National Post (National Edition)
LeddarTech looks for space in crowded room
QUEBEC FIRM EYEING KEY BUYS IN AUTONOMOUS VEHICLE SECTOR
`We're burning cash," Charles Boulanger replies without hesitation when asked if the company he helms is profitable.
While LeddarTech Inc., the Quebec City-based company Boulanger has been running as chief executive for seven years remains in the red, he insists that's the way it has to be for an innovation company focused on the capital-draining autonomous vehicle industry.
“We are taking on a very huge challenge in one of the largest industries,” he said in an interview. “To get into the automotive business … making leading-edge technology is expensive, so you have to be prepared to invest quite a bit money.”
LeddarTech is a sensing company whose specialty is lidar and perception technology. Lidar, which stands for light detection and ranging, is a remote sensing method that uses light in the form of a pulsed laser. That light is used to calculate distance in the way radar uses radio waves.
Accurately determining distances is key in the development of autonomous driving technology, including self-driving cars. “One of the big road blocks for the progression of autonomy is sensing — the quality, reliable sensing you need to have these vehicles move around by themselves at low cost,” Boulanger says. “Our mission is to become the most deployed sensing platform in automotive and mobility.”
The company, he says, produces sensing software that creates a model of the environment around a vehicle, in 3D and in real time, helping the vehicle understand its surroundings.
LeddarTech's innovative lidar offerings are part of the larger list of components required for autonomous vehicles and self-driving cars, including cameras, radar, image-processing software, microprocessors and mapping technology.
LeddarTech, however, is just one tech company in the crowded lidar space, and faces competition from a number of wealthy investors.
Gaurav Gupta, an analyst with IT research firm Gartner Inc., says LeddarTech is one of 80 to 85 startups and companies in the lidar space, and predicts that field will be significantly winnowed down through acquisitions and bankruptcies. “Consolidation is definitely due,” said Gupta, Gartner's vice-president overseeing semiconductors and electronics. “Eventually there will be very few left.”
He points to Oryx Vision Ltd., an Israeli lidar startup that recently shut down, and Amazon.com Inc.'s acquisition of Zoox, a California startup focused on autonomous ride-hailing vehicles.
The problem, Gupta notes, is that progress in the autonomous vehicle industry has slowed, and enthusiasm has dipped. Proponents — including leaders such as Waymo (an Alphabet Inc. company), Cruise (associated with General Motors Corp.), Chinese companies Baidu Inc. and AutoX Inc., as well as Mobileye, an Israeli company acquired by Intel Corp. — have all encountered major obstacles to development, such as high costs, technical challenges, a lack of supportive regulations, infrastructure challenges, and lacklustre public support.
“They are not allowed to operate in most places,” Gupta added of autonomous vehicles. And that means there isn't boom demand for the components needed to make them. “If autonomous vehicles don't become the reality then what are these guys gonna do, especially lidars?” Gupta said, as lidar demand will largely be connected to more advanced autonomous vehicles. “The pricing for lidars has to come down and it might only be restricted to some of the premium car models.”
While Boulanger is bullish, he is aware of the high expectations from regulators and the public alike.
“The regulator will never accept autonomous cars that are only as good as human beings. We accept that drivers make mistakes. We won't accept that robots make mistakes,” he said. “The regulators would only accept something that's better than humans.”
LeddarTech mainly sells its software and hardware components to what Boulanger describes as “Tier Ones” — companies that sell autonomous vehicle technology to auto makers. According to Boulanger, the company has sold 40,000 units to a couple of hundred customers across North America, Europe and Asia, although he wouldn't be specific.
LeddarTech prescribes to an open platform approach, which allows customers to pick and choose the best components and software for the autonomous systems they are developing. “(Our approach is) hardware agnostic, open platform,” Boulanger said.
“We don't bet on which technology is going to win using lidar.”
LeddarTech has 200 employees in offices spanning Toronto, Montreal, Austria, China, and Israel. Its Tel Aviv office was secured through the acquisition of an Israeli company in July, and Boulanger predicts more acquisitions to come.
“We are looking for additional acquisitions,” he said. “We are looking for other companies ... to gather more technology and accelerate access to market.”
It's also an industry that gobbles up cash. Boulanger says LeddarTech has so far raised close to US$200 million and is regularly hunting for more funding. “You have to be mindful of constantly reaching new milestones that allow you to raise additional capital,” he said. “You need a lot of investment. You always have to be mindful of raising capital.”
LeddarTech has four strategic investors, the biggest being Osram, a German automotive lighting company. The other three are: Renesas Electronics Corp., a Japanese semiconductor producer; U.K.-based Active Sensors Ltd; and automotive supplier Magneti Marelli S.p.A., with headquarters in Japan and Italy. (Boulanger says Active and Marelli are also both competitors). Other investors include SAIC Motor Corp. Ltd, a Chinese company, Korea's LG Electronics Inc., and a number of other venture capital firms.
Ideally, Boulanger says, LeddarTech would follow the trajectory of Mobileye, the Israeli company focused on cameras, sensors and software that help vehicles detect what is ahead of them. A technology supplier to most major automakers, Mobileye went public and then in 2017 was bought by chip giant Intel in a deal worth $15 billion, according to the New York Times. (Tesla's Autopilot feature used technology from Mobileye).
An initial public offering, Boulanger says, is part of “the big picture.” Other companies in the lidar space, such as Velodyne Lidar Inc. and Luminar Technologies Inc., both went public or announced plans to do so. “For companies like us, either a strategic partner buys you out or you go (with an) IPO at some point,” he said.
While Gartner's Gupta argues the field will shrink, Boulanger estimates the market for supplying components and parts for autonomous vehicles to be worth $70 billion and “growing very, very fast.”
“We're in a space that's going to be transformative for society …. Autonomous (vehicles) is a big one that's going to change (lives) — the way you're going to be transporting people and goods. It's going to make fundamental change in the organization of society and how cities are going to be built. People are underestimating the changes that are coming,” he said. “It takes some years but it is coming. It is coming big time.”