Shares of Luminar Technologies (LAZR -6.81%) climbed more than 10% on Monday after the automotive technology company announced a new partnership that could dramatically expand its end-market opportunity.
Luminar is best known as a supplier to automakers. The company specializes in lidar systems. Lidar is short for light detection and ranging tools, which are used to help autonomous vehicles measure distance and better navigate the world around them.
That is a crowded marketplace, but Luminar on Monday announced a partnership with Airbus (EADSY -2.60%) to explore ways to use lidar in aviation. The two companies will work together to explore how to develop sensors and technologies toward the eventual goal of autonomous flight.
"As the world's largest aircraft manufacturer, Airbus has a long history of actively setting a new bar for the future of the aerospace industry," Luminar CEO Austin Russell said in a statement. "We're able to directly reapply what we've accomplished for the automotive industry into aviation, an established nearly $1 trillion industry."
That $1 trillion total addressable market is mouth-watering, but investors should temper their enthusiasm. The Luminar partnership is with an Airbus unit set up to test a variety of new technologies, and we won't be seeing autonomous planes rolling off the assembly line any time soon.
There is certainly a constant need for aerospace to continue to focus on new safety tools, including advances like lidar that can help with obstacle detection on the ground and in the air. Smaller planes and helicopters in particular could potentially benefit from onboard lidar systems.
There's a lot of potential here. Just be warned that "potential" won't materialize overnight.