enterprise value of approximately $1.6 billion and equity value of approximately $1.8 billion.

This assessment is not new. In several financing rounds since 2016, the value of Velodyne has always been set at least as high.

Funding Type Corporate Round, Money Raised $150M, Pre-Money Valuation $1.9B

And not just on paper. It was used to measure the payments of companies like Ford, Hyundai and Baidu and the corresponding share of Velodyne was transferred to these companies. This makes it a very reliable source of valuation. It is not to be assumed that these companies would have agreed with a wrong valuation. After all, the higher the valuation, the lower their share in the company for the same payments.

Luminar, which also develops exclusively LiDAR systems, was previously valued at $900 million in November 2019:

To go with this news, Luminar said it has closed its latest round of funding, bringing it to $250 million raised (and a $900 million valuation) to help it boost manufacturing capacity at its Orlando factory.

This rating has just been drastically increased to $2.9 billion: In “Luminar, the Global Leader in Lidar Autonomous Driving Technology, to Be Listed on Nasdaq Through Merger With Gores Metropoulos,” the announcement is:

Luminar delivers the world’s first lidar sensor and software to enable autonomous consumer vehicles and trucking for volume production Transaction proceeds will be used to accelerate commercial growth across its 50 partners and the expansion of its product roadmap for a turn-key “full-stack” highway autonomy and proactive safety ADAS solution Bolstered by the industry’s first high-volume series production win for self-driving vehicles on highways with Volvo Cars Pro forma implied enterprise value of approximately$2.9 billion and market capitalization of approximately $3.4 billion

The valuation is supported by top companies like Volvo:

Transaction includes $400 million of cash from Gores Metropoulos (NASDAQ:GMHI) (NASDAQ:GMHIU) (NASDAQ:GMHIW) and an immediate $170 million financing into Luminar, anchored by top tier institutional investors including Alec Gores, Van Tuyl Companies, Peter Thiel, Volvo Cars Tech Fund, Crescent Cove, Moore Strategic Ventures, Nick & Jill Woodman and VectoIQ.

The author considers this rating to be very ambitious and too high. Especially if one considers that Luminar can deliver first devices, but these do not seem to be competitive with MicroVision’s solution, both in terms of technical features and price.

Uber is said to have paid $680 million to Waymo for details of its LiDAR system (which, as previously stated, is completely unusable).

The CEO confirmed in the conference call Q2 2020 that MicroVision is also oriented towards such transactions:

As we continue to engage with interested parties and actively explore their desired structures, we are endeavoring to make sure that the value of all they would acquire is demonstrated through our designs, financial models and examples of other relative transactions in a particular market.

Since the MicroVision LiDAR system will be technically many times better, smaller and, above all, significantly cheaper to produce than Velodyne’s, the price for the MicroVision LiDAR division is more likely to be around $1-$2 billion.

Impact on MicroVision’s goodwill

At a share price of $1.71 on August 7, 2020, MicroVision has a market capitalization of only about $250 million with less than 150 million shares. This is only 1/7th of Velodyne’s valuation. One of the reasons for this is that MicroVision is under massive pressure from short sellers.

MicroVision should even be much more valuable than Velodyne because of its superior technology, so it should be valued at rather $2 to $2.5 billion. With 150 million shares, this would correspond to a value of about $10 to $15 per share. If the other divisions are added, it could also be $20 per share. Sales can be announced daily. This was stated by the CEO at the announcement of the second quarter 2020 results on August 5, 2020:

I note that Mergermarket recently published an article about our strategic process. The article referred to strong interest from bidders. I would like to clarify that we are engaged in discussions with certain potential interested parties who are at various stage of diligence. We do not plan to make public statement about any bid or a potential transaction unless and until and appropriate agreement is reached.

“Various stages” means that at least one conclusion could be imminent. These are not small companies, but those with sufficient money:

I can share that a focus group of top tier OEMs and technology companies are engaged in exploring and potentially pursuing strategic alternatives, which could include a sale or merger of the Company, acquisition of one or more product verticals, strategic investment and acquisition or licensing of our intellectual property. We believe parties will be particularly interested in our augmented reality and automotive LiDAR vertical.

