Chesnot | Getty Images News | Getty Images

Volvo is integrating Luminar Technologies’ lidar system into the automaker’s upcoming flagship electric SUV, the first major automaker to incorporate the technology into a vehicle as standard equipment.

Luminar’s new iris lidar system, an advanced sensor that enables vehicles to better “see” their surroundings, will be standard on SUVs, Swedish automaker and start-up Luminar announced on Thursday. The vehicle, a successor to the current Volvo XC90, is expected to be unveiled next year.

Luminar’s shares, which went public in December via a SPAC deal, rose up to 13% during intraday trading on Thursday before closing at $ 23.95 per share, up 6.8% .

“Volvo Cars is and has always been a leader in safety. It will now define the next level of vehicle safety,” said Volvo CEO Hakan Samuelsson in a press release. “With this hardware as standard, we can continuously improve safety functions over the air and introduce advanced autonomous drive systems, which strengthens our leadership position in matters of safety.”

Lidars or light detection and distance measurement systems can capture the environment and help cars avoid obstacles. They use light to create high-resolution images that offer a closer look at the world than cameras or radar alone.

There has been a lot of talk about lidar for self-driving vehicles like vans and trucks, but not as much for consumers because of the cost. Initially used to increase vehicle safety, Luminar said its system will only cost businesses about $ 1,000 per vehicle.

Depending on when the vehicle comes on the market, it could be the first with lidar as standard equipment. It’s a huge win for Luminar.

“This is the first time it’s standardized, but it certainly won’t be the last,” Austin Russell, founder and CEO of Luminar, told CNBC during a technology demonstration in Detroit.

Russell said Luminar’s technology will be integrated into Volvo’s next generation EV platform, which could mean Volvo will offer it as standard or optional on all upcoming EVs. A Volvo spokesman did not immediately respond to a comment.

Volvo has announced that it will be an all-electric car company by 2030, which would greatly help Luminar scale its lidar technology. The vehicles are expected to eventually feature advanced hands-free driving on the freeway with some self-driving capabilities, the companies said.

“This is something that will really help usher in the next wave of safety,” said Russell. “I think it’s going to spark a huge growth trend across the board from that security perspective.”

Russell said 2023 will be the company’s “first major ramp-up” of the company’s lidar technology for the automotive industry.

“By the second half of this decade we will easily have millions of vehicles on the road with all of this,” he said.