Aurora Innovation Stock

All right, everyone, let's kick it off. Chris McNally, Head of Global Automotive & Mobility here at Evercore ISI. David Maday, CFO of Aurora. David, let's kick it off. Just a little brief overview of Aurora. You've had a very busy week.

Great. Thanks. Thanks, Chris. Thanks for inviting me. This is an impressive forum with an impressive group of leaders and companies doing great things in the industry. So I am very excited to be here.

First and foremost, maybe I'll spend a little bit of time before the Q&A, just talking about Aurora for those that maybe aren't quite as familiar. As Chris outlined in his earlier material, there's a lot of debate on technology and what types of modeling and end-to-end and frontier models and mapping and things like that. You'll get a lot of that later. You're not going to get any of that from me.

I'm going to talk about the business. That's the stage that we're at, and that's what we're going to focus in on today, plus I'm really not good at answering those questions. So -- let's get started. But before I do, I am going to be providing some forward-looking statements. So please take a moment to read our forward-looking statements disclosure, so I don't get in trouble.

Okay. We just had our Analyst and Investor Day. So we're just going to -- for those that might have seen us, we're going to repeat some of this stuff. But like I think the thing for us is like really we are at a point where we're at this inflection point where we believe that all the investments that we've made today have put us in a position to be highly successful. So today, we are, in fact, the only company that is operating driverless on public roads. This is driverless, nobody behind the wheel, no safety drivers. This is not a pilot. This is everyday operations. And it has its own challenges, of course, of everyday operations, but this is where we're headed. This is this inflection point.

If you talk to Chris Urmson, our founder, he would tell you, and he does a lot of comparisons of like it takes a long time and a lot of investment to get to this point. For him, it's about 20 years of it. Aurora has been around since 2017. We've made major investments to get ourselves into this position.

Earlier this summer, we launched what we call Aurora Driver 2. This is our second version major leap forward. Again, it's built on our Verifiable AI software. It has our second-generation hardware. This is the hardware that actually will allow us to start to scale our commercial business. And obviously, you need all the tools and services. So we really do feel we're at a commercial inflection point with the business.

But at the same time, we also want to remind ourselves that there are some things we're really good at. And there are some things where we believe the best approach is a partnership approach. And we've been pretty proud of our partnership approach. I came to Aurora in 2020, specifically to work on building up a lot of these partnerships. And many of them on the board today are a result of our strategy to do what we do really well and rely upon others to do what they do very well. And so we're proud to be partnering with some of the very best OEMs in the U.S. market. We're proud to be partnering with many of our industry-leading logistics partners.

Some of these people we started back -- working with back in 2021. Some of them are in the room. Some of them have been with us along the way and will continue to support us. And some of them are our harshest critics, right? They want to see the very best from Aurora, and they help us and they guide us in that pursuit. And then we obviously have a lot of pioneering hardware partners that support our strategy going forward. So we're really excited about the commitment that we have from each of them, all aligned on this long-term vision that we have, which is it's a match with our vision, and it's to create tremendous value.

Now I had said that we started back in 2017. We've made tremendous progress. We've also made significant investment to get us to this point, right? And so we truly believe we have all of the elements in place to start to scale and have meaningful value in the market. So whether it's our Verifiable AI software, whether it's our hardware. We're the only company that not only has our second-generation hardware which is a complete redesign from the first generation, which is manufactured by Fabrinet. But we also have our third-generation hardware in development, actually starting to test on roads today from AUMOVIO. And so these are significant investments towards scaling the business.

On the supply side, we're working with multiple OEM partners. Our goal is that our logistics customers can choose the truck that they want with the Aurora Driver. Not the Aurora Driver with the truck that they have to take.

And then finally, from a demand perspective, we continue to make great progress with our customers and filling out the demand. Obviously, we're fully allocated for '26. We've got tremendous potential in 2027. I'd say that we're 2 to 3x where we need to be in terms of the allocation that we can deliver. So we're very excited about the opportunities that are in front of us.

But of course, to be successful at the -- with the Aurora Driver, we have to deliver value, and we truly believe that this is transformational from the freight industry. And I think any other AV trucking company that comes up here is going to agree with this and probably say the same damn thing, right? We are going to be safer. There's -- you talked about the number -- there's roughly 5,000 deaths on the U.S. highways from trucking accidents. So that's too many. Our ability to have scalable, flexible demand for drivers is super important. There are driver shortages, there's turnover, there's all the things that make it challenging for logistics customers to run their business.

We believe we'll have 2x the utilization as the human-driven fleet today. We're seeing that today with customers on the road, with our driverless trucks right now, okay, some of our customers even tell you the examples, and you can go listen to some of them, but it's super important. And then from a total cost of ownership. This is the thing that I think separates trucking from ride-hailing, to be frank. And the ride-hailing, which is awesome, really cool, going to be safe, they're cool-looking vehicles. The cost structure isn't there to drive down the cost.

Today, the economics in trucking allow us to provide value to trucking customers right now in the total cost of ownership. They do in our initial customer adoption launch model, which is our Transportation-as-a-Service-business. But when we shift over to our Driver-as-a-Service-business, they get even more leverage to create real value. We can deliver value on all 4 of these right now. And so that's really what we're excited about. That's why we truly believe the Aurora Driver will be transformational.

I mentioned a little bit about cost. I'm not going to spend a ton of time on here, but let me just kind of talk about 3 things. The total cost of ownership is a real issue in the trucking industry. Their cost structure is growing on all levels. Driver costs are growing. Insurance costs are growing. Fuel is really high right now and growing. And these operating ratios that they work on, they're tough, they're challenging. This is a tough business. For us, we can drive down the cost for the driver.

This is ATRI data on the left. It's got $1.03 plus indirect of $1.15. We have Aurora's pricing, everybody has their own pricing. This is real value that we're delivering to customers today. In addition, we believe -- I'm just going to talk about 3 of these, by the way. In addition, we're going to talk about fuel. Obviously, fuel is really high. We're experiencing 10% fuel efficiency today. We believe that number is going to go to 15%. And probably with working with OEMs has the potential to go up to even 30%, but it's a real value today.

And then from an insurance market. We strongly believe that you're going to continue to see 2 things happen. Number one, the cost of ensuring in the human-driven fleet is going to continue to kind of grow and creep up. And the cost of driving an autonomously driven fleet is going to continue to reduce. And so those 3 things by themselves give us a 20% reduction. So we're really excited about this.

How does this translate to a customer? So today, this is a really simple graph. This is on our Fort Worth of Phoenix lane that we operate on. Today, there's 2 things that are happening. Number one, a truck can operate at double the utilization. So it can make a round trip in a day, which it could not make in the normal world. So you're doubling the revenue side of the equation. And then from a margin perspective, you're getting 6x of the value because of the 20% reduction overall. So it is a really good value equation.

And you might hear people say, hey, we got to work on the pricing, even some of our customers push us on our pricing and things like this. There's a lot of potential here. They understand the value, and we know that this is going to be tremendously important for our customers going forward.

And then finally, maybe this is a chart we used at our Investor and Analyst Day. It got a lot of excitement. We talked about it. We really believe we're at this commercial inflection point. Again, 200 trucks operating by the end of '26. We expect more than 1,000 trucks operating by the end of '27. And we truly believe that this is just a starting point. We expect over 30,000 trucks operating by 2030. So we are really at this point. We have all the enablers in place, both from the technology standpoint, from the supply side and from the demand side to really start to spur transformational growth.

