Lidar giant's stock plummets: global market value shrinks by 80%, 20% staff cut for self-rescue, production outsourced.

In 2024, it's really getting more intense.

Just now, the head player of the laser radar, Luminar, announced a 20% layoff and also announced the outsourcing of production, marking a comprehensive transformation of the company.

The company's CEO expressed regret, stating that this was a very difficult decision, but it had to be done in order to ensure the company's leading position in the market and maximize long-term success.

The window of opportunity is constantly shrinking.

Luminar's Transformation

The layoffs and changes in production mode are all due to Luminar's decision to transform, and these measures are the first step in the transformation.

The company's CEO further explained in the announcement that due to the business reaching a new stage in technology, products, industrialization, and commercialization, as well as the challenges faced in the capital market, the company has decided to shift its business to a more "light asset" model.

The first step is to outsource the production process. Luminar will outsource more industrial processes to existing partners, but specific companies have not been disclosed, and more details will be shared in the future.

The company's existing Florida factory will continue to operate as usual, but will mainly be used for research and testing in the future.

Luminar believes that outsourcing production means being able to have greater capacity, while reducing the cost of industrial production, increasing profitability, and accelerating the launch of next-generation products.

In addition, the company also needs to comprehensively reduce costs.

Cost reduction measures include a 20% reduction in the number of regular employees, which will affect approximately 140 employees, and layoff notices have already been issued.

At the same time, the company will streamline other costs, flatten some organizational structures, and terminate cooperation with some contractors to achieve financial flexibility.

According to Luminar's plan, these measures can save over $80 million (approximately 580 million yuan) in costs annually in the short term; in the long term, cost savings could exceed $400 million (approximately 2.9 billion yuan) over the next 5 years.

Austin Russell, the company's founder and CEO, stated at the end of the announcement that as the leader of the team, making such decisions is not easy, but these measures are necessary for the company to be in the best position and achieve the greatest success in the next decade.

In order to achieve long-term goals and address the current capital challenges, the company has to undergo transformation.

How could Luminar lay off employees for transformation?

Let's start with a brief introduction to Luminar.

The founder, Austin, was not an industry veteran. When Luminar was founded in 2012, he was only 17 years old.

However, starting from high school, he studied at the Beckman Laser Institute of the University of California, Irvine, under the guidance of the optical guru Jason Eichenholz (later became the co-founder and CTO of Luminar), and after graduating from high school, he was admitted to Stanford University to study applied physics.

Like those Silicon Valley geniuses, Austin dropped out of Stanford after three months to focus on Luminar's business and design and manufacture laser radar components on his own.

The company remained low-key for 5 years, until gradually becoming active in the capital market in 2017, securing a Series A funding of $36 million (approximately 260 million RMB).

From the beginning, Austin made it clear that the company was going to make laser radar with higher resolution and longer range, because he believed that laser radar was a life-saving technology.

In 2018, the company announced that it had a fully integrated technology stack in the field of laser radar, with the dedicated integrated circuit design iterated to the seventh generation.

The flagship product, Iris, made its debut in early 2019, with a wavelength of 1550nm (at that time, mostly 905nm), and compliant with automotive-grade standards, with a maximum detection range of 500m, suitable for achieving autonomous driving in passenger cars, Robotaxis, and trucks.

In addition to the performance improvements in accuracy, stability, and safety, Iris was hailed as a "game-changer" in the field of lidar when it was unveiled.

With its technological capabilities becoming the company's biggest selling point, international giants such as OEMs and Tier 1 suppliers have flocked to collaborate with Luminar, including Nvidia, Mobileye, Qualcomm, Toyota, Volvo, Mercedes-Benz, Audi, and SAIC.

In 2020, Luminar landed on the NASDAQ with a pre-listing valuation of $3.4 billion (approximately 24.6 billion yuan), briefly becoming the highest-valued lidar company in the US stock market.

However, in recent years, as the tide has receded, the once bustling industry has seen an increasing number of players unable to sustain themselves.

In 2022, two leading lidar companies, Ouster and Velodyne, announced a merger to weather the storm. Meanwhile, Quanergy, another leading company, declared bankruptcy and sold off its entire business, just 9 months after its IPO.

Amidst this, Luminar, with decent order volume and production progress, has not yet revealed any unfavorable news. However, it seems that the company is already under significant financial pressure, even though no adverse news has surfaced so far.

Although Luminar's total revenue has continued to climb in recent years, reaching $69.779 million (approximately 510 million yuan) in 2023, a 71.5% increase from the previous year.

In fact, it wasn't until 2023 that the company's products, or rather its lidar, became the main source of income for the company. This means that Luminar, like other players, is more or less affected by the progress of mass production.

At the same time, the company is still experiencing continuous losses. The net loss in 2023 was $571 million (approximately 4.13 billion RMB), an increase of 28% from last year.

Not to mention the company's dwindling cash reserves. As of the end of 2023, the company only had $141 million (approximately 1.02 billion yuan) in cash, cash equivalents, and restricted cash, which is completely insufficient.

Just from these three indicators, you can see that Luminar's operating conditions are not healthy. Not to mention that in addition to income and profit conditions, many other indicators such as free cash flow have not met expectations. Even the company's own definition of 2023 is "a year of headwinds".

This once global number one lidar company has seen its market value shrink by more than 80%.

In addition to the factors of the company itself, it is also worth noting that the laser radar is not irreplaceable in the automotive, especially the passenger car market. Although it represents an application route for vehicle-side sensors, its leading position is not solid.

The high and unyielding cost is the biggest drawback of LiDAR. This not only hinders its popularity, but also weakens its advantage in the increasingly fierce price war in recent years. Furthermore, there are also products like 4D millimeter-wave radar seeking to replace LiDAR.

In addition, with the development of AI algorithms, the application of large models and the emergence of new algorithms, the previously questioned reliability of the pure visual route has achieved significant results in recent years and has also proven its capabilities in mass-produced vehicles.

For example, Tesla's introduction of the Occupancy Network (OCC) in 2022, which utilizes visual images to understand and process spatial information through voxelization, replaces the real-time reconstruction of 3D space that LiDAR can provide.

The introduction of OCC allows the algorithm to not have to determine what an object is, but only to consider whether the space is occupied by an object, thereby avoiding the problem of false positives and false negatives in traditional visual algorithms, breaking free from the limitations of the training set, and greatly improving the model's generalization ability.

Various internal and external factors combined, Luminar urgently needs reform to overcome the difficulties.

An interesting detail is that the leading figure of the anti-lidar faction, Musk, revealed in 2021 that he had reached a cooperation with Luminar to develop and test the autonomous driving system using Luminar's lidar.

At the time, this news was interpreted as Musk hitting himself in the face and realizing the advantages of lidar, so he changed his mind.

But now, FSD V12, which relies on a completely pure visual solution, has achieved intelligent driving in three domains and is preparing for a higher-level iteration of autonomous driving.

On the other hand, Luminar is struggling with profitability and has to lay off employees for transformation.