Designing a self-driving car is the easy part. Making it work under all sorts of driving conditions is something else altogether.

The key to making a self-driving car work in rain, fog, and snow is ensuring that it can always “see” everything that is happening all around it. And for that, you need lidar technology.

The term “lidar” comes from an acronym that stands for “light detection and ranging.” Lidar is similar to radar and sonar in that it emits waves into the surrounding environment and measures how much time it takes for each pulse to return to the sensor. But instead of sending out electromagnetic or sound waves, lidar uses light waves to identify objects and determine how fast they are moving.

Even though they all use light waves, not all lidar technologies work exactly the same. I won’t get into all the technical minutiae, but critical variables such as the length of the light waves used and how that data is interpreted by the software being used vary from one manufacturer to the next. The denser the “point cloud” of objects identified by the lidar technology being used, the more accurately an autonomous vehicle can interpret its environment.

If Apple (NSDQ: AAPL) products stand for anything, it is for being the best-in-class at all times. For that reason, we believe Apple will consider using only the best lidar technology available in its autonomous vehicles.

And when you examine all of the variables that determine which lidar technology is the best, the one company that clearly stands out among the rest is Luminar Technologies (NSDQ: LAZR).

Luminar’s lidar technology uses unusually long waves of laser light, 1,550 nanometers (nm) versus the typical 905 nm, which helps spot even small and low-reflective objects — dark-colored cars, animals, a child darting into the street — at a range beyond 250 meters.

In addition, Luminar’s proprietary software provides a turnkey solution that accelerates the ability for automobile manufacturers to deliver high-speed highway autonomy at a commercial series production scale.

That’s why several major automakers have selected Luminar as the lidar vendor for their autonomous vehicles:

• In May 2020, Volvo (OTC: VLVLY) announced that its “next-generation SPA 2 modular vehicle architecture will be available as hardware-ready for autonomous drive from production start in 2022, with the Luminar lidar seamlessly integrated into the roof.”
• In December 2018, Audi selected Luminar as its lidar vendor, noting that its “high-density sensor is the first to deliver the necessary performance to enable safe and reliable perception.”
• In May 2021, Toyota (NYSE: TM) chose Luminar as the lidar vendor for its pony.ai fleet of robo-taxis in China and California because “it can be integrated into the car better than traditional lidars.”
• In November 2021, Nvidia (NSDQ: NVDA) selected Luminar for its autonomous vehicle platform known as NVIDIA DRIVE Hyperion. The new product should be available in 2024 vehicle models.

In addition to those four companies, almost all of the other major automakers are developing their own versions of autonomous vehicles.

Allied Market Research noted, “The global lidar market was valued at $700.2 million in 2019 and is projected to reach $2.90 billion by 2027, growing at a CAGR (compound annual growth rate) of 20.1% from 2020 to 2027.”

Keep in mind, that estimate was made in April 2020, before anyone knew that Apple was seriously considering making an autonomous vehicle using lidar technology.

According to Luminar, the total addressable market for its full-stack, hardware, and software “Sentinel” lidar solution will be at least $150 billion by 2030.

And even without Apple, Luminar is posting strong operating results.

In May, Luminar released fiscal 2022 first-quarter results that included $6.9 million in revenue, up 29% year over year and ahead of internal expectations. Luminar remains on track to meet or beat its prior $40 million full-year 2022 revenue guidance.

Not bad for a business founded in 2012 by a then 17-year-old Stanford University dropout. But Austin Russell knew he was onto something special. So did billionaire Peter Thiel, who awarded Russell a $100,000 grant to pursue his interest in lightwave technology.

Thiel was a co-founder of PayPal (NSDQ: PYPL) and an early venture capital investor in Meta (NSDQ: FB), the parent of Facebook. He believes Luminar could follow in those companies’ giant footsteps.

So do we. Although Luminar is not yet profitable, it continues to make excellent progress. That’s not a problem, because the company has plenty of money to fall back on until it reaches profitability. At the end of the first quarter, Luminar held $706.9 million in cash and equivalents.