Hey, good morning, everybody. It's Jeff Osborne, TD Cowen, sustainability and mobility technology analyst. Very pleased to have David joining us. David, thanks for taking time out of your busy day to hop on. David's the CFO of Aurora Innovation in the autonomous trucking space. But David, for those investors tuning in that maybe aren't familiar with you folks, do you mind just taking a minute or two to introduce what you're up to? And then we can get started with our fireside chat.
Certainly, and Jeff, thanks for having me on. I appreciate the opportunity to speak. This is a great conference with a lot of outstanding companies, so it's a privilege to be here. You know, for those that aren't familiar with us, let me start with our mission, 'cause we are a mission-driven company. Our mission's to deliver the benefits of self-driving technology safely, quickly, and broadly. The core to our business is the Aurora Driver. That's a combination of cutting-edge hardware, software, and data services, and what that allows us to build is a Aurora Driver around a common core to power various, you know, vehicles within multiple use cases. We're gonna start in trucking with our autonomous technology. Trucking is our initial focus because it's a massive market, right?
It's over $1 trillion in the U.S., resulting from more than 200 billion vehicle miles traveled per year. And the Aurora Driver will be essential to this market, creating tremendous benefits for our customers, which allow them to achieve both greater revenue per truck and lower cost per truck, and so, lower cost per mile, excuse me. So when I think about our company, and why we think we're set up to succeed, there's a couple of things that really come to mind. First off, we're the only company with the strategic partnerships to commercialize at scale, right? And so on the OEM front, just as a reminder, we're developing autonomous-ready platforms with 2 of the leading OEM partners in PACCAR and Volvo. They represent roughly 50% of the market.
In fact, yesterday, Volvo unveiled its first-ever production-ready autonomous truck, which is powered by the Aurora Driver, at the ACT Expo in Las Vegas, which we were there hand-in-hand with them. On the Aurora Driver hardware front, we recently announced a partnership with Fabrinet. They're gonna be a contract manufacturer that's going to manufacture and assemble our next-generation hardware kit, starting in 2025. But that's really just a bridge to our first-of-its-kind, Tier 1 hardware-as-a-service partnership with Continental that starts in 2027. With this Continental partnership, we're gonna be designing, and they're going to help assemble, manufacture, and service all of these hardware kits. From a commercial perspective, we're making great progress.
You know, if I think about the progress we've made over the last year and a half, we're autonomously hauling loads supervised by our vehicle operators for now, for a ton of blue-chip customers, including FedEx, Werner, Schneider, Uber Freight, Hirschbach, and others. And in Texas today, we schedule 120 commercial loads per week, and as of last quarter, we delivered over almost 5,500 loads overall. So we're making great progress in not only learning how to develop the system, but integrate it within the networks which we plan to launch with. And we've also launched our first fully autonomous trucking lane in the U.S., meaning that we have all the capabilities to operate autonomous between our terminals. That includes scales, fuel, calibration, repairs, et cetera. So we are fully able to operate an autonomous trucking lane.
Let me just conclude with two quick points. I think financially, I don't know if you heard me, you know, we ended Q1 with $1.2 billion in liquidity. We expect that to fund our operations well past commercial launch into the fourth quarter of 2025, and we've got amazing blue-chip investor support. I think also, and that's underpinned by the fact that we have a really attractive asset-light... DaaS, or what we call Driver-as-a-Service business model that is asset-light, allows us to have really attractive SaaS-like margins and create tremendous shareholder value.
And then finally, and maybe most importantly, as we prepare for launch, we have to continue to be the leader in building trust and transparency with our regulators, with the legislators, our customers, the public, investors, et cetera. And we're the only company that publicly evaluates our progress in our quarterly business reviews, relative to not only our roadmap, but our safety case and our economy performance. So I think that's a good overview, and maybe let's just get into it.
