Luminar Bankruptcy: How the Volvo Deal Collapse Sank a Lidar Giant

Luminar Technologies has filed for Chapter 11 bankruptcy. The once-promising lidar sensor startup collapsed this week. Its downfall was triggered by the catastrophic failure of its cornerstone deal with Volvo Cars.

The bankruptcy marks a stunning reversal for a company that went public with great fanfare. According to court filings, Volvo’s decision to slash orders by 90% was the fatal blow.

From Marquee Customer to Courtroom Dispute

Luminar made huge investments to meet Volvo’s demand. It built a factory in Mexico and spent nearly $200 million. This was for its Iris lidar sensors destined for Volvo’s EX90 SUV.

Volvo was the stepping stone to the broader auto industry. But delays and software issues plagued the EX90 launch. Then, Volvo drastically reduced its expected orders in early 2024.

Other key deals also unraveled. Polestar abandoned the technology because its software couldn’t use the features. Mercedes-Benz terminated its agreement later that same year.

The Final Act and a Fire Sale

The final blow came in September. Volvo decided to make lidar an optional feature, not standard. It also shelved the technology for future vehicles to cut costs.

This reduced the lifetime order volume by approximately 90%. Luminar suspended shipments, claiming Volvo breached their contract. Volvo then terminated the deal entirely.

Volvo stated the move was due to Luminar’s failure to meet its obligations. A spokesperson said their cars’ safety systems work with or without lidar.

Luminar is now selling its assets. It has a deal to sell a semiconductor unit for $110 million. The core lidar business is also for sale to the highest bidder.

The Luminar bankruptcy story is a cautionary tale for the automotive tech sector. Over-reliance on a single, volatile partnership proved disastrous for the lidar pioneer.

Info at your fingertips

Q1: Why did Volvo cancel its deal with Luminar?

Volvo cited Luminar’s failure to meet contractual obligations. The automaker also made the business decision to cut costs by making lidar optional and shelving it for future models.

Q2: What happens to Luminar’s technology now?

The company is selling its assets in bankruptcy. Its lidar business unit is being marketed to potential buyers, which could include other tech firms or automotive suppliers.

Q3: Did other car companies drop Luminar too?

Yes. Mercedes-Benz terminated its agreement in late 2024. Polestar, a Volvo subsidiary, also quietly abandoned plans to use Luminar’s sensors in its vehicles.

Q4: Is founder Austin Russell involved in the bankruptcy?

Russell resigned as CEO in May 2025. He has since submitted an unsolicited bid to acquire parts of the company through his new AI lab.