When we talk about what this means to Aurora, we are really expecting to see substantial growth in our revenue. So obviously, for the last several years, not a big revenue story for us. This has all been about the technology. I told you, I'm not going to talk about technology today, I'm going to talk about our business outlook.

Our business outlook is going to also be transformational. We are going to achieve a positive gross margin and roughly $200 million in 2027. When you look forward to 2030, we expect this number with the 30,000 trucks to be over $5 billion in revenue, exceeding 60% margins really on our path to a 70% margin. In 2028, we continue to expect that we will achieve positive cash flow on a run rate basis. All the enablers are in place to support this. We're really excited about where we're headed. And I guess I'll just close with this.

It's going to be a tremendously exciting few years for the industry. There are a lot of players out there that are going to do and create some great things. We believe that we are in a leadership position today because of the investments that we've made, because of our strategy to really focus in on scaling the commercial business.

And if you look at where we stand in terms of our partnerships, in terms of the fact that we have a scalable hardware supply for our Aurora Driver kit, with our Hardware-as-a-Service partnership with AUMOVIO, when you look at the progress we've made thus far, we're really excited about what the future is going to hold.

So with that, I think we're at our commercial inflection point, and maybe we'll go over to questions.

Perfect. Maybe we can start some of our industry views and then we can work it back into your Analyst Day. So we came to visit, right? In March, we did an AB truck tour. We saw yourself Kodiak, Waabi, Einride and we came away with this idea that the software was ready when we talked about the bottleneck of the 4 parties involved being the actual physical truck itself with, essentially, we all know Volvo maybe in 2027, the only OEM to produce an on-the-line truck. Everyone else is using upfitters as you discussed.

Why do you think the OEM has been at this choke point thus far because then it gives us an idea about how that gets unlocked for the supply side over the years to come?

Yes. It's a great question. It's a very common question. Certainly, supply of OEM platforms has been a constraint for a lot of folks. I don't know that I would describe it as a choke point. I think you have to remember where we are as a stage in our industry of AVs and where the OEMs are in their industry.

So today, not a lot of us -- everybody is making great progress doing all kinds of cool things, but there are very few people that have been at a commercial inflection point. They run a business where they're building 250,000 trucks in the U.S. a year, right? They have that main business to invest in. They have mandates with fuel economy. They have competitive situations that they need to do. They have drivers and customers that they need to satisfy every day.

Our market today is all about the promise. This is why I've been so excited about where we're changing this from about the promise to actually a commercial inflection point where they can start to see tangible real value. There's a difference between saying you're going to be somewhere in the future and actually showing them that today.

I think the excitement level of our OEM partners, at least for us, the excitement of our OEM partners seeing the Aurora Driver operate on the road with nobody behind the wheel has really energized them. I think Volvo is kind of all in right? They've really made a commitment in terms of that, and they're going to start to scale. But every OEM partner, when they do a line-side installation, that's a significant capital investment and impacts their higher production line, their takt time and everything. And so for them to do it for a handful of trucks, it doesn't make any sense.

Yes. The chicken and egg.

Right. So for them, they really need to see the promise and be able to capitalize on that scaling. And so maybe for us, we should have been a little bit more realistic as an industry. But for us, I know one of the things that was exciting at Aurora is this upfit option with Roush and putting this drive-by-wire system in the international, it really was a big enabler to build excitement for the OEMs. And I got to say, we have a lot of conversations with the OEMs today and their C-suite. We host all of them, and their excitement level has never been higher.

Because they can see the product. Yes.

Yes.

So let's play that through to the Analyst Day comment, right, about the inflection point from now to 30,000 trucks in 2030. Is it fair to just assume that by 2030 to get to that 30,000 that the -- I mean, basically, all of the major OEMs will have a production fit AV, meaning over the next 3 to 4 years, we can expect that to happen?

Yes. I think if you ask every OEM, they would tell you that they will have a production level line-side install of an AV on their lines. I think for us, we have a very clear path of where everybody is at and how we're going to get there. I think Volvo has been the most outspoken about it, right, in terms of their path. I think Daimler who we're not currently partners with today also has a path. International is very excited about the trucks operating on the road. Our interest level or their interest level with the Aurora Driver has never been higher.

And PACCAR, while maybe a little bit more conservative on what they like to announce, continues to be a strong supporter. They were at our event. They talked about the opportunity. And so I think we're still well positioned. I think it's taken a little bit longer than some people want. But by 2030, not really a concern. I'd also say that like 30,000 trucks sounds like a lot. And for the AV industry, it probably is a lot. For the trucking market, not that much...

You're talking order of magnitude for those in the room, if you're adding 10,000 trucks per year to get to a fleet of that, you're talking about 3% to 4% of annual builds.

Just to go back to the Volvo comment, just triangulating industry data points. So 30,000 is a cumulative fleet you're expecting by 2030. Volvo kind of less -- typically considered the AV bowl here in this space thus far. They gave a number that was about 25,000 for the units in 2031. Can you talk a little bit about triangulating some of that because you've probably seen the VAS projections. How do we think about sort of triangulating the 2 data points?

I think they have their own business to run. We have our own business to run. So we don't talk a lot about like how they build up their commercial side of that. I think we focus in on like the production allocation that we're going to achieve over the next several years and how we're going to place those. And so we have an idea of how many trucks they would like to be operated by the Aurora Driver. And it's a substantial amount. But we don't have as much insight into like their commercial piece.

We think that Volvo Autonomous Solutions and however they choose to do it, I think Sasko was on our event and mentioned. They like the Volvo Autonomous Solutions, but they're going to meet the customer where they need to be, and that might include different business models and...

And they're starting that business from the scratch as well.

Yes. And so I think what we see is a really solid outlook for all OEMs of once they start to lineside install, they have really good growth aspirations. And for us, we like to match it up with like the fact that we also have an AUMOVIO partnership, and we have a build schedule to actually build the Aurora Driver kits. It's going to be impossible to achieve any of these numbers if you didn't have a partner that would be able to actually build that kind of hardware, and I think we're in a unique position in that regard.

So let's talk a little bit about the unit economics, right, which you've shown before, I think the proposition is clearly there. Everyone knows the $2.50 per mile, a number like $0.85 to driver as a service, software and hardware. Can we talk a little bit sort of to my intro point about the messy between now and then.

If you're pitching to the Werner, the night CTO, CCO -- what are some of the start-up costs that they have to put in to get this up and running, right? We're moving away from drayage. We're going 2 customer facilities. But what other things do they have to put in on cost on their side to start to get ready for autonomous? What prep do they have to think about when they're considering the size of their launches over the next couple of years?

I think in the near term, there isn't much they have to do at all, right? We're going to be going to customer end points that will be the predominant delivery model by the end of the year. We're already starting to do that today. So the drayage thing was super useful if you were running commercial and development at the same time, and you were just operating predominantly as development and you wanted to take advantage of what the commercial market looked like. We're kind of beyond that point. We still do development, but now we have like a separate commercial operations. So we will just go to customer end points. So there's no drayage that they have to do.

