Cepton Inc. (NASDAQ: CPTN)

Tip on: September 29, 2023

Cepton Inc. (NASDAQ: CPTN) is a developer of lidar-based solutions that help enable ADAS, autonomous vehicles, smart cities, smart spaces, and smart industrial applications. The company’s products are currently used in a variety of use cases including monitoring airport terminals, enhancing efficiency at highway tolling stations / railways, and securing high value infrastructure. In 2021, Cepton announced it was awarded the largest known ADAS lidar series production award[1] to support General Motors’ (NYSE: GM) Ultra Cruise program and expects to have its lidars in select GM models starting next year. In addition, Cepton is currently engaged with all other top 10 global automotive OEMs.

Cepton was established in 2016 by Co-Founders Dr. Jun Pei and Dr. Mark McCord and has 151 employees. The company is headquartered in San Jose, California, with a newly opened Center of Excellence in Metro Detroit, Michigan, and an international presence spanning North America, Germany, Japan, India, and China.

Patented Micro Motion Technology (MMT®)

Cepton was built from the ground up to address key lidar industry challenges for mass market adoption. The company’s portfolio of proprietary technology is uniquely aimed at facilitating this industry growth through a combination of performance, reliability, affordability, and design integration.

Key among its innovations is MMT®, a mirrorless, frictionless, rotation-free 3D imaging platform designed specifically for lidars. Its benefits for OEMs and system integrators include:

  • Reliability – The durable design uses common, easily attainable materials
  • Versatility – The platform is capable of achieving near- to ultra-long range with a wide field of view
  • Efficiency – MMT® features a compact form factor, low power usage, and inexpensive components
  • Scalability – Its simple design means that scaling-up to high manufacturing volumes is easily attainable

Due to their compact form factor, Cepton lidars are embeddable and ideally suited for advanced driver assistance system (ADAS) integration, whether behind windshield, in headlamp, or in fascia.

Strong Partnership with Koito, a Leading Tier 1 Supplier

Koito Manufacturing Co. Ltd., the world’s premier Tier 1 auto lighting supplier, originally started an evaluation of Cepton’s MMT® based lidars in 2018. In 2020, Koito made a $50 million Series C investment in Cepton aimed at accelerating the company’s development and enabling Koito’s industrialization of high-performance and high reliability lidar sensors for ADAS and autonomous vehicle (AV) applications.

Through this collaboration, Cepton and Koito were able to secure the largest ADAS lidar series production award[1] with General Motors as a sole source in the automotive space. The award covers GM vehicles for the initial period of 2023-2027.

The two companies deepened their relationship in August 2021 when Koito committed to invest an additional $50 million in Cepton’s business through a Private Investment in Public Equity (PIPE) transaction in support of Cepton’s business combination with Growth Capital Acquisition Corp.

On June 27, 2022, Cepton and Koito jointly announced their intention to expand their existing collaboration efforts to include select future Cepton lidar products and go-to-market activities.

Advancing ADAS in Collaboration with GM

On July 13, 2021, Cepton announced that it had secured an ADAS lidar series production award from a leading, Detroit-based global automotive OEM – the biggest lidar production award by any OEM to any lidar company[1]. It was later clarified that the OEM was General Motors, and Cepton’s lidar is part of GM’s Ultra Cruise program.

GM is “expected to deploy Cepton lidars in its next generation of advanced driver assistance systems (ADAS) across multiple vehicle classes and models – not just luxury cars.” As such, the agreement marks the potential for “an industry-first, mass-market adoption of lidar technology for automotive ADAS, with an anticipated deployment in consumer vehicles starting in 2023.”

On July 28, 2021, Ford Motor Company (NYSE: F) distributed an article on Medium noting, “Ford has been engaged with Cepton almost since their inception in 2016, both for R&D collaboration and small-scale deployments. Cepton lidar are deployed in some of [Ford’s] smart city projects. Based on Ford’s guidance, Cepton delivered a custom version of their lidar to enable R&D on advanced ADAS features.”

Increasing Applications Across Smart Infrastructure

In addition to its work with leading automotive OEMs, Cepton has entered into partnerships around the world leveraging its lidar-based solutions to improve infrastructure efficiency and safety.