Perfect. Look forward to it, and thanks for the detailed overview there. Maybe on the particular lane, Dallas to Houston, on Interstate 45, you know, ever really since the going public process, you've targeted Q4 of 2024 as sort of the commercialization timeline, which is great to see that sticking, and you're now giving that transparency around your readiness index and capability, so to speak, and updating investors there. I'm curious, you know, how's that progressing, given that we're two, three quarters out? What are the risks in achieving that timeline? Are there any major obstacles that you need to either for closing the safety case or the terminals or, you know, things that maybe we're not thinking about, policy-wise, insurance-wise?
I think even recently at a local high school in Dallas area, you had an event there to bring awareness to autonomous trucks. So just maybe give us an update, that particular lane, and some of the key variables we should be watching for Q4 commercialization?
... Yeah, I think that's great. And so, I think it's important for us to really talk about we are focused on, and I think we're making excellent progress on our commercial lane. You know, our measure of when we will be ready to go is when we close the Safety Case on our launch lane, and that is our Dallas to Houston lane. I would point out that we are also operating on Fort Worth to El Paso, because that will be the second lane that we bring on board. We'll know it's acceptably safe to operate when we close the Safety Case, and that's really how we measure our performance. And I would refer to it as, and how we describe it as the Autonomy Readiness Measure or as the ARM, right?
As of mid-April, we had achieved an ARM of 95%, meaning 95% of the safety cases closed. Safety cases, like, the work that's needed to move out and verify and validate that the system performs and behaves as it's expected to have a safe product. We also track our autonomy performance, and that is the autonomy performance indicator. That's really the measure of miles that can be completed in autonomy, overall. So when you think about this, with the achievement we just achieved, the aggregate API of 99%. That means that every mile we're driving, 99% of the time it's operating in autonomy. Why is this super important for us? Because that gives us the confidence to know that the system can handle all the different variations that are coming at us.
With us being at 99%, our focus really now moves more to what we refer to as 100% API loads. That means that a load went from start to end, from one of our terminals in Dallas down to the terminal in Houston, without requiring any onsite support. Now, onsite support is super critical. It's important from a business perspective, because if I need onsite support, that's the most expensive kind of support that you need, and you can't make a business viable in that way. The second thing is that we really expect that getting from A- B without onsite performance is just really the highest bar that we've got to hold ourselves to, to ensure that the Aurora Driver operates as it's expected.
Okay, and again, this is nothing to do with, like, the safety of it, right? The safety of it is really related to closing of the Safety Case. But our 100% API score as of Q1 was 75%. We expect that number to be closer to 90% when we actually launch on our first link. And of course, you know, you asked about risks associated with the planned commercial launch. You know, there are several of them. We kind of categorized them this way. Obviously, there's an element of the Aurora Driver performance, which I just talked about. There's also an element of, you know, the regulatory environment, right? And we get asked this question a ton, right? And it's a super important question.
But I think, as we described at our recent analyst and investor day, Texas is ready for autonomous trucking. So when we're ready, the market is open for them. There are no other hurdles. There's no other approvals that are required. Texas is explicitly available and allowed to operate with autonomous trucks. Importantly, so are a lot of other states. I believe that the number is 25 states have expressly allowed AVs to operate. There are another 15 states that implicitly allow driverless deployment. So there are no regulatory steps that are gonna be required for us to launch in Texas. When I think about the customers, that's another element of it, and we continue to work with our customers through transparency and operating regularly to ensure that they're gonna be ready to launch when we're ready to launch.
And then, you know, the other one is our OEM partnerships, and those are the available platforms. We continue to make really outstanding progress with both of them. Overall, we're continuing to work towards launch at the end of the year. There's always risk associated with launch-
Of course.
Right? And I think at this point in time, right, what we've described is we used to talk about AVs, and I've been doing this for a while, right? Like, we used to talk about AVs and the risk of timing in years, and it's kind of reduced down to quarters and now down to months, right? Like, the future is really coming up on us, and we've never been more confident in our ability to launch, and never more confident in an autonomous future. So that's how I describe kind of our current progress.
