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

By early 2023, Luminar had reached its peak. After appearing in public during the pandemic and signing a major agreement with Volvo, the company added Mercedes-Benz and Polestar as its customers “life savers” lidar sensors. Founder and CEO Austin Russell he called it and the “inflection point,” as Luminar planned for the sensors to go into the first production cars.

Volvo in particular was all about technology. The Swedish automaker, which has spent decades building a brand around the idea of ​​creating safer cars, was the first to jump on the bandwagon of incorporating laser-based sensors into its vehicles. Volvo initially engaged Luminar to supply 39,500 lidar sensors for the duration of the contract signed in 2020. In 2021, Volvo increased this to 673,000. And in 2022, Volvo raised it again, this time to 1.1 million sensors.

Three years later, Luminar is now in bankruptcy. The company has already done so they made a deal to sell one unit centered around semiconductors and is looking to sell its lidar business during Chapter 11, which began Monday.

The first batch of filings from the bankruptcy case shed light on how the Luminar and Volvo cornerstones went awry — and how its bankruptcy helped push the once-promising startup over the edge.

Big promises, then big revisions

Luminar has made “up-front investments in equipment, materials, and personnel” to meet Volvo’s requirements in 2022, according to a to announce written by Luminar CEO Robin Chiu. They built outside manufacturing facility in Monterrey, Mexicoand spent nearly $200 million to develop its Iris lidar sensors for Volvo’s EX90 SUV.

“Volvo will be the marquee customer, the first to bring the company’s Iris product to many car companies,” one of Luminar’s lawyers said at the first bankruptcy hearing on Tuesday.

But, according to Chiu, problems had already started with Volvo. The automaker delayed the EX90 SUV because it needed to do more “software testing and development,” and the automaker said in 2023. And in early 2024, Luminar says Volvo has reduced the expected volume of Iris sensors by 75%.

Some of Luminar’s sales also started to suffer. Polestar (a subsidiary of Volvo) quietly stopped including Luminar sensors “because the car’s software couldn’t use” the feature, according to Chiu. Mercedes-Benz terminated its contract to buy Luminar’s Iris sensors in November 2024 because the lidar maker “failed to meet its expectations,” according to Chiu.

(Mercedes-Benz made a new deal with Luminar in March 2025 for the next-generation Halo lidar, but Chiu wrote that Luminar has no “progressive projects” with the German automaker during the bankruptcy filing.)

This left Luminar with Volvo as its only customer.

The company has not evolved beyond the automotive industry, rejecting other projects such as security or robotics. Instead, Russell founded Luminar in 2012 with the goal of removing lidars from those areas and installing them in vehicles to help advance the adoption of autonomous vehicles.

It wasn’t until March of this year that Russell talked about expanding beyond cars, as Luminar signed up partnership with Caterpillar equipment manufacturer. Two months later, Russell he suddenly quit his job following an ethical audit from Luminar’s board of directors.

“Some bad news”

According to Chiu, Volvo still promised to achieve the lifetime plan of 1.1 million units despite the reduced volume in 2024. So Luminar continued to work under that assumption.

But the signs of depression were showing. Luminar laid off 20% of its workforce in May 2024 and outsourced most of its lidar sensor production. They he made those wounds worse and renewing its business in September 2024. Another suspension came in May 2025. After Russell retired.

In September, “Volvo delivered bad news,” wrote Chiu. The automaker decided to offer lidar as an option on the EX90 going forward, rather than making it a permanent feature as originally planned. Volvo also told Luminar that it is keeping future cars “as a cost-cutting measure.”

“This change reduced Volvo’s life expectancy by about 90%,” Chiu wrote.

Luminar told Volvo on October 3 that it considered this to be a violation of the agreement that the companies first signed in 2020. On October 31, the dispute became public, when Luminar told shareholders in a regulatory filing that it was suspending the delivery of the sensor to Volvo. The Swedish carmaker sent a letter to Luminar two weeks later, to terminate the contract.

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

“The company’s products are able to provide a high level of safety and driver support, supported by the most powerful in-vehicle computers integrated with their advanced set – with or without lidar,” said Volvo.

Meanwhile, Luminar began selling Volvo’s power sensors “to the local market in an effort to recoup lost revenue,” according to Chiu’s statement, but it was too late.

“When its relationship with Volvo fell apart, (Luminar) worked hard to identify new customers, but was unable to develop new customers in time,” Chiu wrote. “Volvo’s public dispute also led to lower sales due to market concerns regarding Luminar’s financial future.”

Now the fate of what’s left of Luminar is in the hands of creditors and the court. It is seeking a judge’s approval to sell a semiconductor unit to Quantum Computing, Inc. for $110 millionand he hopes to court a number of people looking for a lidar business.

Luminar already has a large interest in the lidar business, according to the filing. In January, Chiu wrote, the company hired investment bank Jefferies to evaluate the deal after receiving an “unsolicited buyout request.” Luminar received “additional unsolicited acquisitions for the Company” over the summer and fall — including one that Russell provided through its new AI lab in October.

As TechCrunch reported on Monday, Russell plans to continue ordering on the remains of Luminar as the bankruptcy case moves forward. At Tuesday’s hearing, Luminar’s attorney said it was “deeply in the thick of the sale” and “discussed with” several potential buyers.

This article has been updated with a quote from Volvo and information from Luminar’s first business case.