In this conversation with Mitch Hourtienne from Cepton, Inc. (NASDAQ:CPTN), the chief commercial officer discusses the affordability of LiDAR technology with Proactive’s Steve Darling. Hourtienne explained that historically, LiDAR started at high costs but has significantly reduced over the years.
Cepton, in particular, focuses on keeping costs down through strategic decision. Hourtienne highlighted two key factors for Cepton's cost-effectiveness and touches on the significance of chips in LiDAR hardware.
Overall, the discussion emphasized Cepton's commitment to being the lowest-cost supplier for LiDAR technology through thoughtful technological choices and strategic partnerships.
Proactive: When it comes to LiDAR technology, people are often concerned about costs. Is LiDAR considered an affordable technology?
MH: Historically, LIDAR began with costs in the tens of thousands of dollars. Over the past 15 years, however, costs have significantly decreased due to industry-wide investments. Notably, Cepton differentiates itself by initiating with a low base bill of materials. For instance, the choice of a 905 nanometer wavelength for their laser, based on silicon, incurs a low cost since silicon is widely available in vehicles and consumer electronics. In contrast, some companies opt for a 1550 nanometer wavelength, a telecom industry standard for decades, but requiring pricier exotic materials.
Cepton's second strategy involves cultivating a robust supplier ecosystem, featuring a prominent tier one partner in Koito Manufacturing and strategic contract manufacturing collaborators. The meticulous selection of partners with shared ambition has been crucial; for instance, Cepton opted against a contract manufacturer viewing LIDAR as opportunistic years ago due to misaligned ambitions. These strategic decisions position Cepton as a leading low-cost supplier in the LIDAR market.
Does that also include chips, the components within the LIDAR hardware? Is this a significant aspect of the technology?
Definitely. Many early LIDAR products initially utilize what's known as an FPGA, a field-programmable gate array. While this chip is relatively costly, it offers great flexibility for design adjustments during the development phase. As production scales up, especially with series production awards, the transition is made to developing a proprietary ASIC, an Application-Specific Integrated Circuit. The aim is to tailor this chip specifically for LIDAR use, enabling high-volume production at a minimal cost per unit. That gives us at Cepton a huge cost advantage for future automotive deals.
Could you elaborate on your approach when seeking to collaborate with someone? How pivotal is having a common vision when selecting a partner and navigating the path forward together?
Absolutely. From my experience in launching new technologies like LIDAR, I've discovered that this is likely the most crucial factor when selecting ecosystem partners. Early on, in our engagement with Koito Manufacturing, we observed their forward-thinking approach, contemplating the next 100 years. Being a century-old company, their long-term vision aligns with what we value in potential partners.