How Lidar "sees." Photo/Velodyne

Lidar — the contraption on top of self-driving test vehicles that uses lasers to "see" — costs a ton of money: around $85,000. The full bill for other sensors, cameras, radar etc. required for future hands-off driving can run into the hundreds of thousands of dollars, plus the price of the car itself.

Mike Jellen, president of Velodyne, a key maker of Lidar equipment, claims the price will plummet under $10,000 once self-driving cars are selling in the hundreds of thousands or millions. The issue of Lidar's cost "is all marketing hype for new entrants," Jellen told Axios.

Why it matters: This is part of a technological war over the development of sensors, the winner of which could reap hundreds of billions of dollars in revenue if the world does turn to self-driving vehicles en-masse, as many analysts predict. The losers? Primarily, the millions of professional truck and taxi drivers around the world who may be shoved out of work.

In championing his core product, Jellen is defending himself, among others, against Tesla's CEO Elon Musk, who — all-but alone among carmakers — has spurned Lidar. Instead, Musk's "Vision" system relies on currently much cheaper cameras.

Demand is an important unknown: It's easy to imagine consumers wanting cars that can park themselves, keep them safely within the lanes on high-speed freeways, and — if they happen to be handicapped or elderly — get them where they need to go without touching the steering wheel. What no one knows is how much they are willing to pay on top of the sticker price for such features.

  • Analysts forecasting ubiquitous robot cars in a matter of years seem to suggest that the added cost will be marginal, but a lesson that price can make a huge difference is electric cars, whose failure to yet catch on as a mass market product is often blamed on their higher cost compared with conventional-drive vehicles.
  • But Jellen says cost isn't an impediment for a self-driving market. Instead, he says, it's about getting the software right. He says Lidar hardware is already well advanced but that the software — the programming that accounts for virtually any driving happenstance - is not ready and validated by testing.
  • In fact, no one knows what Lidar will cost at scale -- the jump from $85,000 to the single-digit thousands is a lot.

Who will see robot cars first? The initial market for self-driving cars will be companies offering "mobility as a service," Jellen says. That's a buzzword that includes Uber, Lyft and carmakers that are testing their own versions of shared transportation.

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