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How can a car be inspected in seconds, generating a comprehensive report on engine condition, chassis, bodywork, and tires?
This is precisely the solution offered by UVeye, an Israeli startup that has developed an AI-based automatic vehicle scanning technology with no human contact required. The technology has proven to be a massive success, currently scanning nearly one million vehicles per month. Customers include major car manufacturers such as Toyota, Hyundai, Volvo and General Motors, alongside hundreds of car dealerships in the U.S. and Amazon's extensive fleet. Additionally, UVeye is on the verge of signing another deal with a global automotive giant.
UVeye announced on Wednesday a $191 million funding round, bringing its total capital raised to $380.5 million since its founding. The current round consists of $41 million in equity funding led by Toyota's growth fund, Woven Capital, with participation from UMC Capital and existing investors such as W.R. Berkley, Menora Mivtachim, Mor Investment House, and MyBerg. Additionally, the company raised $150 million in debt from Trinity Capital to finance the scanning systems delivered to its customers.
"We are like an MRI for vehicles," explains Amir Hever, co-founder and CEO of UVeye. "The vehicle simply drives through our system, which diagnoses tire condition, undercarriage and vehicle body, while also scanning the interior and extracting all sensor alerts and issues from the vehicle’s computer – even recording the engine's sound."
What is the advantage of the system over similar smartphone applications?
"There are many smartphone apps that try to compete, although we see them more as complementary products. They might be good for insurance companies wanting photos of a car after an accident to estimate damages, but they’re not as suitable for precise inspections required when purchasing used cars. Moreover, we eliminate the need for potential buyers to photograph the car themselves – our system does it better and more accurately."
The core technology of UVeye is based on scanning critical vehicle parts through imaging and then applying AI-based computer vision. As the car drives through the inspection arch, it is photographed from all angles. The AI can efficiently detect any irregularities or anomalies, from tire tread depth to unusual engine sounds. Another application of the technology – UVeye's first development – was vehicle security inspections. The system can detect concealed explosives or objects in a vehicle's undercarriage without risking human lives.
One significant outcome of the technology is the vast amount of data collected about vehicle conditions. This data enables customers to make better business decisions, reduce damages and minimize repair recalls. A company report revealed that electric vehicles experience higher tire wear compared to fuel-powered cars – a phenomenon explained by the heavier weight of EVs and sharper acceleration and braking patterns. UVeye’s customers can analyze issues based on car type, age or geographic region, helping them make better business decisions.
Hever emphasizes the enormous market potential for UVeye, with the new funding enabling the company to expand into additional markets, hire development staff and enhance the technology. Currently, the majority of the company's revenue comes from American car dealerships, spanning new car sales, used cars, and repair workshops. UVeye’s system supports all these areas: it inspects new cars before delivery to the customer, generates comprehensive reports on used cars for potential buyers, and diagnoses a vehicle entering a repair shop to identify various faults.
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One notable customer is CarMax, one of the largest American used car retailers, selling millions of vehicles annually. Since the COVID-19 pandemic, CarMax began selling cars online. UVeye’s technology enables the company to scan vehicles for sale and upload condition reports to their website, streamlining the sales process.
Another high-potential segment is vehicle fleets. As part of its collaboration with Amazon, initiated about a year ago, every delivery vehicle undergoes an automatic scan upon returning from its delivery route. This allows Amazon to monitor vehicle and driver performance and identify irregularities. Hever notes that the agreement includes up to 850 distribution centers across the U.S., Canada, and Europe.
The company’s business model is intriguing
UVeye finances the purchase of its systems for customers so that the initial investment cost does not become an obstacle to deals. This is the reason behind the current debt fundraising, which allows the company to cover upfront costs and recoup them throughout the customer contract period. For customers, the arrangement involves a fixed monthly payment for the service.
UVeye has grown rapidly in recent years, doubling its revenue annually. The company’s revenue last year was estimated in the tens of millions and is projected to surpass $100 million in annual recurring revenue (ARR) by 2025. "2024 has been a good year for us," says Hever. "We have more demand than we can supply. The funding will help us produce and install more systems to meet all the demand."
UVeye was founded in 2016 by brothers Amir Hever, the CEO, and Ohad Hever, the COO. The company has 230 employees, 130 in Israel and 100 in the U.S., and plans to hire additional staff in both locations. Over the past year, UVeye was recognized as one of TIME magazine's best inventions and was included in Fast Company's list of the world's most innovative companies.
What are the plans for the coming year?
"We’ll sign additional agreements and enter new fields, such as insurance companies, where we’re currently piloting with several firms. We’re investing significant resources to gain a deeper understanding of electric vehicles. Our goal is not just to assess battery health but also to evaluate the functionality of sensors, for example."
With your valuation from the previous funding round at $800 million and additional capital raised, is this the right time to consider going public on NASDAQ?
"When you have a company that stands on its own and manages to double its revenue every year, the question arises whether to go public or remain private. Right now, we’re focused on building a healthy and profitable company – which should happen in the next 12 to 18 months – and then everything is on the table."
A successful private company could become an acquisition target for larger firms.
"That might be true, but given our size, I’m not sure we’re an easy target. It would require a significant strategic deal. We are really just getting started, and I think our investors understand that. Most of them are long-term investors rather than purely financial ones."