Makes sense. And the question, Adam, that you touched on in great detail is on the regulatory side. That's my number one question that I get from newer investors to the story. So I get it at the state level that certainly states like Texas, Arizona are, you know, doors wide open to technology, and many, to your point, have followed suit, which is great to see, as you wanna build longer lanes, I imagine over time. Just to confirm, though, there's nothing at the Department of Transportation or the federal level that you need to check the box on or any type of validation testing that would need to be achieved between now and Q4 when you commercialize without full driver out?
Yeah, that, that's correct. There's nothing that we need to do under existing law and regulations. There, there's nothing that prohibits us from launching. I think it's important to say, though, that, that there's a reason for that, right? Like, the regulatory process is still unfolding, as everybody knows, and, and the reason you get so many questions is there's a lot of uncertainty. We don't take the support of the regulatory environment for granted, right?... We have to work collaboratively with our regulators and our lawmakers at local, state, and the federal levels to ensure that not only are they well-equipped to understand what's happened, and but also if there are policy decisions that are made and governed with this technology and the capabilities and the benefits of it in mind.
I mean, here a really good example of this is recently we were invited, and we're the only AV company that was there that was invited to the House Transportation and Infrastructure Committee on the future of automating commercial motor vehicles, right? And we think that really underscores, like, our leadership position and how people view us in terms of some of the thought leaders and the right people to talk to about deployment and how it works overall. So I think we have the right setup, we have the right relationships with the policymakers. If there is anything that comes in the future, we're gonna be well-advised, and we're gonna help shape what that landscape looks like.
Perfect. And one of the things you didn't really touch on, other than working with the two OEM partners that make up 50% of the volume, is just vehicle readiness. So I'm just trying to understand, you know, what... Maybe walk us through what's in the OEM's court, what's in your arena, as it relates to the Aurora, Aurora platform. And then, you know, where is industry adoption as you move to autonomy? There's a whole drive-by-wire, brake-by-wire, and steer-by-wire technology that's needed, and I would say, generically speaking, and I'm not an expert, but, you know, broad strokes, Class 8 vehicles sell 250,000-300,000 units a year.
It's not been an industry over time that's been cutting edge of adoption relative to, you know, Toyota and passenger cars that maybe have leaned into drive-by-wire systems, at a faster clip. So that's been, one of the hangups that, you know, people that get involved in some of the technology adoption curves of Class 8 industry as a whole, is where are we from an OEM readiness perspective for some of those things? Or, do you have to do a retrofit, for now, and then, you know, over time, that'll be sort of OEM standard kit?
Yeah, so, well, let me start off with, like, just kind of the high level, right? So right now, again, from a technical perspective, we quantify the readiness of our, the safety of our product through our safety case and our Autonomy Readiness Measure, right? And again, that's a measure of completeness of claims, across, for our launch lane. And again, I had mentioned it was 95%. This 95% is most directly related to claims specific to the Aurora Driver. There is an element of integration within the vehicle platform that still needs to take place as we receive the final, production-ready, platforms and do the work associated with that. So for closing the safety case, the vast majority of the work really is on our side.
That's not to minimize the effort and work that goes into by the OEMs. I think for the OEM platforms, it's important to distinguish it. Why do we work with OEM platforms? Why do we need this tight, tightly integrated approach? This is how you scale, right? I would say that you had mentioned maybe you could retrofit or take a truck and try to add in the necessary redundancies and everything communicate together to feel confident that the truck would behave okay, and I think that's fine at really low volumes. That's really not a scalable solution, and it's really not the solution that the OEM partners will, you know, promote for when you start getting exposure and having a lot of vehicles out there in the marketplace.