So if you drop off at a customer site or if you land at a customer site, you essentially need WiFi. They will have an Aurora terminal app that will allow them to launch and land trucks. So we'll have to train them and have standard operating procedures on how to do that. And they will need somebody dedicated there to actually receive those trucks. If you talk to customers, most every customer in a shipping yard has somebody to do that role already today. And most everything else, we're going to try to eliminate. So as an example, if we need to fuel, we will go to truck stops and fuel with our fueling partners. If we need to scale the vehicles, we will go to our truck stops and scale the vehicles. So we're going to do as much as we can with a partnership approach and try to make it as seamless as possible. It's the near term.

So when we first launch with every customer site, they want to be handheld. We're going to put people on site at the yards, making sure that everything goes seamless. The issue for our customers is not, are we driving extra cost? The issue with our customers is, are we reliable? Because if we're not reliable, then they will lose the business that they have, and they will not want to use driverless trucking. So it is more about operational excellence than it is, are we adding anything specific to there.

In the long term, it's going to be super seamless like we're going to be adding new end points. The time that it takes to do it from the first to the last is going to -- from -- to a new endpoint, it's going to be less than a week. It's going to be really easy. They're going to already have the standard operating procedures. We'll have launch teams that go out and set up every group really quickly.

I think in the long term, what you're going to see is carriers are going to take advantage of the unique abilities of the Aurora Driver to operate 24/7 to kind of go wherever. And every carrier is going to try to optimize their network to them. And they're not going to broadcast it to the world because they're going to look at this as a competitive advantage.

How can I optimize my network? How can I improve my efficiency? And they're really good at it. Like they got a lot of models, they figure out where to go. So in my opinion, their focus is going to be how do I optimize? I actually think that the total cost of ownership story in 3 years is so much better for them because they're going to take advantage of their inefficiencies and they'll know them a hell a lot better than we will.

Can we talk about some of the 24/7. I think from maybe some of the best examples of what you've been running so far. I think in our mind, we all thought this is going to be a 15-hour journeys, one single long haul. But I'm hearing more about these 2-hour high-efficiency back and forth. Like, what are we seeing in terms of an uptime per day in some of your best runs?

Yes. It really depends. Detmar was the example where basically they do basically 2 trips a day, and we're doing 6 now. So they're basically doubling, tripling their utilization of the trucks. Part of this has been limited on where we drive today, but there is a world in the not-too-distant future, like by the end of this year, where you're going to see people going across the country, right? They're going to be going from Atlanta to Phoenix to L.A., whatever the case is. They're going to go from Phoenix to Houston. These are all trips that you can just run throughout the day.

And to be honest, trucks are slightly more efficient when they're operating at longer cycles. Where they get inefficient, and where do they get a lot of [ wears ] is constant stopping and starting or cycling back up or getting cold and then trying to go run again. So a truck is really efficient when it's operating in its normal mode. So you're going to start to see this more. Most of our customers see a lot of value, if you're like an FTL, if it's 500-plus mile range. And they would like to get to 1,000 and 1,500 pretty quick.

The Detmar and some of the other examples, everybody -- and that's why I talked about network optimization. Everybody is going to optimize their network to work for them. I would not have anticipated Detmar to be the greatest use case when we first thought about it. It's actually a great use case for them, right? And so you have to meet the customer where they're at, and you have to understand their business challenges.

Let's stay on the customer. I think when we think about fleet demand, logically, I would have thought the larger fleets are the ones that can invest, can think larger about TCO. But so far in some of the announcements like it's been some of the smaller fleets. What do you think is the last thing to bring the FedEx -- I mean, obviously, we've seen announcements, but the FedExes of this world, the Walmarts what's when we get these big headlines? Is it just complicated contracts? What's the -- what brings the largest fleets to bring this to scale?

Well, in fairness, the larger fleets have the largest amount of bureaucracy, but they also have the largest risk, right? Like today, it's kind of a risk reward for them. If I can only provide them like 50 trucks this year, and they operate 10,000 trucks like the risk reward ratio, they got to be careful with that, right, because you still need a whole bunch of people to deliver every day, and they are concerned about that. Despite the fact that all the data will continue to support that if you're a driver today or if you want to be a driver, you can retire a driver. That's still clear today. There's going to be roles for drivers. And actually, there's going to be better roles in the future when AV is broadly deployed.

But there's a near-term psychological impact that people have some customers, especially the bigger ones, are much more excited about the potential when you can give me 1,000 trucks. So then I can go in and make a statement and it doesn't look like a pilot for -- like if you took FedEx as an example, 50 trucks with FedEx is a pilot, right? Like that's not really scaling their business. But I would say that -- so bureaucracy is one of them. I think, risk reward is another.

I think the third thing is there are some leaders. These are the early adopters. There's going to be a lot more fast followers than what I think people think. And I think you'll start to see bigger trucking fleets start to lean into this more. The more we can deliver value, the more you'll see customers come onboard. The more customers come onboard, the more questions are going to be to those carriers that aren't operating with AVs, why aren't you? Because it looks like this is a pretty substantial cost advantage...

And so in that regard, that's where the upfitting becomes a bridge to get the supply, to get it rolling. So a fleet can get their first 100 because they know the 500 supply is coming a year from now, as a line builds...

That's exactly right. It was an enormous unlock for Aurora, right? We knew that the technology was going to create value. We were confident in the safety of the technology. We knew there'd be operational complexities associated with it. But if you don't have enough trucks to put on the road, kind of doesn't matter. And so truck supply was really important. This was our bridge until the OEM lineside came about. And we're really excited about it.

And frankly, it's been great. It's been energizing for the company, but the customers have had a chance to come and see this without waiting for the OEM. So they now know this is a safe product that can happen. So they're starting to put pressure on the OEMs as well. So it is -- it's been really valuable.

Let's move -- I'm not going to put you on the spot, but I caught the quote in the TechCrunch article on -- look, it's a very ambitious 2030 guide. I think you gave a very confident answer that you see Aurora hitting that target that's not just an ambition. Could you talk about some of the internal metrics qualitatively? Is this customer conversations? Is this -- when you see a customer that you have not a signed contract, but this is the realm of trucks that they're asking for the next couple of years. Just a little bit of color to some of that confidence.

Yes. It is not an ambition. It is our target, right? And we're moving towards that. I don't want to say it's 50-50 because it's kind of hard to say what's 50-50 out in 2030, but it is a realistic number. I know it sounds like a lot. I said this before. It's not relative to the industry overall. We do a couple of ways when we approach like when we're establishing our targets and the resources that we need to deploy them. We kind of look at the top down approach what's the market size, what's the TAM, all kinds of different metrics, what are outside public things? What's our capacity situation look like? So we do that. And then we also do a ground-up build up, right? So we do it.

So we have a business development team. They have a list of customers that's ever growing. We just had a Partner Summit the day after the Analyst Investor Day. I think the first year we did this, we had 6 or 7 companies that participated. The folks in the back will tell me if I'm wrong, but it was like 3 or 4x at this time. So the amount of growth and interest has been really high. And we've had some really -- including senior level folks at very big conservative companies, right? And so it is really starting to catch fire.

