I’m convinced that Seeing Machines has recently been awarded a contract worth more than US$25m a year by BMW to supply its driver monitoring system in its cars, some of which should be available for sale by 2020.
From discussions with auto industry contacts, I believe the contract is for many forthcoming models (several million cars) and the DMS is likely to eventually end up being standard issue within the instrument cluster of all BMW cars. Given that BMW sells roughly 2.3m cars a year and that Seeing Machines would get approximately US$30 a car, that makes a potential annual income of US$57m a year by 2020, rounded down to US$50m.
Given that in the auto industry the lifetime of a model lasts for roughly 5 years, the lifetime value of this contract should be at least US$125m, though it could be as much as US$250m.
When this news is officially announced I’d expect broker upgrades to be the order of the day. FinnCap currently has an estimate for full year revenues of A$141m for 2020 and Canaccord Genuity has an estimate of A$128.5m — of which only A$24m is from auto!
There has been no official announcement of the contract win aside from an announcement by Aptiv on page 9 of this document that I take as confirmation.
When questioned, Aptiv were unwilling to discuss any details, saying: “…unfortunately we have nothing incremental approved to share beyond what’s in the document.”
Given the scale of BMW’s operations, the BMW contract may be shared with at least one other Tier 1 but no others that I’ve contacted are keen to confirm or deny involvement.
BMW itself remained rather coy. Asked how it plans to solve the problem of driver disengagement and the associated issue of ensuring the driver is alert and ready to take back control from the car, whether it would use a driver monitoring system and who would supply it, a spokesman said: “So far we have only announced that interior cameras will play a role ensuring the vaild point you mention. Details on functions and suppliers have not yet been announced. We have to ask for a little more patience.”
Seeing Machines was contacted but declined to comment.
Winning BMW so soon after it won a huge contract with Mercedes last year truly cements Seeing Machines’ Fovio driver monitoring system as the leading DMS in the auto industry. The premium choice for premium auto manufacturers.
Note that General Motors Cadillac already features Seeing Machines Fovio DMS.
Not only is Seeing Machines working hand in glove with Autoliv and Bosch, but I believe its DMS is now being used by LG (Mercedes), Aptiv and probably others that I don’t know about.
Driven by regulatory changes many other car OEMs are going to be tendering for DMS systems and Seeing Machines is set to be the industry standard. A standard that i’m consistently told no other company can yet match.
Thus, I’m confident that Fovio is likely to be chosen by many other global OEMs as they gear up new, increasingly semi-autonomous, vehicles for production over the next year.
By my reckoning the automotive side of Seeing Machines must already be worth £1bn and with every new win is only increasing in value.
Moreover, there’s a strong case for arguing the rest of the business (Fleet, Aviation, Rail and Off-road) is worth another £1bn.
Given the success of Seeing Machines in winning large contracts and the increasing momentum of M&A activity in the auto industry I believe it’s only a matter of time before a bid is forthcoming from an industry player. Let’s hope the price soon reflects the value of the business.
The writer holds stock in Seeing Machines