It's really important to have deep, tight collaboration between these. Now, there are differences between trucking OEMs and passenger car OEMs, for certain, and how technology adoption takes place. I think, I might describe it as, like, there are certain areas where the truck OEMs are technically way more sophisticated at doing things for their use case than passenger cars, right? If you think about hauling an 80,000-pound tractor-trailer down the road, there's a lot of technical knowledge and capabilities that has to take place to do that, that you don't have on passenger cars. But I think if you think about specifically drive-by-wire or brake-by-wire, I think really what you're talking about is the ability to computer control the systems so that they can perform the necessary capabilities that you need when you don't have a human in the vehicle.
So, we expect that we will have full electronic power steering rack that's akin to passenger cars today on some of the platforms. All the systems will have, from a steering standpoint, some sort of mechanical pneumatic linkage that's associated with it, but it will be driven electronically. I think when you, when you talk about braking, both of the platforms will have some some element of brake-by-wire in there. So it's really about how do we get the right electronic capabilities in, or computer-controlled steering and braking systems in place, and that's why we're working with the the partners today.
Got it. That's helpful. We've got about 10 minutes left. Just, you know, looking at my questions here, I definitely wanna touch on, you know, coming out of the Analyst Day, which was fantastic as it relates to the future vision around the financials of the company. You know, one of the things that resonated well with me was the price per mile. Can you just touch on, you know, what your expectations are for price per mile? Maybe walk us through what current rates are in the industry, how you think your ability with the autonomous system, you know, how you can capture price over time?
I guess what is the right price point for the industry and Aurora as you commercialize and gain wider acceptance?
Yeah, I think that's a great question, and look, our product and pricing strategy is always gonna be designed to drive a compelling value proposition for customers versus the existing alternatives. Like, you think about the eliminating hours of service, the lower fuel costs, which are incredibly valuable. You know, obviously, first and foremost, is gonna be the safety of the products. But really I would- sorry, another computer glitch there. So really I would describe it as how do we increase both the asset utilization, so we're generating more revenue per truck for customers, and we're providing a lower total cost of ownership? So when we launch, we'll own a small fleet of vehicles where we'll carry goods for these customers that we're working with today and pilot.
We'll be paid a traditional price per mile that would be equivalent to a market rate, and these, these rates really vary by lane, right? So they're anywhere between $1.50-$3 per mile. But our long-term business model is really a driver-as-a-service business model, in which case, today's driver cost is the opportunity. So, ATRI provides an estimate of trucking costs. It's pretty well-known and respected, and if you look at the average driver cost, including benefits, it's $0.91, right? And trucking labor has consistently been rising, right? So this trend is expected to continue to go. For driver-as-a-service, our indicative pricing range falls anywhere between $0.65-$0.85 per mile, and it's really dependent on the lane and the value we provide for each lane. We expect this pricing's gonna do the two things that I mentioned, right?
It's gonna help reduce the total cost of ownership for our customers, which is super good. Well, but also, it's gonna deliver really high margins for our business, right? Which is really critically important. From a customer perspective, they think about the DaaS business model providing this lower, more predictable driver supply and driver costs versus today's alternative, and then again, eliminating these pain points, right? The things that we've talked about multiple times. If you look at ATRI's estimate of the driver costs, and then throw in an additional $0.15 for things like recruiting, retention, training, and things like that, our pricing strategy is gonna deliver tremendous value, 20%-40% savings for our customers. This is tremendous value creation that's really hard to ignore, right? And so that's kind of the strategy that we're at.
We're really focused on value creation and iteration.
Makes sense. David, we've got about five minutes left here. And just in looking at my list here, I definitely wanted to come back to safety. You know, certainly Cruise has captured the headlines. I'm on question eight on my list here, but so how do you avoid, you know, what's happened to Cruise in the city of San Francisco, you know, with your rollout in Texas? I certainly don't think you're gonna have traffic jams with three different Aurora drivers at a red light, like you've seen some of the social media videos. But you know, how, how, how do you folks define safe enough? How do you work with local authorities, as you mentioned, in Texas, to avoid some of the pitfalls?