And so the business development team, they look at where we're headed, and we do a road map with each of these customers and say, all right, what does '27 look like when we're operating here? And we try to build up a road map for each partner based on each geographic area that we unlock. Remember, in 2030, we expect to be operating a 150 billion VMT out of the total 200 billion VMT market. That's a lot different than where we are today. We're at 4 billion today. But we will be sufficiently -- we truly feel we're sufficiently generalized to be able to achieve that. And when you're operating in 3 quarters plus of the continental U.S. you have now created an entire autonomous network for people to take advantage of as opposed to Southeast or Southwest corridor or maybe one additional lane. So we are now actually enabling it to operate and transform all of their businesses.

And so when we look at the ground-up estimates and the top down, that's what gives us a lot of confidence in the approach.

Excellent. Well, we have about 5 to 7 minutes. We try to keep at the end of every session for Q&A. Any questions from those in the audience? Don't be shy.

AUMOVIO's third-gen hardware, start of production for the second half of 2027, and that will eventually support the production of tens of thousands of trucks. Does production for the third-gen hardware kit need to be fully ramped for an OEM like PACCAR to become initiating lines of production...

You just need to achieve SOP and full PPAP, which we have planned to do by the end of '27. So OEMs care about like have you PPAP the parts? Are you at your full production line? So what they don't want to do is scale lineside with like a B sample or a C sample. They want to do it with full production kits.

Can we just follow on AUMOVIO? It has come up over and over again, obviously, both in trucking and robot. The idea of Hardware-as-a-Service, is this is a pretty revolutionary kind of agreement. Can you just talk about a little bit how it came about? Because I talk about this, like almost everyone would benefit from the alignment of your revenue and your costs, right, for suppliers. So just a little bit on the relationship that's obviously a year or 2 old?

Yes. And for those who don't know my background is actually in automotive, so I was at an OEM for 20-plus years. This is the first agreement that I'm aware of in the automotive hardware Tier 1 industry that is kind of like this, where AUMOVIO is -- we're co-developing, co-designing. They're doing all of the engineering, all of the manufacturing, the financing of the kits as well as the service and maintenance of the kits. And in traditional OEM land, a part comes into the assembly warehouse, typically, the OEM pays for that part.

In this particular case, that part is just consigned inside. It is not paid for by the OEM. It's not paid for by the freight customer. It is financed by AUMOVIO. And we pay them cents per mile for every mile delivered. So it's the only business model I've seen where the shipper, the carrier, the Aurora Driver, the hardware supplier are all compensated the exact same way, which is on actual usage.

And both companies carry -- they carry risk in terms of that, but there's a lot of upside. They do it for a different reason, and every reason has their own, and I ask you to talk to them a little bit, but like at a high level, this is a way to have recurring revenue that's more predictable that allows them to better capital plan going forward, and they're really excited about the opportunity.

And for us, we got a major Tier 1 to commit to build tens of thousands of kits per year. Do all the financing, all the activities that matched our capital-light business model. It came to fruition because we were very clear upfront with what our expectations were, what our mission was, what we were trying to do. And we talked to many Tier 1s. This was the one that was the most aligned with our vision, and that's really important to us because you got to have an aligned vision with your partners. And so it is super unique. I don't know that anybody else has it. I haven't seen one since.

Can you remind us -- is there any exclusivity on a period on either side or...

There are some levels of exclusivity, but it's -- I don't want to talk through all the details of the contract.

Anyone else? We do a real quick one on regulations. Obviously, the positive momentum in California, I think, is a huge part of that VMT unlock. I mean, regulation has not been prohibitive here, but obviously, there's a cost without having national regs. And how much is the California sort of progress a part of unlocking the VMTs for some of these larger routes?

Yes. Of course, California is a huge market. We had always expected California to come in at some point. It's just faster than maybe what we thought a year ago. There's still some hurdles that you have to clear, right? And it's a permitting process. So we're making our plans to do that. And we're kind of well on its way. It wouldn't have impacted any of our near-term business. Actually, we don't have any trucks allocated there.

And this year, I don't know that we'll have any allocated there next year. If we do, it will be a few because they still have to -- we're a driverless trucking company. So we have to make sure that, that gets opened up. Once it gets opened up, we'll take full advantage of it. There are plenty of customers that want to go there. And it -- I'd say most of the momentum, and I will knock on wood here, most of the momentum regulatory has been very favorable for the industry thus far in really the last 2 years.

I think with the new administration, there's kind of a renewed vigor to support technology adoption, eliminate roadblocks, use a little bit more common sense and try to provide a framework. And so there has been stuff at the federal level. There's been positive momentum at the state level. And so we believe that it is really headed in the right direction.

Now some things can always change. But I think this is good for the industry. This isn't good for Aurora. This is good for the industry as a whole. And when I say the industry, I'm not talking just an AV industry, I'm talking in the freight industry. To be able to unlock technology for customers across the U.S. is an important milestone for the industry, generally speaking.

Excellent. The last minute, I always try to end on some version of what's next. You've laid out now the 4-, 5-year plan. What's your focus? Next 3 to 6 months gets in the mind of Dave. What is really the next 3 months, the major things that are going to be most important?

It's kind of twofold. I think in the next couple of months, it's all about execution of the plan. We have all the enablers in place. We're building trucks. We've got our Aurora Driver kits coming in. We've got our customer contracts. It is ensuring that we have operational excellence for our customers, and that's the focus on execution. So in the next 3 months, that's my single biggest one. Outside of that, I'm excited about the opportunities, not just in the U.S., but maybe we'll explore things in other areas as well, but that's for a later day.

Okay. Excellent. Everyone, Aurora, a round of applause.

[Audio Gap]

Please refer to the risk factors and other disclosures in our most recent 10-K and our other filings with the SEC. And our discussion today may also include non-GAAP financial measures. These non-GAAP measures should be considered in addition to and not substitute for or in isolation from our GAAP results.

Now let's get into the fun stuff. Enjoy.

[Presentation]

Welcome, and thank you for joining us. No, it's a lot to ask you to come down here to Dallas and spend a whole day with us. So we really appreciate that. We hope this could be worth your time today. What I really wanted for you to spend -- to get out of today is to learn a little bit about what about Aurora, a little bit about where we're going and hopefully come away with the same level of excitement that I and we have for Aurora ahead. It's going to be a hell of a few years for us.

Today, Aurora and the freight industry are at a point of inflection. We no longer need to talk about when autonomous trucking is going to happen. We talked about how it is happening on the road today. Euro Driver is here now, and we're ready to scale. I like spending time understanding how new technologies kind of came into existence as you look back over history. And in doing that, I've seen this common pattern, most of the world's most transformative products have something in common. They spend a couple of decades wandering through the wildness really kind of trying to figure out how to actually make it work. And then all of a sudden, they look inevitable.

For decades, after Ben's invented the automobile, it really was this novelty for rich people that no one thought had a hope of replacing the [indiscernible] carriage. Right? It took 20 years of refinement. It took Henry forward kind of innovating the assembly line. And then we're able to get to the point where we can start to put a car in every driveway. And voided that change the world. It didn't just change how we moved, changed how we live. It changes the world, the shape of the world we live in.

In the shipping industry, Malca McLean began experimenting with containerization and at first, it went nowhere, right? It was imposed. Freight had moved the same way on chips for literally centuries. But 20 years of refinement this kind of magic moment of product market fit in the Vietnam War, suddenly kind of open the world's eyes to this. And all of a sudden, it was inevitable.

