How Volvo’s failed deal for Luminar helped push the company into bankruptcy

In early 2023, Luminar was on the rise. After going public during the pandemic and closing a major deal with Volvo, the company has added Mercedes-Benz and Polestar as customers for “Life-saving“LiDAR Sensors.” Founder and CEO Austin Russell Shoot it An “inflection point” as Luminar prepared to integrate these sensors into its first production vehicles.

Volvo in particular has been involved in this technology. The Swedish automaker, which has spent decades building a brand around the idea of ​​making safer cars, was the first to jump into incorporating laser-based sensors into its cars. Volvo initially used Luminar to supply 39,500 lidar sensors for the duration of the deal signed in 2020. In 2021, Volvo increased that to 673,000. In 2022, Volvo raised this number again, this time to 1.1 million sensors.

Three years later, it became Luminar Now in bankruptcy. The company already has Make a deal to sell a semiconductor-centric subsidiary and is looking to sell its lidar business during the Chapter 11 process, which began Monday.

The first batch of lawsuits in the bankruptcy case have shed new light on how Luminar’s seminal deal with Volvo collapsed — and how backing out of it helped push the once-promising startup to the brink.

Big promises, then great reviews

Luminar has made “significant upfront investments in equipment, facilities and workforce” to meet demand from Volvo in 2022, according to a report from Volvo. a permit Written by Robin Chiu, Luminar’s newly appointed Chief Restructuring Officer. It’s built out Manufacturing facility in Monterrey, Mexicoand spent nearly $200 million to prepare to manufacture Iris Lidar sensors for the Volvo EX90 SUV.

“Volvo was a prominent customer, and a stepping stone to introducing the company’s Iris product to the broader auto industry,” a lawyer for Luminar said during the first hearing in the bankruptcy case on Tuesday.

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.” In 2023, the automaker said. In early 2024, Luminar says Volvo reduced its expected size of iris sensors by 75%.

Luminar’s other deals began to deteriorate as well. Polestar (a subsidiary of Volvo) quietly abandoned integration of Luminar’s lidar sensors “because the vehicle software ultimately couldn’t use” the features, according to Chiu. Mercedes-Benz ended its agreement to buy Luminar’s Iris sensors in November 2024 because the lidar maker “failed to meet ambitious requirements,” according to Chiu.

(Mercedes-Benz struck a new deal with Luminar in March 2025 for its next-generation Halo lidar, but Chiu wrote that Luminar had “no projects to move forward” with the German automaker at the time of bankruptcy.)

This left Luminar with Volvo as its only major customer.

The company has never diversified beyond the automobile industry, eschewing other applications such as defense or robotics. In fact, Russell founded Luminar in 2012 with the goal of bringing lidar technology out of those sectors and into the automotive industry to help accelerate the adoption of autonomous vehicles.

It wasn’t until March of this year that Russell talked about expanding beyond cars, Luminar signed Deal with construction equipment company Caterpillar. And just two months later, Russell He resigned suddenly Following an ethics investigation by Luminar’s Board of Directors.

“More bad news”

According to Chiu’s account, Volvo continued to promise that it would meet the standing demand of 1.1 million units despite the volume decline in 2024. So Luminar continued to move forward under this assumption.

But signs of tension were showing. Luminar laid off 20% of its workforce in May 2024 and outsourced the manufacturing of its lidar sensors. He – she Those cuts deepened It restructured some of its business in September 2024. Another round of layoffs came in May 2025. After Russell’s resignation.

“In September, Volvo delivered more bad news,” Chiu wrote. The automaker has decided to offer Lidar technology as an option on the EX90 model from now on, rather than making it a standard feature as originally planned. Volvo also told Luminar that it will discontinue the use of lidar technology in future vehicles “as a cost-cutting measure.”

“This change reduced Volvo’s estimated lifetime volumes by approximately 90%,” Chiu wrote.

Luminar told Volvo on October 3 that it considered this a violation of the agreement the companies first signed in 2020. On October 31, the dispute became public, with Luminar telling shareholders in a regulatory filing that it would suspend sensor shipments to Volvo. The Swedish automaker sent a letter to Luminar two weeks later, terminating the agreement.

Volvo told TechCrunch in a statement on Tuesday that it “took this decision to reduce the company’s exposure to supply chain risk and is a direct result of Luminar’s failure to fulfill its contractual obligations to Volvo Cars.”

A Volvo spokesman said: “The company’s products can provide a high level of safety and driver support, thanks to the cars’ powerful core computing combined with its advanced sensor suite – with or without a lidar sensor.”

Meanwhile, Luminar began selling Volvo’s custom lidar sensors “to adjacent markets in an effort to recover its sunk costs,” according to Chiu’s filing, but it was too little too late.

“As its relationship with Volvo deteriorated, Luminar worked tirelessly to identify new customers, but was ultimately unable to enter production with any new customers in a timely manner,” Chiu wrote. “The public dispute with Volvo also led to lower sales due to broader market concerns about Luminar’s financial future.”

Now the future of what’s left of Luminar is in the hands of creditors and the court. It is seeking a judge’s approval to sell its semiconductor business, Quantum Computing, Inc. For 110 million dollarsIt hopes to attract a number of bidders for its lidar work.

Luminar already had a significant interest in the lidar business, according to the filing. The company in January hired investment bank Jefferies to evaluate the sale after receiving an “unsolicited takeover offer,” Chiu wrote. Luminar received “additional unsolicited inbound messages of interest in acquiring the company” over the summer and fall — including one submitted by Russell through his new AI lab in October.

As TechCrunch reported on Monday, Russell Plan to keep bidding On the remains of Luminar as the bankruptcy case progresses. During Tuesday’s hearing, Luminar’s attorney said it was “deep into the sale process” and “in negotiations with” several potential bidders.

This story has been updated with a statement from Volvo and information from Luminar’s first bankruptcy hearing.