Luminar (LAZR) Positions Itself at the EV Crossroads
mass adoption is turning electric vehicles into just another piece of consumer electronics
Electric vehicles are science fiction no more. In fact, the freshman class of mass-produced electric vehicles behaves more like consumer electronics devices than vehicles. EV navigation is where today’s innovation lies: Lidar positional startup Luminar Technologies (LAZR) is attracting particular attention.
Take, for example, Ford’s new F-150 Lightning pickup truck. This all new, all-electric light utility vehicle boasts all the spiffy benefits of all-electric conveyance: 560 horsepower, a hands-free driving system, and live-streamed updates to onboard computer systems. Most spacecraft could only dream of being so well-equipped.
Ford was careful make its electric F-150 feel just like the petrol-powered version. That raises subtle problems.
But the interior of the F-150 Lightning is far from space age. It looks, feels, and is priced like a standard F-150 pickup.
Openly cutting-edge EVs also bespeak a similar, mundane consumer-tech experience. The Rivian R1T pickup and the spiffy Lucid Air electric luxury sedan initially radiate a futuristic glow. The Rivian features innovative design, roughly 800 horsepower, and something like 77 miles per gallon equivalent. The Lucid Air offers similar eye-popping statistics: 1,111 horsepower, 520 miles of range per charge, and a full slew of driver-assist technologies. A giant glass roof invites most of the galaxy into the vehicle.
Eric Bach, chief engineer at Lucid (LCID), deserves real credit for crafting top-end Mercedes Benz-like features and roominess into a manageable-sized vehicle. But how differentiated is the Lucid really, from other EVs, like Tesla’s latest Model S Plaid? One is a shade faster. One is a shade roomier; one is more efficient. Both were once bits of sci-fi imagination. But now that both electric vehicles can be seen, touched, and driven, both boil down to not much more than electric coils, control systems, and screens.
Stripped to such a consumer-tech essence, comparing a Lucid and a Tesla is not all that far from comparing a Dell Laptop to a Lenovo Thinkpad: The electronic guts are essentially the same.
Comparing electric vehicles suddenly feels as mundane as comparing personal computers.
Sexy No More
EVs’ sudden resemblance to a more mundane consumer electronics experience has as much to do with the changing story surrounding EVs as the vehicles themselves. Sector bellwether Tesla no longer dominates the narrative. Motor Trend’s most popular stories of 2021 – a surprisingly insightful industry indicator – included not only the usual breathless coverage of Tesla, but also solid performance breakdowns of electric models from established car makers like Ford. Motor Trend awarded both the Rivian truck and Lucid sedan Truck of the Year and Car of the Year, respectively, based mostly on style, performance, and features.
Electric propulsion was not a significant factor.
The change in consumer perception of EVs was so dramatic that Motor Trend commissioned its own consumer behavior study. Nearly 6 out of 10 cited environmental reasons for their interest in electric vehicles. Only older shoppers were skeptical of the eventual domination of EVs. Roughly 80% of younger drivers, 18- to 34-year-olds, expect to consider buying an EV over the next 15 years. Half expected to probably purchase one. Cost and charging practicalities were the main reservations. Range is no longer a concern.
EVs are now seen as the Marvel Comics antihero Thanos: They are “inevitable.”
But the personalities behind this first generation of electric vehicles are sending a clear message that the consumer experience for buying an electric car won’t change.
Deborah Wahl, global chief marketing officer at General Motors, created a solid track record for selling EVs. But there was none of Elon Musk’s conjuring to draw attention. Instead, in 2020, Wahl went out and hired Lebron James, licensed a well-known Led Zeppelin song, and married one to the other in a well-produced 2-minute commercial about an electrified Hummer. Then spent millions on TV ad time to spread the word.
That’s exactly how Lee Iacocca launched the Ford Mustang back in the 1960s.
Consumers are skeptical about EVs changing the purchasing experience. Motor Trend’s survey made it clear that 42% of shoppers still hate dealers, 57% hate the process of buying a car, and 85% wished buying a new vehicle was easier. “We don’t get many plug-ins out here,” was the word of caution we got from a midwestern Toyota dealer managing the simple reboot of a plug-in Prius.
The logistics of mass producing electric vehicles will also remain unchanged. Kumar Galhotra, Ford’s president of American and International markets, made the electrified F-150 Lightning pickup compelling not because he managed the logistics of making a single truck. Galhotra made the story of the vehicle sparkle because he managed to figure out how to build 600,000 trucks yearly by 2024.
Car racing, the marketing machine behind the automotive industry, is also sensing the snooze factor of EVs. Major racing classes Formula 1 and NASCAR announced rule changes that will bring electric and hybrid power plants into racing. Both classes are migrating to well-defined electric technologies that promise to lower costs and tighten competition.
Dominate Formula 1 team Mercedes-AMG Petronas is reacting to electric race cars by diversifying into racing sailboats.
But dominant teams in both circuits are already diversifying away from racing just cars. Both the Mercedes and Red Bull F1 racing teams announced partnerships with major sailing syndicates. Both plan to compete for the next America’s Cup Yacht racing trophy.
As a brand argument, fast boats are telling as good, if not better a story than fast cars.
Storytellers are also beginning to poke fun at electric vehicles. Singer songwriter John Hiatt’s hilarious rockabilly tune, “Long Black Electric Cadillac,” is a must-hear. EVs are now squarely in the mainstream idiom of beer, blues, and busted dreams.
EV Yes, Profits Maybe Not
Considering the electric vehicle as just another bit of consumer electronics nicely rationalizes investor value. Electric truck maker Rivian (RIVN) had 2021 IPO awarded the business an enterprise value of roughly $100 billion. Currently the firm is worth only $56 billion. That percentage decrease roughly doubles the current value correction grinding through the S&P 500.
Investors close to the emerging-vehicle sector are quietly migrating toward companies that provide the tools any car will need in the future. Chipmakers Nvidia (NVDA) and Intel (INTC), parts supplier Magna International (MGA), and the privately held electricity charging station maker Electrify America are offering different, yet valid, points of entry to the intelligent mobility sector.
Luminar Technoloy’s founder Austin Russell is betting knowing where an EV is, will be more lucrative than squabling over what it is.
Back to the real innovator in the race for EV dominance: Founded by a 26-year-old mapping sensor innovator, Austin Russell, Luminar offers an impressive near-range sensor that keeps one car from hitting another. Unlike the bigger names in the space, Luminar knows it’s smarter to profit from knowing where an EV is, rather than what it is.