It opened the way for new economic hubs and have built the global supply chain that we all rely on today. And then finally, Vince Serve and his buddies, back in 1969, connecting a few nodes to create the ARPANET. Initially, it was very much a curiosity, right? It was for academics to talk to one another over a network. It took almost 30 years the revolution in the telecommunications to create a global telecommunication network and the web browser. But ultimately, they create a platform that fundamentally changed not just the way we communicate with the way we connect and how we do commerce. Cars, cargo, information, the same pattern, investment for a period of 20 years and then suddenly inevitable. And not coincidentally, these are all bits of technology that we need to enable what we're doing now.

Each of them transformed our world and created immense value and our technology is on a similar shape of trajectory, 20 years ago, DARPA kick started automated vehicles with their grand challenges. These robot rates across the desert. I took part those early competitions, ultimately leading the team that won the 2007 DARPA Urban challenge. We looked at what we built at the time, and we had big dreams. This was going to be big. It's going to transform the world.

We literally had no idea how hard it was going to be and I can tell you, if I probably did, I wouldn't be here talking to you about it today because I would have going to found basket weaving or something. I then spent 7.5 years leading what's now Waymo. And we made tremendous progress, real strides, but we still weren't ready. It's now been about 20 years since those challenges. And I can tell you, we are ready today.

Our first product, as you all know, is [indiscernible] driver for freight. We chose trucking for a bunch of reasons. First and foremost, there's actually a huge need for this technology, the market, the addressable market that we can reach is gigantic, and we think there's an opportunity for incredible unit economics. The customer decision makers are dispassionate. If we are safe and we can help them bring value and grow their business, they're going to adopt this technology. That is clear.

And finally, there's a tremendous amount of existing infrastructure that we can leverage. As someone who's excited about scaling this business and doing that in a capital-light way, that's cool. I imagine that's pretty cool for all you that we don't have to continue to invest heavily to actually scale and grow the business.

To have the privilege of serving this market, we have invested heavily, right? We've been developing our software and AI systems, our Verifiable AI system that's on the road today. We've invested in our second and third generation hardware that meet our affordability targets to meet our robust and targets to meet our ability to scale.

Our OEM strategy means that we can put the Aurora Driver on the platforms and vehicles that our customers demand. And our customers are excited for what we've built. And we're seeing that demand accelerating.

Our philosophy from day 1 has been do what we do best in the world and then work with amazing great companies. I believe and we believe that we will scale faster and deliver more value if we can focus on what we do best and they can lean into their strengths. We are proud of the ecosystem we've built. It contains world-class OEMs, amazing logistics companies, hardware partners, it's awesome, right? And you'll hear from many of them today.

Building a connected ecosystem like this is hard. It takes time to build the relationships and build trust. There's really no shortcut to that. But what we are seeing is that with each proof point, each example we put on the board, our ecosystem is accelerating, people look at what we are doing, we want to be part of this. They see the benefits to their businesses. This is why I believe we're at an inflection point. The tech, the partners and the customers are already. It has been a hard journey, but the Aurora Driver is now on the same rapid adoption curve as we've seen with these other technologies in the past.

Today, we are the only company operating [indiscernible] trucks on the road and scaling. Not a pilot, not with a safety driver behind the wheel, but in actual day in, day out operation. And this is just the beginning. By the end of the year, we expect to have 200 trucks on the road. A road driver too was a huge step to work for us. It allowed us to get our verifiable AI systems out on hardware that was cutting edge that had both price, our cost and scalability and durability that we needed. And it allowed us to deploy the tools and services that will ultimately allow our customers to use this technology in our operations and allow us to scale with them to meet their demand.

Now trucking is a tough business, and it's only getting tougher. Driving is difficult and demanding. And that means that there aren't enough people that want to do this important job. And our policy decisions are actually taking more supply out of the market. People need to rest. That means that these assets have to sit idle or companies have to do complicated logistical things with slip seat driving or team driving.

And driving a truck is dangerous. As a truck driver, you are 10x is likely to die in job as the average American. 5,000 people are killed in collisions with heavy trucks every year. This is something we can do something about. Fuel, labor, insurance, these are all costs that are increasing. When a customer integrates the Aurora Driver into their fleet, we will be able to help them drive all of these down simultaneously. The Aurora Driver makes trucking safer, 360-degree perception, validated safety case, millions of tests, this gives us conviction when we put it on the road, it will be the safest, best driver out there.

The Aurora Driver never needs to take a day off, and our customers can deploy it where they need it, when they need it, allowing them to meet their customers' demands. Of course, the Aurora Driver doesn't need to rest, allowing trucks to operate 24/7, really creating that opportunity to double utilization.

And finally, all of this drives down the cost of labor, fuel and insurance, again, simultaneously. Taken together, the Aurora Driver is nothing short of transformational for these businesses. And these benefits are not hypothetical, we're delivering real-world value with customers today. When you look at the video here on the left, this is the Aurora Driver on I-20, [indiscernible] along at 70 miles an hour, I think. At this moment, as construction worker decides it's time to go have lunch in the outside of the road, they run across the road driver sees them, slows down, everybody goes home safe. In our long-haul applications with Werner McLean, we're seeing trucks running 225,000 miles on an annualized basis.

Again, that is double the normal utilization for these assets. And then finally, in our short-haul application with Detmar, we're doubling the number of trips per day that they're able to operate. Safety is table stakes, doubling utilization is a change -- fundamental change in the value we can provide.

Now as I mentioned before, we are fully allocated to exit 2026 with 200 driverless trucks on the road operating for customers on our existing routes. For customers to use the Aurora Driver, we need to meet them where they are. That means operating from and to their endpoints.

Today, we're live offering driver sleep for Detmar between the capital sands mine and between their distribution point. In the coming weeks and months, you'll see us begin to operate drivelessly for more customers. Make no mistake, it is clear that the core value that we provide as part of the Aurora Driver is operating directly between customer end points and that is the product we're building and deploying. Having had the opportunity to work with customers at their endpoints, it's really given us the ability to improve and optimize through Aurora Driver and ensure that it will fit seamlessly into their businesses. And as we head into 2027, we're further expanding the network we plan to -- or we're going to be supporting and growing into.

It took us 6 years to develop, validate and deploy for the first lien. It took us 6 months for the second lien. And earlier this year, we deployed a lien in 6 weeks. In the not distant future, it's going to take us days. That's because the Aurora Driver is now generalized. And every bit of further generalization we make eases the ability to open new lanes.

In parallel, we're continuing to develop the tools that allow us to map, validate and verify the Aurora Driver, so we can have confidence that's safe on the road. The combination of these two is not just a linear improvement in how quickly you can open lanes, but an exponential one. Once again, we see this inflection point that means that we will be able to scale and build the business.

Now before I hand over to Osa, I want to take a moment to zoom out. Over the long term, automating freight is going to bolster the U.S. economy. The Aurora Driver will make our logistics pipelines safer, more robust and lower cost. Lower cost logistics is great. It's going to both help the end consumer because goods will cost less. We will help fight inflation. But beyond that, through Jevons paradox, lower-cost freight will mean that there is more demand for freight, which will grow our customers' businesses.

And in parallel with that, automating the middle mile long haul routes we're going to be focusing on will actually help our partners elevate the role of their logistics professionals, allowing them to focus on being the face of the company in short haul applications and importantly, allowing them to sleep in their own beds at night. We're going to help transform this industry. We're starting this flywheel motion today.

