IPO

​Velodyne’s IPO Could be a Test of Lidar’s Future

Stephen L Kanaval  |

In a report in Business Insider, Velodyne Lidar is reportedly looking to IPO before the end of the year. The San Jose, California company has a valuation of $1.8 billion and is reportedly working with Bank of America Merrill Lynch, Citigroup Inc, Royal Bank of Canada, and William Blair.

If readers are not familiar, Velodyne Lidar provides technology for self-driving and driver-assistance vehicles through lidar sensor systems (Light Detection and Ranging), which use lasers to create a three-dimensional, 360° map of a vehicle’s environment. LiDAR works by sending out laser beam pulses and measuring in real-time the distance it takes for the light to hit an object or surface.

This technology are the eyes of a self-driving vehicle and a crucial infrastructure component of the autonomous auto industry but even have uses for industrial mapping and UAV/drones. In April, Nikon invested $25 million in Velodyne to mass-produce LiDAR sensors. Ford and Baidu have a combined $150 million invested in Velodyne, and the former uses the technology inside its Ford Fusion Sedans.

Tesla and Lidar

Everyone believes Lidar is essential for autonomous vehicles except Elon Musk. "Lidar is a fool's errand," Musk said in April at a Tesla event. "Anyone relying on lidar is doomed. Doomed." In Musk’s view, artificially intelligent cameras will make LiDAR technology obsolete and others in the industry have questioned its reliability and range.

Critics of Musk argue that if Tesla’s vehicles included Lidar some of the high-profile deaths would have been averted due to the additional data available to the autopilot system. However, as a methodology, Tesla believes vision alone is enough. "People drive with vision only, no lasers are involved. This seems to work quite well," Tesla director of artificial intelligence Andrej Karpathy said at Tesla's autonomy event. "Lidar points are a much less information-rich environment. Vision really understands the full details."

LiDAR proponents like Verodyne see the laser technology as the third leg in the chair (believing that radar, cameras and Lidar are all needed). In the National Transportation Safety Board review of a 2016 Tesla crash in Florida, where the autopilot struck a tractor-trailer at 68 mph, determined that radar bounced under the trailer thinking there was nothing ahead and the camera could not discern the difference between the sky and the side of the trailer. As a side note, a Daimler research paper on state-of-the-art radar concluded that radar isn't sufficient for full self-driving, and developments are needed to comprehensively understand stationary objects.

"I like Elon, I like his spirit and I relate to his passion," said Marta Hall, President of Velodyne, in a KYMA interview, "but I don't like the irresponsible talk."

Patent Clash

Velodyne recently won a challenge from fellow Silicon Valley Lidar company, Quanergy. The PTAB upheld the patents from Velodyne’s founder, David Hall. “The ruling was not a surprise, because real-time surround view lidar was invented by our founder, David Hall, and the company holds a number of foundational patents relative to this technology,” Marta Hall said after the ruling. However, this case is hardly dead as Quanergy is planning on appealing the PTAB’s decision saying in a statement that Velodyne’s invention does not follow innovative steps, but obvious ones.

Quanergy is contesting that the patents should not have been issued in the first place as the company submitted patents prior to David Hall’s 558 patent, and, in fact, Velodyne changed its model to more closely resemble Quanergy’s “puck-style” model as it proved more efficient.

Quanergy’s CEO and founder Louay Eldada said in a company release: “We will not rest until our intellectual property based on decades of innovation and hard work is respected, and we receive the financial damages resulting from any infringement. We have seven issued patents that we intend to use to examine all lidar competitors’ products and protect our intellectual rights.” For its own right, Quanergy is not a small company as it has also raised a lot of capital and counts Mercedes and Volvo as clients.

Things are shaping up for Velodyne’s potential IPO to be a battleground over the technology’s future, but also the sanctity of the company’s foundational technology.

Equities Contributor: Stephen L. Kanaval

Source: Equities News

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

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