21st Century Business Herald reporter Deng Hao reports from Shanghai
On May 7th, Luminar (LAZR. O), a leading LiDAR company, released its latest financial report, with Q1 2024 revenue of $21 million, a year-on-year increase of 45%. What sparked public discussion is that Luminar specifically mentioned that Tesla had become its largest LiDAR customer in the first quarter of this year, accounting for over 10% of revenue.
However, as Tesla, which adheres to a purely visual approach, has always held a denial attitude towards the LiDAR solution. It has publicly stated, "We will regularly compare and test our technology with other sensors to calibrate our cameras, sonar, and radar systems."
It remains to be seen whether Tesla's massive purchase of Luminar's LiDAR products means a change in technological solutions. However, in order for Luminar to overcome its operational difficulties, relying solely on Tesla at this stage is definitely not enough. Its latest financial report shows that even with Tesla's procurement support, the decrease in sensor purchases from non automotive customers has led to a 5% month on month decline in revenue.
Mass production dilemma
As one of the earliest laser radar manufacturers to enter the capital market, Luminar has attracted the enthusiasm of countless investors. After going public on NASDAQ in 2020, it once became the most valuable lidar company in the US stock market.
However, due to regulatory and technological constraints, LiDAR manufacturers have also entered a cold winter with the autonomous driving industry since 2020.
In 2022, two leading laser radar companies, Ouster and Velodyne, announced a merger; Meanwhile, Quanergy, also a leading company, directly declared bankruptcy and sold all of its business.
Luminar has also been facing losses since its listing. In 2023, its net profit attributable to shareholders was -571 million US dollars, and the year-end balance of cash and cash equivalents was only 141 million US dollars.
In recent years, with the rapid progress of intelligent electrification in China, local manufacturers of LiDAR such as Sagitar Juchuang and Hesai Technology have rapidly increased their sales, hitting the annual sales volume of one million units. However, foreign car companies are relatively conservative in using autonomous driving technology, while Tesla insists on a purely visual route. Overseas LiDAR manufacturers have never been able to successfully achieve large-scale cost reduction.
"The current dilemma for Luminar is that it is still unable to achieve mass production, which puts significant pressure on its operations. On the one hand, the rapid development of domestic LiDAR manufacturers not only continuously upgrades product performance, but also continuously reduces product prices, winning the favor of many OEMs. On the other hand, currently, Chinese OEMs have a much higher recognition of LiDAR than overseas manufacturers, and overseas OEMs are still relatively conservative. The front-end production of LiDAR still needs some time." Dong Xiaoya, Executive Director of CIC Zhuoshi Consulting, analyzed to reporters.
Layoff outsourcing
This year may be a year of change for Luminar.
Luminar management stated that with the launch of Volvo's flagship model EX90, it marks the start of mass production for 25 projects in hand. It is expected that the number of LiDARs sold in the second half of this year will be five times higher than the total sales in the past decade.
In order to meet the upcoming mass production demand, Luminar has also begun its business strategy transformation.
Reuters reported on May 3rd that Luminar will lay off about 20% of its workforce as part of its annual restructuring plan. This news has been confirmed in Luminar's shareholder letter.
Luminar management admits that adhering to an end-to-end fully industrialized process is extremely challenging. At present, its most critical goal is to achieve SOP (note: vehicle manufacturing terminology, meaning start of mass production), in order to significantly reduce production costs, for which the company has engaged in some degree of production outsourcing.
Luminar stated that it has established an exclusive partnership with TPK (Taiwan Chenhong Group) to optimize design, automation, and supplier management, while correspondingly reducing redundant internal positions. These measures will save it approximately $80 million in annual expenses.
But Luminar's strategic transformation may solve a temporary problem, but it may not be beneficial for its long-term development.
"At the current stage, choosing production outsourcing can to some extent solve their business difficulties. However, for LiDAR manufacturers, building their own factories is the long-term development trend," Dong Xiaoya said bluntly.
In Dong Xiaoya's view, building a self owned factory can effectively supervise the entire process of LiDAR from product design to final delivery, enabling the company to effectively control each production stage and promote timely optimization and refinement of the production workflow. At the same time, self built factories can more timely integrate new technologies into LiDAR products to adapt to the rapidly developing LiDAR industry, thereby improving its competitiveness in the market.