Mercedes-Benz stated Thursday it plans to make use of lidar expertise from Luminar in its next-generation of automobiles, driving shares of the tech start-up 13% greater in buying and selling Thursday morning.

As a part of the settlement, the German automaker is predicted to amass as much as 1.5 million shares of Luminar over time as milestones are met. The businesses additionally agreed to share information.

Luminar is making ready for serial manufacturing of its lidar expertise later this yr. The businesses declined to say when Mercedes-Benz plans to start utilizing the lidar expertise in its automobiles, however Luminar CEO and founder Austin Russell stated it might be in “the not too distant future.”

“It is an enormous deal for Luminar,” he stated throughout an internet interview from Germany. “It is one other main OEM announcement and a serious industrial win for us.”

Luminar final yr introduced Volvo could be the primary automaker to supply Luminar’s lidar expertise as customary on a brand new electrical flagship SUV that is scheduled to be unveiled this yr. Russell described the take care of Mercedes-Benz as “related in lots of respects” to Luminar’s take care of Volvo.

Lidars, or mild detection and ranging programs, can sense environment and assist automobiles keep away from obstacles. They use mild to create high-resolution pictures that present a extra correct view of the world than cameras or radar alone.

Luminar’s inventory closed Wednesday at $13.45 a share, down 6.7%. Shares of Luminar, which went public by means of a SPAC deal in December 2020, have been down 19% this month. Its market cap is $4.9 billion.