Does Cruise get brought up as a potential thing for you folks to avoid as you're, you know, having conversations with local constituents?
Yeah, I think you have to start off with, first and foremost, which is how do you build public trust, right? Like, that, the AV industry generally has to do that. We're a safety first approach to development and deployment of the technology. You had mentioned the activities we're doing at Palmer High School recently. This is really designed to continue to bring people along and provide the confidence and the transparency that's required to operate an autonomous trucking business, right? And we can't take it for granted that people are gonna understand it or the trust us approach. We're gonna have to provide the right transparency associated with that, and we really pride ourselves on this approach, this open, transparent engagement with all of our stakeholders. And really, that's really what our focus is.
I don't wanna really compare ourselves with, or comment on other companies. You know, I think everybody is well-intended, and you know, I just think for us, we're really truly seen as a leader in this space because we've been so open and transparent about it from inception, really. We think about safety and what's safe enough, and it's really kind of an ambiguous thing, for some people, right? 'Cause it means different things to different people. We've really centered ourselves on the Safety Case Framework and completion of it through its five pillars, right? It's proficient, it's fail-safe, it's continuously improving, it's resilient, and, you know, it's trustworthy. This works in all kinds of safety-critical industries.
This ability to employ a Safety Case Framework so that you systematically go through the process and make sure that you're doing all the right steps that are necessary, that's what needs to get done. So we think if we take the Safety Case approach, we provide transparency and progress along the way, we don't take anything for granted, and we're constantly sharing information, I think we're confident that this is the right go-to-market approach. You know, our operating domain is definitely different, but it's still complex, and it's not the same as an urban environment, but we're still hauling, you know, up to 80,000-pound tractor trailers on the road, and it's just not okay to not employ the process that we're doing. So we're very confident in our approach.
... Perfect. We've got about 2 minutes left. Maybe the final question I had for you, since you're the CFO, I'd be remiss if I didn't touch on the midterm capital needs. You touched on the cash on hand gets you to Q4 of 2025, but maybe looking beyond that, and you're truly commercializing in 2026 and 2027. I guess I want the emphasis of my question is, I just wanna understand, what do we need to see to make the business at a high level self-funding? You know, is it a certain number of trucks times the price per mile times miles per year? You touched on the ability to capture price earlier in a prior question, but I'm just curious, like, how do investors think about that?
Is it, you know, a certain number X thousands of trucks gets the business to self-funding? Or maybe you're approaching it a different, different manner?
Yeah, again, I think, you know, with $1.2 billion on hand and our ability to raise capital, we're pretty confident in the approach. You have the right levers, right? This is about how many miles are traveled, right? That's the utilization of the trucks, and what's the gross margin on the truck, right? The revenue relative to the costs. And so for us, it's a component of both. Certainly, you need to drive a certain amount of miles to be able to do it, but we have to do both sides of the ledger, right? We have to make sure that our cost structures are going down. It doesn't take us... And we really reduce the amount of onsite support that's required.
We increase the amount of remote assistance operators that are monitoring trucks. We're reducing our hardware costs, and we're maximizing the revenue, and that will have an impact overall on the margins, as well as on how many vehicle miles are traveled. I think we estimated, you know, $1.3 billion in revenue in 2028, which is based on 2 billion vehicle miles traveled, which is a really conservative 4% of the 50 billion vehicle miles traveled market that we would be operating in at that time. So, you know, if you look at trucks getting anywhere from 200-250,000 per year, which is basically double the utilization, that kind of gets you into the envelope of what we're talking about.
And again, variation on how great we do at driving down the cost and how much value we provide to the customer.
Well, perfect, David. I wish we had more time to dig into this in more detail, but I'm afraid we're out of time. I appreciate you joining us. I thoroughly enjoyed the conversation. Thanks for all your perspective.
Thanks, Jeff. It's good to be here. Sorry about the technical glitches as well.
Not a problem. Bye.