Of course, it is not going to happen overnight, but the long-term impact of what we're building is profound. So thank you for being on the journey. Thank you again for taking the time with us today. I hope you find the day informative and useful. Really excited to get you in truck.

And with that, I'm going to hand it over to Osa, our President.

Thanks, Chris. As you can see, it is an incredibly exciting time to be at Aurora. I have the pleasure of spending a good portion of my time with our customers and their enthusiasm is simply palpable. I thought that before I get into the numbers, I might share a few stories from the road just so you can get a feel for some of the things that I'm hearing.

So last week, I had dinner with the CEO of one of our long-standing customers. And we were talking about S curves and inflection points sharing many of the same stories that Chris was just telling you about. And he said that the external factors or market forces that are often required for adoption to move from one part of the curve to the next had already arrived for autonomous trucking. He then went on to say that the decision to adopt AVs was no longer just a smart one, it was now an urgent one. And that sentiment was actually echoed with another CEO of ours who we had the opportunity to introduce to Secretary of Transportation, Shawn Duffy. As he was talking to Secretary Duffy, he said this marked a high point in his career. He had never before seen such technological momentum, coupled with regulatory acceleration. It's just the two we're working in lockstep with one another. And I'll share one story before I move on. And as CEO of ours, who Mike just happened to be in the room with us today was driving on I-20 when up along beside him, comes the Aurora Driver, hauling his freight and no one behind the wheel and it was just cool. He said it marked a new level of excitement for him and for me.

I share these stories you can understand how fun it is to be at Aurora right now. We are in a materially different spot than when I joined 4 years ago. And so with that, let's get into a little bit more of the specifics. When customers come to us, what are they asking about? Well, first and foremost, it is always safety. And at this point, most of our customers and, frankly, even our prospects have had the opportunity to experience the award driver firsthand. They know that the Aurora Driver is one of the safest most capable, most experienced drivers on the road. But we didn't want to stop there.

We engage third parties to validate how we approach safety. [indiscernible] came and audited our safety management system. They found that we were highly proficient, reliable, thorough, basically, we passed with flying colors. We then went to edge case, and they did a first of its kind audit of our driverless safety case. They did a rigorous sampling of our facts and evidence and they found that we had reached a whole new standard of transparency when it came to autonomous trucking.

After safety, money talks. This is probably the most common conversation that I'm having today. We took ATRI data and looked at total cost of ownership for a traditional driver versus the Aurora Driver. The savings are staggering, upwards of 20% or a full $0.50 per mile.

Now there's a lot in this slide, but I really want to break it down into 3 key themes that we keep hearing and talking about. The first is, of course, the driver itself. In this analysis, we compare it against solo driving, which is actually a conservative view. Team driving might be the more comparable approach. But even with solo driving, you see great savings. After the driver, there is fuel. We are regularly seeing 10% fuel efficiency on the lanes we're hauling today, and we see an opportunity of 15% depending on the lane and type of freight. That's quite notable to our customers given diesel prices today and where we expect them to be.

The third category is insurance. Dave, our CFO, is going to talk in detail about liability and insurance. So at this point, I will just say that a safer driver is a cheaper driver to ensure. The great thing about these economics for our customers is it affects both sides of a carrier's P&L. What do I mean by that? Let's take the top line.

Our truck is not subject to our service limitations, and we don't have a driver that needs to get home. That means we can effectively double the utilization and in turn the revenue for any given truck. Now the bottom line. Any carrier will tell you that this is a razor thin margin business. Every penny counts. Based on the analysis I just showed you on the previous page, there is a ton of opportunity to improve the bottom line as well. But let me make this tangible. We did an analysis. We took our lane Phoenix to Fort Worth. We took a single truck, and we mapped it over the course of a year. You see a doubling of revenue and a sixfold increase in margin. That is an incremental $340,000 in revenue and $160,000 in margin per truck per year.

Did I mention these conversations are fun? And then beyond that, beyond safety, beyond the economics, we also want to meet our customers where they are, and that's where endpoints come in. Opening up end points this year has been a great demand and growth driver for us. But beyond just opening the lanes, we want to make sure we're providing the service and support so that our customers cannot only start operating with us. But they can scale operations with us.

And with that, I'd like to take the conversation just a little bit deeper in lighting 3 of my favorite people, industry experts and also Aurora customers to the states. Please help me welcome Matt Detmar from Detmar Logistics, Eric Hildenbram from McLean and Daragh Mahon from Werner.

Thank you, Gentlemen. So appreciative of you making the trip. And I think we're going to have early fun conversation here. I'm going to actually start the conversation with Daragh. For those of you who were here 2.5 years ago, you remember that Daragh was on this panel with us as well. And I'd like to think back to that moment and then I head to today. There's a lot that's happened. You've approved driverless operations with Aurora. Tell us a little bit about the last 2.5 years and what gave you the conviction to move forward?

Yes. So thanks for having me first. I think back to 2.5 years ago, it doesn't seem like that long ago. I feel like a top of mind back then were 3 things. First was the tech, was it there? Or was it getting there? Second was safety. And third was reliability. And I think I'll put safety first here because in my mind, that's what we eat, sleep every single day at Warner safety, how safe? How do we drive safety into our fleet. How do we make sure that we maintain that, and we wanted to make sure that you guys could prove a safety case and I think back even prior to that, maybe 2 years before that, the first conversation I had with Sterling and Chris was about safety.

So I think you guys have done an excellent job up to that point, but up to this point, you proved your safety case. So we feel like you guys are there from a safety perspective. Now you got to get millions more miles in the road to keep proving it. But I think at this point, millions of miles in the safety case has been proven, and we're very satisfied with that. Second thing is the Tech. Look, I feel really good with the Tech. I don't think there's any question anymore. In fact, we talked about this internally all the time, Tech is there. We're not worried about the Tech. We have some integration work to do, et cetera, but all of that is relatively easy in comparison to the heavy lift you guys have done to this point. And then the third part versus reliability. We put these trucks on the road. We have another safe and we have [indiscernible] reliable. And over the last 8, 9 months, whenever it was, we approved driverless operations. We haven't -- I mean we've run a lot of miles with you, but in comparison to what we run on a daily basis, its not really a lot of miles. So the reliability has been there. Again, you got to run a lot more miles to prove it's there, but we feel really good about where we're at right now. We're still bullish. And I think we're ready to -- we're just ready to keep moving forward to you guys.

We really appreciate working alongside of you on this journey. We've learned a lot from you guys as well. And with that, I want to really turn it to Eric and then to Matt. I think Eric Mclean has been working with us for 2 years. What prompted that decision? And where do you see it going from here?

Yes. I think for us, first, it starts with safety as well. I think that's probably where everyone in the industry is, and we saw an opportunity to have a potentially very safe lever that we could use to grow, right? And that for us was critical. How are we going to manage, our growing middle mile logistics and redistribution operations.

Drivers are scarce, as I think we all know. And we need them desperately for our final mile into our customers. And so finding a solution like yours that could help us in that middle mile and deliver the safety, the reliability and those types of kind of opportunities to put our drivers where we really need them was why we turn to you.

Yes. So we've been working with -- first of all, thanks for having me glad to be here. We've been working with Aurora for about a year now, and there's multiple things that prompted us to look at this and go down this journey. Safety, of course, being a big one. The Permian Basin is an incredibly dangerous place on the roads, a lot of traffic, a lot of truck traffic at night. A lot of people are trying to get to these drilling and frac locations to get deliveries on time.

