What happened

Innoviz Technologies (INVZ -9.88%) stock rose sharply Tuesday. As of 12:41 p.m. ET, shares of the lidar technology specialist were up 22.1%.

The news that revved up the engines of the bulls was that Volkswagen (VWAGY 1.06%)  had selected Innoviz to provide lidar sensors and software for its autonomous vehicle subsidiary.

So what

In early May, Innoviz Technologies announced that it had inked a new contract with a major automaker, but did not at that time name the customer. Now investors know the mystery client was Volkswagen. CARIAD SE, a technology company that is a subsidiary of Volkswagen, selected Innoviz for its InnovizTwo next-generation lidar sensors and perception software.

"We are thrilled to work with the CARIAD team and be a supplier of LiDAR sensors and perception software to support safe mobility for vehicles launching from the middle of the decade," said Omer Keilaf, CEO and co-founder of Innoviz.

In its press release Tuesday, Innoviz reiterated that its order book has increased to $6.6 billion from $2.6 billion, which it had previously announced in May.

Now what

It's unsurprising that the market is celebrating the VW news, given that Innoviz's new customer is one of the biggest players in the global automotive industry. In addition, investors may also be speculating that this deal could be a harbinger for future partnerships with other leading vehicle manufacturers.