Some experts believe the key to building lidar that costs hundreds of dollars instead of thousands is to abandon Velodyne's mechanical design--where a laser physically spins around 360 degrees, several times per second--in favor of a solid-state design that has few if any moving parts. That could make the units simpler, cheaper, and much easier to mass-produce.

Nobody knows how long it will take to build cost-effective automotive-grade lidar. But all of the experts we talked to were optimistic. They pointed to the many previous generations of technology--from handheld calculators to antilock brakes--that became radically cheaper as they were manufactured at scale. Lidar appears to be on a similar trajectory, suggesting that in the long run, lidar costs won't be a barrier to mainstream adoption of self-driving cars.