Some recent examples include:

  • Traffic Challenges in Cape Town, South Africa – Cepton and Fibre Based Integrations, an established fiber optics systems house, are working together to develop lidar-based vehicle detection solutions to enable citywide smart transportation infrastructure
  • Vehicle to Infrastructure (V2I) Solutions in West Midlands, United Kingdom – Cepton and Vortex IoT, a UK-based IoT solutions company, teamed up to turn UK buses into real-time road inspection tools
  • Security & Safety Systems in the U.S. – Cepton partnered with Barrier1 Systems, a top perimeter security solutions provider, to enable the next-generation of early-warning intrusion detection and onsite safety applications
  • Smart Railway in Europe – Cepton teamed with Lithuania-based system integrator Belam to improve road user and rail passenger safety by deploying lidar-enabled obstacle detection at railway level crossings
  • Real-Time Crowd Analytics at Orlando International Airport – The Indoor Lab, a leading provider of lidar-based real-time foot traffic monitoring, implemented Cepton’s award-winning Helius™ Smart Lidar System in a crowd analytics solution that helped Orlando International Airport create one of the world’s safest terminals during the COVID-19 pandemic
  • Free-flow E-tolling – Cepton partnered with Red Fox ID to deploy lidar as part of their free-flow e-tolling solutions. Deployments include a major highway turnpike crossing multiple states in the United States, and various sites across North America, EMEA, and Asia.

Market Outlook

The global lidar market is forecast to experience considerable growth over the coming years, driven by increased development and adoption in automobile safety applications, environmental mapping, and 3D-modeling. In 2020, ground-based lidar accounted for the lion’s share of the overall lidar market, and this trend is expected to continue as the automotive sector continues to rapidly advance adoption across the full spectrum of vehicle classes.

The lidar automotive end market also has high barriers to entry, because it can take substantial time, spanning multiple years, for automotive OEMs to vet and award a production win to a lidar company. It is a commonly held view that the fragmented universe of lidar companies will inevitably consolidate into a handful of companies.

Cepton is uniquely positioned to capitalize on this market growth in the years to come given its head start and established partnerships with leading global OEMs.

Opening a New Center of Excellence in Metro Detroit

On June 16, 2022, Cepton announced the opening of its new corporate office in Metro Detroit (Troy, Michigan). As detailed in the release, the new office will serve as the company’s automotive hub as it continues to expand active engagements and initiatives with OEMs.

“I’m incredibly proud that our Silicon Valley company, Cepton, has earned Detroit’s trust,” Dr. Jun Pei, Co-Founder and CEO of Cepton, stated in announcing the new office. “As we continue to expand our engagements with all of the top ten global OEMs, locating our experienced team in Detroit will serve us well.”

Cepton’s new office will house members of its senior leadership team, as well as team members engaged in product development, program management, business development, application engineering, sales, and corporate marketing.

Experienced Management Team

Cepton’s founder-led team is made up of lidar industry pioneers with decades of collective experience across advanced lidar and imaging technologies.

Jun Pei, Ph.D., is the company’s CEO and Co-Founder. He is a technology specialist with a focus in optics and electronics. Prior to founding Cepton, Dr. Pei founded AEP Technology, a firm focused on developing advanced 3D optical instruments. He received his Ph.D. in electrical engineering from Stanford University.

Mark McCord, Ph.D., is Cepton’s CTO and Co-Founder. Prior to founding Cepton, he led advanced development at KLA-Tencor. Dr. McCord also formerly served as an associate professor at Stanford University, where he earned his Ph.D. in electrical engineering.

Hull Xu is the company’s CFO. He is a seasoned investment banker and electrical engineer who has previously held leadership positions with RBC Capital Markets, Barclays Investment Bank and GE Capital. Mr. Xu has an M.B.A. from the Haas School of Business at the University of California, Berkeley, an M.S. in Electrical Engineering from Stanford University, and a B.S. in Electrical Engineering from the University of California, Davis.

[1] Largest known ADAS lidar series production award based on number of vehicle models awarded

Investment Considerations
  • Cepton provides highly competitive price-for-performance lidar solutions based on its proprietary Micro Motion Technology (MMT®)
  • The company was awarded the industry’s largest ADAS lidar series production award to support General Motors’ Ultra Cruise program, with an anticipated start of production set for 2023
  • Cepton has partnered with Koito, the world’s premier Tier 1 auto lighting supplier, to accelerate product development and enable economies of scale
  • The company boasts a compelling financial profile supported by a capital efficient model, leveraging relationships with Tier 1s, systems integrators, and contract manufacturers
  • Cepton is founder-led and guided by a management team with a proven track record in advanced lidar and imaging technology
Additional Resources