The technology is very well rated, which should lead to a high price:

We have received feedback from multiple interested parties, recognizing that they think MicroVision technology is the most sophisticated and potentially disruptive that they have reviewed so far.

Important to know

Critics may object that the MicroVision Automotive LIDAR system is still in development. On the other hand, the consumer LiDAR with the same resolution is already finished. Furthermore, Velodyne was also evaluated while its modules were still in development: The probably most modern one, the Velarray, is still not available even after years and its technical data is still unknown.

Possible interested parties

Among the interested parties could be many companies. Besides Waymo (Alphabet), Tesla, of course every major car manufacturer and supplier, also surprising companies, such as Apple (NASDAQ:AAPL). Reuters wrote about Apple:

“They’re not happy with most of what they see,” the first person familiar with the matter said. “They’re looking for a revolutionary design.”

A third person familiar with the matter said Apple is seeking a “design-oriented” sensor that would be sleek and unobtrusive enough to fit into the overall lines of a vehicle.

This reads exactly like a description of the MicroVision Automotive LiDAR system, which will even significantly undercut the target price for a module:

The designs Apple is seeking could potentially be made with conventional semiconductor manufacturing techniques, all four people familiar with the talks said.

That has the potential to lower prices from the many thousands to the hundreds of dollars as the sensors are produced in larger numbers, similar to chips in phones and other devices. Apple also wants sensors that can see several hundred meters (yards) down the road.

Probably the Automotive LiDAR has already been presented to car manufacturers and suppliers

Although most shareholders of other companies may not be familiar with MicroVision’s products, the author was certainly not the first to come up with the idea that MicroVision Automotive LiDAR would be a perfect fit for car manufacturers and their suppliers. MicroVision has approached over 100 companies through a consulting firm.

MicroVision CEO has now mentioned in a conversation with shareholders that a request for discussion from MicroVision has never been rejected by a large company in the last four years, even though it is only a small company. It is known that MicroVision is the technological leader in its business areas. It would be interesting to know which companies are currently bidding for it.

Another interesting tidbit was Sumit talking about how respected and acknowledged MVIS is in the tech world amongst the big boys. (…) But his point was, and he’s only been there about four years, is how remarkable and unusual it is for a tiny engineering tech start-up that when they contact the whales and say “We have something we think you will want to see”… they GET THAT MEETING EVERY TIME. That just doesn’t happen for most tiny tech engineering houses. But it does with MVIS. That lead into just a general description about how NONE of these big dogs dispute that MVIS tech, in its core competencies (i.e. LBS), is years ahead of the competition. None of them.

Conclusion

MicroVision, one of the most innovative and exciting companies, is currently on sale due to the consequences of the COVID-19 pandemic.

Interested parties may range from all car manufacturers (like Tesla, GM, Ford, Toyota (OTCPK:TOYOF), Volkswagen (OTCPK:VLKAF), etc.) and suppliers (like Bosch etc.) to software and hardware companies for self-driving cars like Waymo and Apple. This should ensure correspondingly high proceeds).

On the basis of the valuation of the competitor Velodyne prepared by Ford, Baidu and Hyundai, as well as the valuation of Luminar by. e.g. Volvo a reliable valuation basis is now available. Since MicroVision Automotive LiDAR is many times better – in all disciplines – it should be worth at least as much, actually much more than Velodyne and Luminar.

As mentioned above, the MicroVision shares are thus currently – as previously stated – already only for the LiDAR division, and are still ridiculously cheap compared to the valuations of other companies, such as Velodyne.

A valuation as for Velodyne would result in a share price of $13. A valuation as for Luminar would result in a share price of $16. Including the other divisions, such as smart glasses and AR, it could be approximately $20 per share. But considering the current situation of MicroVision and that it does not have its own manufacturing facilities, $10-$13 per share would be a fair price ($1.5-$2 billion) for shareholders and the buying company.

Disclosure: I am/we are long MVIS. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

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