MIZUHO SECURITIES USA INC. | US EQUITY RESEARCH
In Vol. 50 of the Mi-Global Tech series, we take a look at the emerging LiDAR market. The 2018 Audi A8 is on track to become the first commercially available car with LiDAR; going forward, we believe advancements in solid state LiDAR (SSL) technology, the reduction in cost, and the demand for a full sensor fusion will could significant demand acceleration in the market between 2017 and 2021. Some key takeaways: 1) a look at history with airbags, LDW and seat belt adoption; 2) history shows automotive adoption gets to ~50% in 5-7 years; and 3) LiDAR adoption could get to 20% in 5 years to 2021E and grow to an $8B automotive LiDAR market (<$500M today) and a ~$30B fusion LiDAR ADAS market (vs <$1B today), not to mention the adjacent data, AI, and services markets it could spawn.
In the first decade of the 20th century, there were no stop signs, traffic lights, or speed limits. Cars and automobiles for the first 10 years were driving without any stop signs or traffic lights. According to the Detroit News, the first U.S. stop sign was introduced in Detroit in 1915. So, in the first 10 years of the automobile, there were no stop signs or traffic lights and in 1917 Detroit there were 65,000 automobiles accounting for 7,171 accidents and 168 fatalities. Today, it would be unimaginable to think of driving through intersections without stop lights or traffic lights, but still, 2015 marked one of the highest years of automotive fatalities with 4.4M accidents and 39,052 fatalities in the U.S. out of 263M vehicles registered, according to Statista, highlighting the fact that we are far from done in delivering safety or the objective of Vision Zero. But, that is history and 110 years later, we are now talking autonomous driving and its perils along with the disruption it creates, much like the advent of the original automobile.
Automotive fusion ADAS and LiDAR ramps-LiDAR a $8B and Fusion ADAS $30B market by 2021E. We believe 2017E could see multiple LiDAR ramps in Europe and the US, with adoption growing to 20-30%+ by 2020-25E as AEB, ACC, and LDW features continue to ramp. While radar and cameras dominate the market today, we believe dropping SSL costs (<$200/unit) could drive adoption and accelerate ADAS and autonomous driving. We would note the 2016 California disengagement report, where Google (with LiDAR) was far and away the best performing car at 0.2 disengagements per 1,000 miles. We believe camera/radar only Tesla was closer to the bottom at ~330. More details and YTD global auto sales in subsequent pages.
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