- Cepton Technology is coming public this month via a merger with SPAC Growth Capital Acquisition Corp.
- Cepton is a leader in lidar technology, working with all the top automotive OEMs and signing the largest lidar contract to date where its MMT will be used in General Motors’ Ultra Cruise ADAS
- Cepton recently hosted a Virtual Investor Day where the management team provided comprehensive insight into the past and future as it targets $1.22 billion in revenue is 2026
Occasionally, an industry emerges that fundamentally changes the game. In the automobile industry, the future is autonomous driving, starting with Advanced Driver Assistance Systems (“ADAS”) before it evolves into full-on driverless technology. According to Dr. Jun Pei, CEO of Cepton Technology, the future of autonomous will include a combination of lidar (light detection and ranging), camera, and microwave technologies working seamlessly to keep passengers safe in vehicles. In the words of Dr. Pei during a recent Virtual Investor Day, don’t think Cepton is “just another lidar story;” Cepton is writing lidar’s history, including winning the largest ADAS lidar contract to date.
Cepton is coming public through a merger with special purpose acquisition company Growth Capital Acquisition (NASDAQ: GCAC), with a shareholder vote on the merger scheduled for February 9. Ahead of the meeting, GCAC has accumulated approximately $172.5 million in trust, plus another $59.5 million via a PIPE (private investment in public entity).
During the two-hour presentation, Cepton’s leadership team took turns detailing the company and the industry in a highly informative and easy-to-understand manner that illustrated exactly why Cepton is differentiated from any peers in the lidar space. From the minutiae to the broad strategy, Pei and company made it easy to see why Cepton was selected by GCAC founders after exploring over 100 potential acquisition targets for the SPAC.
Lidar and associated technology can be complex and intimidating for those outside engineering circles, which Pei, who received his Ph.D. in Electrical Engineering from Stanford University, seems to have a firm grip on when providing insight on Cepton technology. He lays out exactly how the company got to where it is today since formation six years ago with the specific purpose of becoming the dominant force in mass market lidar.
Lidar uses infrared beams of light, shooting them into space, recording the travel time to reflect home, and then using equations to determine distance. When combined with computing power, lidar creates a map of the environment that undergirds autonomous driving and vehicle safety. Heralded for the last decade as the future for cars, lidar engineers faced countless obstacles for what Pei calls the three pillars of lidar: performance, cost, and reliability.
To overcome these challenges, Cepton looked to some time-tested and auto-approved technologies for illumination and detection and married it with their own patented tech called MMT(R) (micro-motion technology). In summary, MMT(R), is a microscopic optical array merged with a voice coil being microscopically driven over a magnet. It is completely frictionless with no complex optical components and stunning performance.
These qualities resulted in a partnership with Koito, the biggest Tier 1 automotive lighting company in the world, and General Motors (NYSE: GM), which is now solely using Cepton’s lidar technology in its vehicles through 2027. More precisely, Cepton’s lidar is the center point of GM’s new Ultra Cruise ADAS, its upgraded version of its popular Super Cruise tech that will make hands-free driving possible on essentially every road in the U.S., an industry first. The contract is, hands down, the biggest the lidar industry has ever seen. It is not merely a contract to put Cepton’s lidar on one model of a GM vehicle. It will be used for every vehicle in the GM family receiving Ultra Cruise.
Throughout the Investor Day presentation, the company provides a bevy of insight on how onerous a path it is for an upstart (or any company for that matter) to win such a contract from a Tier 1 automaker, including the design process, the importance of Koito as a partner, and all the software and hardware work necessary to build what is arguably the most advanced lidar system available today, complete with Cepton’s own low-power, sesame-sized ASIC chip that handles all the processing.
Part of the genius of Cepton’s LiDAR is its versatility. With its tiny footprint, it can go behind windshield, in Koito headlamps, or on the vehicle body, whatever the OEM wants. And, according to Brunno Moretti, VP of Product Marketing, lidar seeing booming demand. “Every OEM that I’ve talked to…sees lidar as a necessity, sees it as a way to get to fewer accidents,” said Moretti during the investor presentation.
Management went on to enlighten shareholders about how it continues to build a rigid barrier to entry to ward off any potential competition as part of its go-forward strategy. For starters, working intimately with companies like GM, Ford (NYSE: F), Koito and other top names provides validation and a rapport that is not easily duplicated as one becomes integral to their infrastructure. Cepton has had “boots on the ground” in Detroit for years making sure it is meeting any demands automakers require.
Owing to confidentiality agreements, Cepton cannot disclose all the companies it is working with, but it did share that it has engagements with nearly 200 companies across many verticals. Cepton is working on optimization of MMT(R), as well as new technologies, including sharing a video clip demonstrating its SLAM (simultaneous localization and mapping) tech.
According to Mitch Hourtienne, VP of Business Development at Cepton, the new product launch of Ultra Cruise has tremendous potential to scale after the initial roll-off in 2023. Opportunities should abound in new models and geographic expansion, plus potentially new alliance partners akin to the way Honda is adopting GM’s Super Cruise on certain models.
The presentation also included a financial section that gave CFO Winston Fu an opportunity to discuss the revenue forecast through 2026, when revenue is expected to reach $1.22 billion. While GM certainly is a key influencer, the overall revenue plan is diversified throughout hundreds of engagements with other companies highly interested in incorporating lidar technologies. Fu went on to detail the strategy on customer retention and lowering selling price points while simultaneously expanding gross margins, which should exceed 50% in 2025.
Cepton’s team spent nearly an hour fielding and answering questions from shareholders that provided additional perspective on decisions and where the company is headed, including very specific topics (scalability, hurdles, illumination design, etc.).
What is evolving for Cepton is a beachhead market where Cepton has the opportunity to gain a dominant market share in the auto industry while positioning to address adjacent markets where lidar is applicable. Confident in the company’s position, Pei quipped, “You don’t have to project who the winner is. Cepton is already the winner.”
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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