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LiDAR Detects Merger Between Cepton and Growth Capital Acquisition Corp. (NASDAQ: GCAC) Drawing Near
January 27, 2022

LiDAR Detects Merger Between Cepton and Growth Capital Acquisition Corp. (NASDAQ: GCAC) Drawing Near

  • Six LiDAR companies have gone public since 2020, raising $3.6+ billion as investors look for exposure to autonomous vehicles market
  • Cepton is merging with Growth Capital Acquisition Corp GCAC in the coming weeks in a deal valuing Cepton at $1.55 billion, with $231 million in pro forma cash on its balance sheet
  • Cepton has worked with the world’s biggest automotive OEMs, including General Motors and Ford, and garnered a $50 million investment for Japan’s Koito Manufacturing

As the race to fully autonomous vehicles (“AVs”) heats up, one particularly important pocket of the AV and advanced driver assistance systems (“ADAS”) markets is gaining momentum right along with it: LiDAR. LiDAR (short for “light detection and ranging”), developed for space applications and hyped for its potential in automotive applications, is moving beyond speculation and into revenue-generating reality. Investors are on board, with six LiDAR companies coming to market via special purpose acquisition companies (“SPACs”) since 2020, raising over $3.6 billion in the process, and another, Cepton, Inc.,  is dialed-in to go public on or about February 10th through a merger with the Growth Capital Acquisition (NASDAQ: GCAC) SPAC.

LiDAR technology uses infrared laser beams to generate a three-dimensional map of the road and surrounding environment, serving, in a manner of speaking, as the eyes of an AV or ADAS. LiDAR is remarkably adept at detecting objects and measuring their distance from a vehicle with incredible precision and speed, even in bad weather and low light conditions. It cannot, however, tell the difference in colors or a rock from a human, which makes it an ideal candidate to work in adjunct with technology such as high-definition cameras, which can provide details on objects.

While viewed by many as the future of AVs, LiDAR has faced numerous challenges, including high cost along with integration issues that are commonplace during introduction of any disruptive technology. Cepton was purposely assembled in 2016, developing and patenting its Micro Motion Technology (MMT(R)) LiDAR platform as a new, reliable, scalable, and cost-effective solutions that deliver long-range, high-resolution 3D perception for a range of markets (auto, smart cities, industrial, etc.), with the initial thrust on ADAS, the most robust market today.

Unlike most peers that use rotating microscopic mirrors to bounce and measure laser beams, known as MEMS (micro-electro-mechanical systems), Cepton uses quartz-crystal-like materials, which provides better performance and lower power usage at a better price point. Cepton has also engineered its LiDAR system to work in different installations, including behind windshields, an auto industry first that gives Cepton a competitive advantage. In November, Cepton was named a CES(R) 2022 Innovation Awards Honoree in the Vehicle Intelligence & Transportation category for its Nova lidar, a miniature, wide field of view lidar sensor for near-range applications.

The Cepton technology team has captured the attention of upper echelon companies and upstarts alike. Management says it is in negotiations with all the top 10 biggest original equipment manufacturers (“OEMs”) in the world, as well as four new electric vehicle OEMs.

While some of this information remains closely guarded, Cepton has provided some valuable insight on its direction, including deals with Koito Manufacturing, General Motors (NYSE: GM), and Ford (NYSE: F)

Tokyo-based Koito, a Tier 1 automotive lighting manufacturer, has licensed the Cepton technology on a non-exclusive basis. Furthermore, Koito made a $50 million investment in the company as part of a PIPE (private investment in a public entity) in connection with the upcoming SPAC merger.

On a valuation level, GCAC has $172.5 million in cash and $58.5 million raised through the PIPE giving it $231 million in pro forma cash on the books. The company has a pro forma valuation of $1.55 billion, equivalent to 1.8x estimated 2025 revenue of $861 million.

The Koito relationship resulted in Cepton securing the largest ADAS LiDAR production award (based on # of vehicle models) today through a new contract with GM. In fact, the three companies collaborated on development of a special type of glass used by Cepton sensors that are entering the GM ecosystem. With an initial term running from 2023 through 2027, all GM vehicles equipped with the automakers’ Ultra Cruise ADAS – expected to be up to nine different platforms of several models each – will exclusively use Cepton LiDAR sensors. Ultra Cruise is the next generation of GM ADAS, designed to ultimately work on every paved road in North America. 

Today, LiDAR is used in extremely limited fashion and only on ultra-high-end vehicles in select parts of the world. The agreement with GM positions Cepton as the first company to bring LiDAR sensors to production markets. Introduction to the mass markets is what will help drive Cepton’s production costs down from around $1,000 to down near $500 in the coming years, which will make the option even more affordable, subsequently driving greater adoption until the tech is mainstream.

The working relationship with Ford has been in place almost since Cepton’s inception nearly six years ago. Ford is working with Cepton on different projects, including advanced ADAS features and on its some of Ford’s smart city projects, where Cepton LiDAR technology is already deployed.

As the company has said, it is first addressing the rapidly emerging LiDAR for ADAS markets, but it has grander plans in the long run to address an array of applications.

For more information, visit the company’s website at www.GCACorp.com 

NOTE TO INVESTORS: The latest news and updates relating to GCAC are available in the company’s newsroom at https://ibn.fm/GCAC

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