(Bloomberg) -- Volkswagen AG is tapping Israeli lidar company Innoviz Technologies Ltd. to provide laser sensors and software for a push to outfit its cars with more advanced driver-assistance features.

The deal with VW’s software unit Cariad adds about $4 billion to Innoviz’s future orders, with the potential for that amount to grow if the company supplies more VW group brands, Chief Executive Officer Omer Keilaf said in an interview.

Innoviz, which also has a lidar agreement with BMW AG, is responsible for supplying the sensors and integrating the software that makes them operate into VW’s vehicles. That’s a step up for Innoviz, which in the past relied on Magna International Inc. to embed its technology.

“Doing that vertical integration removes a lot of pressure for us, because we are able to reduce the pricing while still keeping a very nice margin for us,” Keilaf said.

Lidar -- laser-based sensors that allow a vehicle to see its surroundings -- are among the most expensive components to enable advanced driver-assistance features and eventually, autonomous driving. The slower-than-expected rollout of robotaxis has spawned a wave of lidar startups tapping public markets to sell carmakers features like hands-free driving on highways.

Read more: With Robotaxis Still a Distant Dream, Lidar Makes Itself Useful

Innoviz, which went public in a reverse merger last year, is hiring a third-party contractor to manufacture the lidar sensors, Keilaf said, declining to disclose the name of the firm.

VW established Cariad in 2020 to consolidate its software efforts. The unit is working with Robert Bosch GmbH to bring hands-free driving functions to the carmaker’s fleet starting in 2023. VW swapped out its Chief Executive Officer Herbert Diess last month after shortcomings at Cariad delayed important models including the Porsche Macan sport utility vehicle.

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