Luminar is battling with its largest client as the threat of bankruptcy looms

Swedish automaker Volvo has canceled a five-year contract with Luminar, the latest escalation in an increasingly ugly fight between the lidar sensor company and its largest customer.

The fight occurs during an existential moment for Luminar. The company recently defaulted on several of its loans. While it works with those lenders to reach a resolution, Luminar has warned investors that it may have to declare bankruptcy.

To avoid this, Luminar recently laid off 25% of its staff and is trying to sell itself – or parts of it – to potential buyers. One of them is Luminar founder Austin Russell, who resigned as CEO in May during an ethics investigation. Luminar is also under investigation by the Securities and Exchange Commission, recent filings reveal.

“Volvo Cars made this decision to reduce the company’s exposure to supply chain risk, which is a direct result of Luminar’s failure to fulfill its contractual obligations to Volvo Cars,” the automaker said in a statement to TechCrunch. Luminar did not respond to a request for comment.

Volvo is not just a client of Luminar. The two companies have spent much of the last decade working together. Volvo invested in Luminar and helped the Florida-based startup acquire some of its first production vehicles.

The relationship was beneficial to both parties. Luminar technology has given Volvo the confidence to make big promises about making roads safer by offering automated driving features. Volvo gave Luminar credibility before the 2020 SPAC merger that made Russell one of the youngest self-made billionaires ever.

But Luminar has faced challenges as a public company. It has struggled to diversify away from Volvo, and in 2024 cut a fifth of its staff while deciding to outsource the manufacturing of its sensors. Then, in May this year, Russell abruptly resigned after Luminar revealed that its board had opened a “code of business conduct and ethics” investigation.

The battle with Volvo came to the fore on October 31.

Volvo has decided not to make Luminar’s “Iris” sensor a standard sensor on its EX90 and ES90 cars, the company told shareholders in a regulatory filing that day. Volvo also told Luminar that it has “postponed” the decision to include the next-generation “Halo” sensor in the Swedish automaker’s future vehicles.

Luminar said in the lawsuit that it “filed a claim against Volvo for significant damages” and “suspended additional IRIS obligations” to the automaker.

“The company is in discussions with Volvo regarding the dispute; however, there can be no assurance that the dispute will be resolved favorably or at all,” Luminar wrote.

Volvo told TechCrunch on Monday that its “products can provide a high level of safety and driver support, thanks to powerful automotive core computing coupled with its advanced sensor suite — with or without a lidar sensor.” But she added, “The situation is having an impact on some customer orders.” He did not immediately clarify whether this meant a delay or anything else.

Volvo’s decisions not only posed a threat to Luminar’s revenues, but also had knock-on effects on Luminar. In an October filing, Luminar said it had stopped spending money on Volvo’s Iris sensors, and in turn, the supplier that makes the sensors claimed this was a violation of they deal.

This story has been updated with comments from Volvo.