Innoviz started Serial Production of InnovizTwo LiDARs

2 January, 2023

Its newly established production line is an essential component of the company's Tier-1 strategy. CEO and co-founder Omer Keilaf, revealed the story behind this bold move

photo above: Omer Keilaf, Innoviz CEO and co-founder. Credit: Techtime

Innoviz Technologies is reaching a critical moment: It started to manufacture LiDAR sensors in its new production line in Rosh HaAyin (near Tel Aviv), and it will be soon delivering complete automatic production machines to its production sub contractors – to be ready for the launch of vehicles equipped with its sensors. The timetable is pretty tight: During 2023, BMW will launch an L3 car with Innoviz sensor, An unnamed customer is planning to launch an autonomous shuttle for European airports, and an Asian customer is planning to launch L3 cars in 2024 with Innoviz sensors inside.

Meanwhile its largest customer, Volkswagen Group, is planning on launching its own level-3 models equipped with Innoviz LiDARs during in 2024-2025. This phase marks the culmination of a bold move: Becoming a Tier-1 provider that is working directly with OEMs, instead of the common business model of T2/T3. As a result, Innoviz will provide complete solutions for the car directly. “Becoming a Tier-1 supplier is the best thing that happened to us,” said Omer Keilaf, Innoviz CEO and co-founder, during a meeting with Techtime.

Why did you even think that an Israeli startup company could be a Tier-1 supplier?

Keilaf: “The Automotive industry is very structured. At the top there are about 20 large branded manufacturers. They split the vehicle into various modules, and issue bids among Tier- 1 companies which, in turn, provide complete modules back to the manufacturer. As these companies hold expertise in separate areas, there are few competitors on each area. In ADAS, for example, you can find only 6-7 Tier-1 suppliers, Globally, and only a handful of LiDAR suppliers, who’s systems are based on Tier-2 technology providers.”

InnovizTwo LiDAR sensors leaving the new production line located in Innoviz' HQ
InnovizTwo LiDAR sensors leaving the new production line located in Innoviz’ HQ

The qualification costs reach 20% of the overhead

“When we introduced our technology to BMW, they were very excited about it, but they also explained that we are a small startup company and need to find a Tier-1 contractor before they can inspect our technology. This is how we reached Magna and Aptive. Eventually, we won the project through Magna. When we approached Volkswagen, we were already in a better position and they agreed to check if we could match their Tier-1 requirements.

“Following this, we started a long series of tests: They checked how the organization is being managed, our documentation of R&D processes, the production infrastructures, the ways we control our software development and updates and so on. They even checked the history of software development. These demands can rise to up to 20% of the total overhead, but still – working as a Tier-1 provides us with the ability to sell the product at lower prices while gaining better margins compared with Tier-2 model.”

Is it related to your Nasdaq listing in April 2021?

“The decision to trade on Nasdaq was not part of process of becoming a Tier-1, but it surely supported it: one parameter being checked during the due diligence is our financial stability and strength. The capital raised on Nasdaq served made it possible for us to meet the financial goals. In November 2021 we were approved as Volkswagen’s Tier-1 supplier, and in April 2022 we won the bid to supply LiDAR sensors for Volkswagen Group. We are now striving to be a Tier-1 for all the car manufacturers. We do not offer our products in a Tier-2 model anymore.”

How the supply chain crisis affected this move?
“In fact, it helped us. The car manufacturers were very disappointed by their big Tier-1 contractors which failed to supply the required semiconductors to their obligations. They lost billions of dollars. Following this experience they were more open for direct engaging with vendors like us.”

What is the effect on your production infrastructures?

“The first LiDAR generation (InnovizOne) was produced by EMS contractor in Germany. In the transit towards the second generation (InnovizTwo), we took responsibility for the process: we developed the production line inhouse and will shift it to the contractor’s site. We provide the contractor with the automatic machines we develop and build here.”

The Active Alignment station under development in Innoviz' HQ
The Active Alignment station under development in Innoviz’ HQ

The production line developed in Innoviz’ HQ is mostly situated in a clean room and is capable of producing several thousand units. When completed, Innoviz will supply an Active Alignment system to the designated serial production sites. The system installs the optical elements in the sensor, verifies it precision and automatically fixtures them. The last station in the production line is named “End of Line”: Each sensor undergo a series of automated tests in order to determine its acceptance level, and when qualified – it’s going for shipping.

Car manufacturers do not demand exclusivity over your technology?

“BMW is an innovative company, which desires to be the first with cutting-edge technologies. Germans manufacturers are always the first to embrace new technologies. The fact that we won both the Volkswagen and BMW projects positions us in a very good starting point in the market. The Car industry adopted the ‘waterfall’ approach: technologies are being transferred from the more advanced companies to the less advanced ones.

“These companies are interested in spreading the new technologies to more and more customers in order to reduce costs, and this, eventually,  leads to a state of market in which you have 2-3 suppliers for every segment within the automotive industry. A BMW senior engineer demonstrated this idea bluntly: ‘If there’s a feature used only by me – let me know and I will remove it’, he told me.”

Translated by P. Ofer

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