How Luminar’s doomed Volvo deal helped drag the company into bankruptcy

Summary

In early 2023, Luminar was riding high. After going public during the pandemic and scoring a key deal with Volvo, the company had added Mercedes-Benz and Polestar as customers of its “lifesaving” lidar sensors. Founder and CEO Austin Russell called it an “inflection point,” as Luminar prepped to have those sensors integrated into the first production vehicles. Volvo in particular was all in on the technology. The Swedish automaker, which spent decades building a brand around the idea of making the safest cars, was the first to jump at integrating the laser-based sensors in its vehicles. Volvo initially tapped Luminar to provide 39,500 lidar sensors over the life of a deal signed in 2020. In 2021, Volvo upped that to 673,000. And in 2022, Volvo upped it again, this time to 1.1 million sensors. Three years later, Luminar is now in bankruptcy. The company has already made a deal to sell off one subsidiary centered around semiconductors and is looking to sell its lidar business during the Chapter 11 process, which began on Monday. The first batch of filings in the bankruptcy case shed new light on how Luminar’s cornerstone deal with Volvo came apart — and how its undoing helped push the once-promising startup over the edge. Big promises, then big revisions Luminar made “substantial up-front investments in equipment, facilities, and workforce” to meet the demand from Volvo back in 2022, according to a declaration written by Luminar’s newly hired chief restructuring officer Robin Chiu. It built out a manufacturing facility in Monterrey, Mexico, and spent nearly $200 million to prepare to make its Iris lidar sensors for Volvo’s EX90 SUV. But, according to Chiu, problems were already brewing with Volvo. The automaker delayed the EX90 SUV because it needed to do more “software testing and development,” the automaker said in 2023. And in early 2024, Luminar says Volvo reduced its expected volume for Iris sensors by 75%. (Volvo did not immediately respond to a request for comm...