Sometimes vindication arrives years late and through someone else's bad news. Tesla Inc. (TSLA) CEO Elon Musk might be having one of those moments this week as Swedish automaker Volvo announced it's pulling the plug on its partnership with Luminar Technologies Inc. (LAZR). The question everyone's asking: Was Musk right about LiDAR being a dead end for autonomous vehicles?
Volvo Says No Thanks to LiDAR
According to a report from The Drive on Tuesday, Volvo won't be offering LiDAR technology on its 2026 ES90 and EX90 models. The automaker is severing ties with Luminar over supply chain headaches and what a Volvo spokesperson described as the LiDAR maker's failure to "meet its contractual obligations."
Notably, Volvo didn't say whether it plans to source LiDAR from alternative suppliers or ditch the technology altogether. That ambiguity matters because it could signal either a vendor problem or a deeper reassessment of LiDAR's role in autonomous driving.
For Luminar, the news couldn't be worse. The stock crashed to an all-time low on the NASDAQ, trading at $0.9018 even after jumping 4.12% in pre-market trading. When you're celebrating a 4% pre-market bounce but still hitting record lows, you know things are rough.
Musk's "Fool's Errand" Comment Lives On
Back in 2019, Musk didn't mince words about LiDAR technology at an industry event. "LiDAR is a fool's errand," he declared, adding that the technology was expensive and anyone depending on it "is doomed."
He clarified that he didn't "super hate" LiDAR entirely. Musk pointed out that he led SpaceX's efforts to build sensors from scratch for spacecraft docking sequences. But for cars? He called it "stupid." His reasoning was straightforward: "Once you solve vision, it's worthless."
Musk's argument rests on the idea that camera-based systems mimicking human vision will eventually outperform LiDAR's laser-based distance mapping. If humans can drive using only their eyes, why can't computers do the same with cameras and enough computational power?
Tesla's Camera-Only Gamble
Tesla has committed fully to a camera-based approach for its Full Self-Driving technology. It's a controversial bet that's drawn skepticism from industry experts, including Uber Technologies Inc. (UBER) CEO Dara Khosrowshahi, who suggested that building camera-only autonomous driving tech was "going to be very difficult."
Musk remains bullish, recently claiming that Tesla's autonomous driving technology could be spreading "faster than any technology ever." The CEO also shared ambitious plans for the company's Robotaxis in Austin to go fully driverless by the end of 2025.
But Tesla's FSD system isn't without problems. The National Highway Traffic Safety Administration recently launched an investigation into 2.88 million Tesla vehicles after reviewing incidents involving traffic violations and accidents with cars using FSD or Autopilot. Regulatory scrutiny is mounting precisely when Tesla needs to prove its vision-only approach works safely at scale.
The LiDAR Faithful Soldier On
Despite Volvo's exit and Musk's skepticism, LiDAR technology still has plenty of believers and applications. Alphabet Inc. (GOOGL) (GOOG)'s Waymo, Tesla's primary Robotaxi competitor, relies heavily on LiDAR-based systems. The company recently announced its autonomous cabs would begin operating on highways in multiple cities, suggesting confidence in their technological approach.
Meanwhile, LiDAR maker Hesai Technology (HSAI) just announced an agreement with Tesla rival Li Auto Inc. (LI) to become the Chinese automaker's exclusive LiDAR supplier. Clearly, some companies still see a future in the technology that Musk dismissed years ago.
The Volvo-Luminar split doesn't settle the debate between LiDAR and camera-based systems. It might simply be a vendor relationship gone wrong rather than an indictment of the technology itself. But it's hard not to wonder if Musk's controversial prediction is starting to look a little more prescient.
Price Action: TSLA shares closed down 0.72% at $398.38 in regular trading on Tuesday.