Secondly is operational capacity. So not only are we in the trucking business, but we're also in the oil and gas business. So we're in 2 cyclical industries. So the push for innovation and competition is very high. So as we look at the operational capabilities to be able to double our utilization and continue to look at how we can provide our customers a value-driven approach when you look at both those things, it made the most sense for us to go down this path.

That's great. I remember the first time I visited in Midland, and there's very little infrastructure there. And I think you guys have a slightly different use case than the long haul we typically talk about. And can you talk about sort of a 60-mile loop that we want perpetually tell the audience a little bit about how that works and why autonomy is helpful in that regard.

Yes. I'll go ahead and kind of explain how the oil and gas logistics base works as well as that could give more clarity. As we look at our trucks, especially on the sand side and you look at pipe and a lot of other commodities that move in the Permian Basin and in different oil and gas basins -- sorry, I lost my train of thought. But as you look at that, most of the drivers, especially in the Permian Basin, do not live in the Permian Basin. They are coming from a lot of the Southeastern United States, different parts of Texas, Oklahoma and New Mexico. So almost all the trucks you see are running sleeper cabs, day cabs have never really broke out into that market because drivers don't like to come live in man camps. They don't like to switch trucks because they don't know which driver was driving that truck before was a driver smoking in it. The driver not report something on his pre-trip or post trip.

So anybody who's really come to try to work the day cab slip seat model to run 24/7. It's never worked out very well. So we run a sleeper cabs. So our drivers work on average, 3 weeks on, 1 week off. So when you look at that from a utilization perspective on the monthly, you're getting 75% utilization. So now I go into their hours of service, driving about 12 hours a day, okay? So now you cut that in half. And then you also have their 34-hour reset that comes on top of that as well.

So when you look at the utilization of the tractor, you're looking at sub-40%. So with what we've seen with Aurora and our drivers are averaging 2, 2.5 truck loads per day getting into the 5 to 6 range on the 60-mile loop is fantastic to see from a utilization perspective. So you're taking that 40% to greater than 90%, so effectively almost more than doubling the utilization. And then on top of that is the trader utilization.

So as drivers go into their 3-week shift when they go back home, their trader goes back in the pool. But because their drivers will stage next to the nearest sand mine that they might be picking up from the next day, they're always attached to that trade for the shift. So now not only are we doubling the utilization of the tractor, we're also doubling the utilization of the trailer. So that's where we see a lot of the use case and the optimization for the uptime and utilization of the asset.

It's fantastic. And as we've talked before, it's almost insatiable appetite here because diesel prices and the need for oil is just growing. So it's been really fun to watch in partner with you.

What's going on with diesel prices?

We monitor them occasionally. And with that, Daragh, you've been in this industry a long time. You've seen a lot of changes. But in particular, I know you've looked at other potential trucking partners? And what caused you to land on Aurora is differentiated?

I think we'll there's a couple of things. So first of all, the very -- again, I'll go back to the very first conversation I had with Chris and Sterling in 10, I believe, in the drop yards.

We're illuminated.

And I think the thing that came across most strongly was safety was the first conversation we had. And then you guys instinctively got the driver problem, right, that this is not about replacing drivers. And maybe kind of go on to the drivers for a bit. First of all, the very first job I had after construction when I came to the U.S. 30-something years ago was I got to see the land went driven for one of our competitors. I don't think are in this room, but I can't mention, I'll get fired. But the reality is I am a driver, and I did it for a short period of time, but I understand drivers. I also -- so this makes me sense of that this conversation. No question. I still actually go out and drive a little bit today at times they get me to test drive trucks every now and again.

So I have disconnection to drivers and drivers are the lifeblood of our industry. Our founder 1 guy, CL Werner, with a truck, instill that message and that just across the entire company, the drivers are the central part of what we do every day. So we have this connection to drivers. They're not just a guy in a truck or a relating a truck. They are the lifeblood of our company and of our industry. So the thing that Aurora intuitively got when we talk to them was this is not about replacing drivers, right? This is not what this is for, this is about taking the jobs that drivers don't want for us and giving them to a different mode of transportation, making drivers' lives better.

Drivers today want to be home as often as possible. They don't want to be on the roads for 2 or 3 or 4 weeks at a time, they want to be home nightly or at least every other night. So we see this as the places that we find it hard to hire drivers to do certain middle mile roads that are long lonely road. We think that that's where this really comes in. And the way we look at it internally is it's almost like another mode of transport. So we do land, we do dedicated, we do intermodal. We do everything and then driverless becomes another thing that we offer to our customers. but it also helps us fill some of the driver shortage that we're experiencing and have been since there was a driver shortage when I took the job 32 years ago.

There is still a driver shortage today and it's getting -- it's looking better, it's getting worse. So it helps us fill that, but does not and never will replace drivers. We say this all the time. If you want to become a driver 2-day a Warner, we think you can retire as a driver 30, 35 years from now.

Can I echo that. I think -- because our choice for Aurora was very similar. It was about the shared values. I mean [indiscernible] has been around for 130 years, and we care a lot about our culture, which is very driver focused as well. And so I think between that and safety, like working with you for 2 years, we feel that our cultures are similar in a way that's very differentiated from some of the other competitors, and it's why we're very happy to be the partner. And for us, as I said, our drivers have to pull into a 7-Eleven parking lot with 6 other cars there and then take 40,000 pounds off of a truck with a handcart.

So they're really critical to us and the risks are faced to the customer and we need them to understand this isn't a replacement. This takes you -- now you're doing that versus having to hopefully drive very long miles or kind of very repetitive routes. So we see it the same, and I think that's what makes our partnership really valuable to us. And I would also add that I think you're probably the only one we spoke to ever who didn't think initially that were going to become truckers, right? Now freight take -- so that was a big deal for us. And I think all of the others have finally realized that trucker is tough, it's complicated. It takes years of experience to get there. And I don't think you guys ever felt like that was your role in the industry, which matter to us as well.

That's actually a great commentary on why we pick Driver as a Service. I think as Chris alluded to, there are certain things we think we can do better than some. We know there's a lot we can't. And maybe as we talk about driver as a Service, you all know that's when our carriers own and operate the trucks. We provide the driving service. But me how you're thinking about that, why you're excited about that. Maybe, Matt, I'll start with you sort of why a transition to DaaS would be an inevitable choice for you?

Yes. So we've been in business for about 15 years now. So we purchased tractors, we use leased tractors. We do maintenance lease programs as well. And what makes most sense for us because of the use of the application. It's on the road, but it's also very vocational as well sometimes our miles are 10%, 15% offroad. So the maintenance aspect of it is incredibly important to us for the uptime of the asset. So as we buy the asset, and we like to bring our own maintenance in-house because that really helps us accelerate the uptime as well.

Now I mean, of course, buying trucks. It also has some tax benefits as well. So there is that case as well. But you're being able to handle the maintenance, bring it in-house. I mean as we look at scaling it, looking at because it's going to be -- it's going to be a alternate path to revolutionize and we're actually really, really excited about that as well. So that is one of our biggest drivers going into DaaS Model really.

That's great. Eric, how are you guys thinking about either the DaaS evolution or just the next several years at McLean with Autonomy?

