Buried within Luminar Technologies' recent Q1 2024 earnings transcript lies a tantalizing clue, one that might have slipped past the keen eyes of Wall Street analysts. While discussing revenue sources, CEO Austin Russell casually revealed that Tesla, the champion of vision-only autonomous driving, has been purchasing Luminar LiDAR sensors.

This revelation, seemingly innocuous at first glance, has the potential to shake the very foundations of the autonomous vehicle landscape. Could Tesla, long a vocal critic of LiDAR technology, be secretly incorporating it into their development plans? Is this a quiet admission that their vision-only approach might not be the ultimate solution?

The transcript doesn't offer explicit confirmation of Tesla's intentions. Russell, bound by a non-disclosure agreement, could only divulge that Tesla's purchases have been "lumpy rather than recurring." However, the fact that Tesla's orders triggered the 10% revenue threshold for customer disclosure suggests a significant investment in Luminar's technology.

Let's dive into the numbers. Luminar reported Q1 2024 revenue of $20.9 million. A 10% threshold would imply a minimum purchase of $2.1 million worth of LiDAR sensors by Tesla during the quarter. This isn't a trivial sum, especially considering Tesla's history of minimizing development costs.

""So, what I would say is I'm not going to, I don't think we're in the best position to talk about, what they're doing with our LiDAR. This isn't the first time that they've ordered LiDAR from us, but I would say it's been more, lumpy than recurring. The reason we're talking about this is, because if they're greater than 10% in a quarter, we disclose who those customers are. But, look, they, they're buying the LiDARs for us and, what exactly they're doing them, we can only speculate." - **Austin Russel, CEO of Luminar Technologies**"

Now, let's consider the broader context. Luminar, after years of development, has successfully launched its Iris LiDAR sensor into series production with Volvo's EX90, marking a major milestone for the company. Could Tesla be using Luminar's technology to benchmark their own progress, or perhaps to enhance their data collection efforts for their vision-based systems?

Another intriguing possibility emerges when we examine Luminar's upcoming Halo LiDAR sensor, slated for release in 2026. Halo boasts a smaller form factor, increased efficiency, and a significantly lower cost compared to Iris. Could Tesla be positioning themselves to leverage Halo's affordability and mainstream appeal, potentially integrating LiDAR into future vehicle models?

The timing of Tesla's purchases coincides with the National Highway Traffic Safety Administration's (NHTSA) recent announcement of stringent new Automatic Emergency Braking (AEB) regulations, set to take effect in 2029. These regulations mandate advanced pedestrian detection and braking capabilities in all vehicles, a challenge that even current camera and radar-based AEB systems struggle to meet.

Luminar has already demonstrated that its long-range LiDAR technology exceeds NHTSA's new AEB requirements. Could Tesla, facing an imminent regulatory hurdle, be exploring LiDAR as a solution, potentially incorporating it into their future vehicle platforms to ensure compliance?

This hypothesis gains further traction when we consider that Tesla has already shown a willingness to embrace LiDAR in certain applications. In 2021, reports surfaced that Tesla was testing vehicles equipped with Luminar LiDAR sensors. While Tesla remained tight-lipped about the purpose of these tests, it indicated a willingness to explore the technology's potential.

The strategic implications of Tesla potentially embracing LiDAR are vast. It could signal a major shift in the autonomous driving landscape, encouraging other automakers to accelerate their LiDAR adoption timelines. It could also validate Luminar's technology leadership, boosting investor confidence and driving the company's valuation to new heights.

Luminar's Revenue Growth

The following chart shows Luminar's Quarter-over-Quarter Revenue growth. (data extracted from earning's call transcript)

However, it's essential to remain cautious. Tesla's LiDAR purchases might be limited to data collection and benchmarking purposes. The company might ultimately choose to pursue alternative solutions, such as further refining their vision-based systems or exploring other sensor modalities.

For now, Tesla's LiDAR intentions remain shrouded in secrecy. But one thing is clear: this unexpected development adds a layer of intrigue to the autonomous vehicle race, prompting us to question long-held assumptions and anticipate a potentially game-changing future.

"Fun Fact: Luminar's Iris LiDAR sensor can detect objects up to 250 meters away, even in challenging conditions like darkness and fog. This long-range detection capability is crucial for safe and reliable autonomous driving."