The Six Five team discusses Luminar completing the bring-up of their Mexico plant.
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Transcript:
Patrick Moorhead: Automotive Lidar company Luminar announced this week the bring up of its Mexico plant. And as I pointed out in the headline in my Forbes article, Luminar proves the pundits wrong with successful bring up of a Mexico plant. You might be like, “Well what are you talking about, Pat?” Well, if you remember, I don’t know if it was last week or the week before on the pod, we talked about Luminar’s CFO actually writing an article having to respond to some of the claims from two competitors, and also a very interesting call from a sell side analyst that he directly responded to.
But there were a ton of people that said, “Hey, Luminar, there’s no possible way that you can get this to high volume manufacturing.” And then boom. So Luminar has not only signed up Volvo and Mercedes and is actually shipping to them, but also kind of the high-flyers out there like Sykes Rising Auto, which offers the R7 in China today with Luminar lidar, and holistically, the company has signed up 20 vehicle models. And to do that, you need to have space. So this space which is run by Celestica, a very well-known ODM, can create between 250 and half a million sensors a year. And I know that the company Luminar is also building some really big capacity in Asia as well.
But it’s funny, I wrote this at the end of my article, Daniel, on hey, is this company going to get any credit for what they’ve been doing? They talk about these customers doubling down their stock catapults, the haters come in and then it goes down to below where they were before they made the initial element. And the way that I net this out, it’s really tough to be a leader, right. When I was at Alta Vista, there were people Yahoo, Excite, Ask Jeeves and their investment bankers were trying to figure out how Google was so good at what it did.
It’s a very similar quote from they ripped off the technology to these kids will never be able to run a business like that. There’s no way they can afford it. Even investment banking firms lined up to take potshots at Google who had aligned with different competitors. So it really took me down kind of a memory lane here. But at the end, what I know is this, is that Luminar is in high volume manufacturing and their competitors are talking about manufacturing on PowerPoint slides. And the other thing I know is that when it comes to early types of technology, you do pay a premium. Surprise. Look at NVIDIA, look at Qualcomm and 5G. They’re ahead, they’re ahead, they’re ahead. They rake in very high prices in the beginning and then the other folks like Media Tech come in and fill in the gaps and prices go down. And guess what? Qualcomm’s on to 6G or something after that.
The difference here though is that these contracts with these auto manufacturers could be up to 15 years long. Luminar doesn’t have to move to somebody, and whatever’s baked in these long-term agreements has a certain pricing stipulation. And at this point it’s like, “Do Volvo and Mercedes, do they want the cheapest and tomorrow or the best and now when it comes to the safety of their other passengers?” So anyways, interesting stuff. A lot of intrigue and a lot of interesting stuff going on there.
Daniel Newman: The automotive space will continue to be a hot button item with all the discussion of AI. And I think we have at least one, if not two more AI-related topics here today, we’re quickly forgetting that we were working rapidly towards full self-driving. And this is really kind of the ethos of Luminar, is to enable it to deliver the technology that can truly and safely enable vehicles to do full self-driving in the future. But even right now, just the L2 plus L4, the ability to do assisted successfully.
I mean, Pat, we’ve seen the dummy run. Your son’s multimillion hit video from CDS. The Tesla just keeps running over the kid. And this isn’t us. We’re just passing along what we saw. And when Tesla shows its evidence that it’s doing something differently, but it’s not going to be a single type of process that’s going to enable the safest driving. It’s going to be a combination of multiple sensing technologies. It’s going to be radar, it’s going to be lidar, it’s going to be vision.
And I think that’s what Luminar understands. That’s what the vendors or the OEMs or the manufacturers that are signing up with Luminar understand. And so seeing them execute against their vision is great. Like you said, the market hasn’t appreciated growth for a long time. Maybe we’re getting to the end of the interest rate hike cycle. When that rate hike cycle ends, you will see tech growth bounce. That is just… That’s happened every time. So if it doesn’t happen this time, it’s an aberration. So overall though, I like him and I like his house and succession by the way… Looks good. I want to visit it.
Author Information
Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
