How Luminar's ambitious plans in the automotive sector led to the company's collapse

Luminar’s history is a classic example of how one-sided dependence on a single client can destroy a company, even if its entire reputation and brand are built on technological innovations. In early 2023, founder Austin Russell presented Luminar as a market revolutionary in lidar sensors. The company went public during the pandemic, signed key deals with Volvo, Mercedes-Benz, and Polestar, and everything seemed like continuous growth. Russell called that period a “turning point,” as the company prepared for mass production of its first-generation laser sensors.

But after three years, Luminar filed for bankruptcy. The whole affair revolved around one failed deal and a one-sided development strategy.

How Volvo Changed All Plans

It all started with Volvo, which built its global brand on the idea of safety. When the Swedish automaker decided to integrate lidar sensors first, it looked like a big promise for Luminar. In 2020, Volvo ordered 39,500 sensors. By 2021, the order grew to 673,000. And in 2022, Volvo increased the order to 1.1 million units.

Luminar invested heavily in this contract. The company spent nearly $200 million on building a manufacturing complex in Monterrey, Mexico, and on preparing to produce its Iris sensors for the Volvo EX90 SUV. Restructuring head Robin Chiu later documented in bankruptcy filings that the company made “significant upfront investments in equipment, manufacturing capacity, and personnel,” relying on these orders.

Everything changed in 2023–2024.

Step-by-Step Collapse

Initially, Volvo delayed the launch of the EX90 SUV. The official reason was the need for additional “testing and software development.” Then, in early 2024, Luminar learned that Volvo was reducing its expected order volume by 75%.

At the same time, other deals fell through. Polestar (, a Volvo subsidiary ), silently withdrew from Luminar lidar sensors because the software couldn’t utilize these features. Mercedes-Benz terminated its agreement in November 2024 because Luminar “failed to meet ambitious requirements.”

Luminar began layoffs. 20% of employees received severance in May 2024. September 2024 brought even deeper cuts. Then, in May 2025, after an ethical investigation, Austin Russell suddenly resigned.

The Final Blow

The worst happened in September 2025. Volvo announced it would switch to a model where lidar would be optional rather than a standard feature, as previously planned. Moreover, the automaker announced a delay in deploying the technology as a “cost-saving measure.” According to Chiu, this cut Volvo’s expected lifetime volumes by approximately 90%.

Luminar sent Volvo a letter on October 3, claiming a breach of the 2020 agreement. But the worse news was yet to come — on October 31, the company informed shareholders of a supply halt. Two weeks later, Volvo officially terminated the contract.

Why Luminar Didn’t Survive

The main mistake lies here: Luminar never diversified. Austin Russell founded the company in 2012 with the goal of transferring lidar technology from defense and robotics to automotive. But the company never developed alternative applications. Only in March 2025 did Russell start talking about expansion — signing an agreement with Caterpillar. Two months later, he resigned.

When everything fell apart with Volvo, Luminar tried to sell sensors intended for Volvo on adjacent markets. But it was too late. “As relations with Volvo deteriorated, the company tirelessly worked to find new clients but was unable to start production with any new ones in time,” Chiu wrote.

And a public dispute with Volvo further eroded investor and potential customer trust. The market saw Luminar’s financial future at risk, and sales plummeted.

Now, the remnants of the company are up for sale. The subsidiary Quantum Computing, Inc. has left $110 million. The lidar business itself is being attempted to sell through Chapter 11 bankruptcy proceedings.

Ironically, the Luminar brand, built by Russell as a revolutionary, turned out to be overly dependent on one bet. Instead of developing multiple directions, the company invested everything in one giant that proved to be an unreliable partner.