You may get a significant boost in ability with LIDAR, but it's possible that over-reliance on it will hamper those companies' ability to develop passive image recognition and they will end up stuck.
That opinion certainly seems possible, and Musk does seem to have a track record of being very intelligent and perceptive, and is known to develop his opinions from first principles. So... I'm generally inclined to believe he's correct.
So while Musk might be right if we get such AI, it's not clear that it's about to arrive, and even if it does, we can still use LIDAR. In fact chances are that if you have such great AI, additional sensor inputs will turn it from 'Level 5 Autonomous Pilot' to 'Ultra-super human pilot who can preemtively react to situations you didn't even realize were possible in the moment.'.
Of course there are questions at hand:
1. Is Elon right and I'm wrong? Maybe strong(er) AI is right around the corner. 2. Is current LIDAR tech good enough to reliably provide the ground-truth I spoke about?
But one of Elon Musk's most underrated traits is his adaptability: if a genuinely better/cheaper technology becomes available or if the current picked solution just isn't working, he'll switch to the better option quickly.
For instance: SpaceX originally scoffed at the idea of vertical landing rockets, thinking that parachutes were just fine for recovery. They switched after parachutes failed and then Elon sent out a company-wide email of Masten Space Systems (at the time, not much more than some guys in a garage) doing this: https://www.youtube.com/watch?v=H2Yt5L5TlGM
It's not even that hard to change your mind like that. It's just that usually people don't do it because they invested so much emotionally/verbally/etc in telling people they had the "right" solution and don't want to lose face by changing course.