Lidar technology startup Luminar said Thursday that it has established its latest automotive partnership with Mercedes-Benz.

It will involve series production of sensors, enhancing the automaker’s automated highway driving systems.

There’s not yet a timetable for when Luminar’s “Iris” lidar will be installed in passenger vehicles, nor specific vehicle models chosen.

As part of the agreement, Mercedes-Benz notches a financial stake in the company. The automaker will receive 1.5 million shares of Luminar stock, which closed at $13.39 per share Wednesday. The company’s market capitalization stands at about $4.7 billion.

For Luminar, the Mercedes-Benz partnership represents another major design win, its ninth overall and third for conventional passenger vehicles. Only weeks ago at CES, the lidar company unveiled a similar effort with Volvo Cars. Luminar now works with many leading global automakers including Toyota Motor Corp. and China’s SAIC among others.

This one, though, brings newfound significance.

“It’s the big leagues when it comes to the volume game,” Luminar CEO Austin Russell told Automotive News. “We’re really getting into that, and it’s pretty meaningful from the standpoint of enabling the next generation of safety system and autonomous capability for their vehicles. That’s the whole objective.”

Lidar sensors use lasers to detect objects in the traffic environment and measure their distance from vehicles. With the exception of Elon Musk and Tesla, more and more automakers have come to believe lidar is an essential component in advanced driver-assist systems.

Mercedes-Benz is already allowing drivers to push beyond systems that require human oversight. In December, the automaker said it will launch its “Drive Pilot” Level 3 automated system on German roads. Drive Pilot allows for hands-free driving up to 37 mph on certain roads and does not require a human to monitor its performance.

Available in early 2022 on the S-Class sedan and coming soon on the EQS electric vehicle, Drive Pilot already contains lidar.

“Mercedes-Benz’s achievement of SAE Level 3 already marked a huge milestone for automated driving, and I am absolutely convinced that partnerships will increase our level of ambition for what is possible in the future,” Markus Schäfer, member of the board of management at Daimler and Mercedes-Benz, said in a statement.

In the future, Luminar’s Iris lidar will enhance the performance of Mercedes’ systems. They can spot objects at a maximum distance of 600 meters, and perhaps as important, reach 250 meters at 10 percent reflectivity, an important metric for tasks like detecting dark objects at night.

Iris will enter series production by the end of the year, Russell said, in parallel with Luminar’s first production program with Volvo.

In some sense, the deal with Mercedes-Benz is not a surprise. Luminar previously worked with Daimler and has a partnership with Daimler Trucks. What’s perhaps notable is the direct nature of this partnership.

Unlike many competitors that work with an automaker’s preferred Tier 1 supplier, Luminar works directly with Mercedes-Benz.

Partnerships involving the legacy Tier 1s, Russell said, can be more of a “hindrance than a help at the end of the day,” to deal with the “legacy mentality they bring into it,” he said. “You don’t have the talent and the expertise when it comes to these complex lidar systems. You can’t just throw a design over the wall and say, ‘Hey, build a million of these.’

“That direct relationship allows us to have a great, close feedback loop that enables those extra capabilities and move quickly to make all this happen.”

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