What happened
Shares of newly public lidar-sensor maker Luminar Technologies (LAZR 0.59%) fell sharply on Tuesday afternoon after Reuters reported that one of its key clients may choose to build its own lidar units instead of buying Luminar's.
The company had been trading higher earlier in the day, but as of 3 p.m. EST, Luminar shares were down by about 14% from Monday's closing price.
So what
Reuters reported that the CEO of Intel (INTC 1.46%) subsidiary Mobileye, which is developing a new self-driving car system that it expects to launch in 2025, said that the company is considering developing its own lidar sensor in-house.
In November, Mobileye said that it had selected Luminar to supply its lidar units starting in 2022; that deal has contributed to high investor interest in the shares of Luminar, which went public following a merger with a special-purpose acquisition company earlier this month.
Luminar's lidar sensors are designed to be easily integrated into mass-produced vehicles. Image source: Luminar Technologies.
Mobileye is planning to launch Level 4 driverless taxi fleets in several cities around the world, including Tel Aviv, Dubai, Paris, and Daegu, South Korea. While Mobileye and Intel will supply key components, the vehicles themselves will be manufactured by Chinese electric-vehicle maker NIO (NIO 0.32%). Mobileye and NIO signed a strategic partnership agreement in November 2019.
Until now, it looked to many auto investors like Luminar would ride along on that venture with highly regarded Mobileye and fast-growing NIO. That assumption has now been called into question, which is why the stock fell on Tuesday afternoon.
Now what
Luminar certainly has other clients, including the heavy-truck unit of Mercedes-Benz parent Daimler AG, and Volvo Cars (owned by China's Geely Automobile Holdings), which expects to incorporate hardware and software from Luminar into some of its vehicles starting in 2022.
The takeaway here is that if -- if -- the Mobileye deal falls through, Luminar still has a couple of other significant deals in place, and is currently negotiating to win more. All would not be lost, in other words -- but it would be a blow to the newly public company.
