Long-Term LiDAR Programs And Industrial Sensing Will Ultimately Justify Current Market Caution

Catalysts

About Aeva Technologies

Aeva Technologies develops FMCW based 4D LiDAR sensors and perception systems for automotive autonomy and precision industrial sensing.

What are the underlying business or industry changes driving this perspective?

• Although Aeva has completed the development program with a top 10 global passenger OEM ahead of plan, any delay or downsizing in the planned worldwide Level 3 rollout could limit the scale of hardware shipments and associated software revenue tied to that platform, which would cap future revenue growth.
• While Aeva is the exclusive long range LiDAR supplier for Daimler Truck's autonomous program, the long time line to Daimler Truck's planned 2027 market entry and dependence on Torc's commercialization progress could stretch out the path to higher volumes and delay any improvement in gross margins.
• Although interest in FMCW based 4D LiDAR is rising as OEMs reassess sensor architectures for Level 3 and Level 4 systems, a slow pace of additional RFQ conversions into awards could keep revenue concentrated in a few programs and limit earnings leverage from the unified perception platform.
• Despite the multibillion dollar addressable market for high precision industrial sensing and early orders for Eve 1D and Eve 1V, adoption curves at key customers like SICK and LMI may be gradual, which would temper the contribution of industrial volumes to overall revenue and delay operating margin benefits from the Thailand production line.
• While the recent US$100 million Apollo convertible and prior LG Innotek equity investment increase liquidity to about US$270 million, the ongoing non GAAP operating loss of US$27.2 million in Q3 2025 and gross cash use of US$33.6 million in the quarter suggest that any slowdown in program ramps could keep earnings under pressure and extend reliance on external capital.

Assumptions

This narrative explores a more pessimistic perspective on Aeva Technologies compared to the consensus, based on a Fair Value that aligns with the bearish cohort of analysts. How have these above catalysts been quantified?

• The bearish analysts are assuming Aeva Technologies's revenue will grow by 136.7% annually over the next 3 years.
• The bearish analysts are not forecasting that Aeva Technologies will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Aeva Technologies's profit margin will increase from -1031.1% to the average US Electronic industry of 8.5% in 3 years.
• If Aeva Technologies's profit margin were to converge on the industry average, you could expect earnings to reach $17.0 million (and earnings per share of $0.23) by about January 2029, up from $-156.3 million today.
• In order for the above numbers to justify the price target of the more bearish analyst cohort, the company would need to trade at a PE ratio of 102.1x on those 2029 earnings, up from -6.5x today. This future PE is greater than the current PE for the US Electronic industry at 25.7x.
• The bearish analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.4%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• If the top 10 global passenger OEM finalizes a series production award and rolls out Level 3 capability across a broad global vehicle lineup, Aeva could see a structural lift in sensor shipments and software related revenue, which would raise the potential for revenue growth and a re rating of earnings expectations.
• The multibillion dollar manufacturing automation and precision sensing market, where Eve 1D and Eve 1V are already seeing initial orders and a dedicated Thailand line is in place, could scale faster than expected and turn industrial sensing into a meaningful second growth engine, improving gross margins and operating leverage.
• Aeva is the exclusive long range LiDAR supplier for Daimler Truck's autonomous truck program, and Daimler Truck has publicly framed autonomy as a multi billion dollar revenue and profit opportunity by 2030, so successful commercialization there could materially increase volumes and support better net margins over time.
• The unified perception and chip based architecture, which is being reused across passenger, trucking and industrial customers, could allow Aeva to add new programs and end markets without a matching rise in non GAAP operating expense, improving earnings quality and potentially shortening the path to lower operating losses.
• The US$100 million Apollo convertible notes and earlier LG Innotek equity investment together bring pro forma liquidity to about US$270 million, which may let Aeva fund program ramps and product expansion without near term balance sheet stress, reducing financing risk and supporting the company’s ability to pursue revenue and earnings growth.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The assumed bearish price target for Aeva Technologies is $18.55, which represents up to two standard deviations below the consensus price target of $24.11. This valuation is based on what can be assumed as the expectations of Aeva Technologies's future earnings growth, profit margins and other risk factors from analysts on the more bearish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $33.0, and the most bearish reporting a price target of just $18.55.
  
• In order for you to agree with the more bearish analyst cohort, you'd need to believe that by 2029, revenues will be $201.0 million, earnings will come to $17.0 million, and it would be trading on a PE ratio of 102.1x, assuming you use a discount rate of 8.4%.
  
• Given the current share price of $16.89, the analyst price target of $18.55 is 8.9% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.