Yes. I think similarly, I think we have a lot of infrastructure built to take care of trucks whether it's our own or we have partners that do it. And so I think that having us be able to use our scale to do that while you do the technology and the thing that makes you special, probably makes the most sense. There are also tax and other benefits, as you note.

I think as we go into the future, we just see so much opportunity, right? I'm always on the phone with you telling you about my next great idea. He's very polite, by the way.

A fun conversation.

And I'm very excited to kind of expand from the lane we're running now, which has been incredibly successful to some of these places that we mentioned about our drivers really don't want to do and are really critical and have this consistent freight running on this lane. And it's always like who wants to do that overnight trip to wherever, right? And we'd love to get that expanded as fast as possible under the model.

That's great. I know we want to spend some time getting questions from the audience. But before we do that, could each of you, maybe starting with Daragh talk me through what does the strategy look like for you over the next 3 to 5 years? If you come back in 2.5 years from now, what are you going to be saying to the audience then?

Yes. I think for us, it really is about taking -- I don't want to say tentative steps, but that's -- we've gotten our toe right now. Let's take the next move. It's about really proving out the safety case, making sure that we feel -- we are 100% comfortable but let's make sure that we understand all the nuances of it. It's about the reliability that I talked about.

And I think it's about really exploring what lanes this is best suited to. Like we have a massive network countrywide across all 48 states. There are lanes that we are already now that this will -- because we have trouble getting drivers are keeping drivers in those lanes. So I think there's lanes that we can do it. There's certainly the concept of utilization like completely utilizing this massive investment in an asset that we have that we maybe get, we don't get enough of today or we could get more of it.

So I think we want to explore all of those areas, safety, reliability, the tech, let's see the tech keep moving forward because it's fantastic. But how do we get to the point where I think we start to strip the cab of these trucks of the creature comforts and work with you guys in that. So that becomes less expensive even. And then I think it's really finally about how do we fit this into our network and how do we make the best use of it. So I think a couple of years from now, hopefully, we're much deeper into this, and we've got more lanes operating. And we've given our drivers a better life and a better job across the board. I think that's what we'd like to be.

Well, Eric, how do you see it?

What Daragh said.

I really agree. I think it's about use cases for us. which different use cases, can we -- can we use this in the north when it's snowing right, like that kind of technology that keep pushing to find the different use cases, so we have more flexibility because that's what we really need.

Yes, for us, of course, we're running in the Permian Basin looking at areas beyond. But today, we're brokering out about 75% of our freight in the Permian Basin. By the end of the year, we'll be running about 1,200, 1,300 loads a day. So we're seeing the opportunity continue to grow out there for us. So as we're continuing to prove out the safety case, which everything we've seen has been absolutely phenomenal on the Aurora side for the safety, but the safety aspect. We do expect to get into 100s of trucks over the next couple of years.

So again, we're still proving out in the deliveries closer to the well site, which I know we're looking at doing very, very soon. And as we continue to get there, and I don't see anything really getting in the way of that. I do expect us to scale pretty significantly with Aurora.

Great. Well, we're looking forward to all the expansion opportunities and continue together. I do want to open it up for questions from the audio -- Okay, in the black suit in the front, please.

It's Scott Group from Wolfe Research. Thanks for doing this panel. I guess, I'm guessing you saw the slide earlier showing the total customer receivings. Just curious, like each of your perspectives, what you're seeing? And then maybe Daragh if you're if you think this is best is like a middle mile application, like does that change in any way the savings opportunity? And then maybe just like my last question would be like, when do you think you transition brokering trucks to Aurora to becoming -- using Aurora as a driver as a Service model.

So on the economics, first, we're negotiating, so I'm not going to comment. Look, I think if I had to say the one area that -- there's 2 areas we probably are working on we are working on right now extensively with Aurora, one is legal just contract work, which we will get through, it's offline and the other is economics. And I will have been quite honest, we have a gap. We've got to figure this out. I think the economics become viable at scale, I mean, really viable at scale, where nobody is eating some of the cost. And I don't think that is too far ahead of us. And I think that it sometime in the next few months, we will get to a point where we believe that economically, we can make this work. But -- there's work to do there.

The second part of your question yes, I think absolutely, where we run changes, the economics for us changes the liability. For us, honestly, we believe the long-haul route is the best, the middle mile where we're running 500, 600, 700, 2000 miles, whatever that happens to be the longer we could run, the more utilization we can get out of the asset, the better fuel economy we get once we're running those long hauls when we can run at 22 hours a day or 20 hours a day out of 24, all of that matters, shorter length of haul doesn't allow us to do quite that much.

So I think the economics will get there, but we believe we have a gap that we've got to work through, I think we'll get through it. I think it comes at scale. And then I think, yes, definitely, the lanes we operate in change the financial model.

George Gianarikas from Canaccord Genuity. I'd like to ask about reliability, which mentioned a few times, is that something that just proves itself out over time, just more miles under your belt? And then second, what particular parts are you focused on from a reliability perspective. Is it the autonomous kit? Is it the redundant systems in the truck?

Maybe Eric can take that as a lawyer on the panel.

I think, I can't believe you outed me in front of all these people. I think that -- the reliability seems really good right now. We hope to just keep proving that out, right? We're not -- we're seeing basically 100%. I don't want to say I can't do it 99%, whatever percent uptime on stuff that's controllable, right? There's the stuff that is in controllable or someone on our side too, right, getting the freight where it needs to be. So I think that proves itself out over time. We just need more miles, more trucks running and you're going to see -- but I have no -- I have an expectation that we'll just see that continue to be very positive. I forgot the last part of your question. Sorry.

Are there any particular parts you focused on?

I think we're looking at the whole truck and the whole system, right? And I do think it's kind of early to say which parts of the driver system we have to watch. We know what parts of the truck to watch. And I have a feeling if we can get everyone aligned that because the truck needs maintenance in such a very specific way, particularly if you can get the utilization that we all want, that fixing or updating or all those things shouldn't actually to more downtime, right, because we should be able to do that while we're doing maintenance that you have to do on the physical asset.

Ravi Shanker, Morgan Stanley. A question for Daragh and Eric. You were both very passionate about how you feel about drivers and how you're both going to be a very driver first organization for a long time to come. Have you had this conversation with your drivers? Is this message resonating? And if not, kind of how long or what do you think you need to build that trust?

I mean, firstly, yes, we've been very intentional over the last 5 or 6 years where we talk about driverless operations at every opportunity just last week at Driver Appreciation Week. It's a topic that comes up. We get a lot of questions on it. We've been very open with drivers, not hiding anything. But the message is the same like we want drivers to understand that if you want to take a job of weren't today, if you're out Werner today, you're probably going to retire Werner today if that's what you choose to do. Because we keep getting reiterating that message that today, depending on what numbers you take, whether it's from the ATA or the DOT, there's a shortage of anywhere between 100,000 and 200,000 drivers right now and that only grows even in Aurora and all of the driverless operations trucks, most bullish case, we still need 1 million drivers in the next decade to come into the market.

So we've been very open about that. We've told drivers what we plan to do. We've told them that we're doing this slowly, methodically and with a lot of intention and thought, but they know and we certainly talk to them.

You can't hide things from drivers. It's the first thing you learn working for drivers. They have the best communication network you've ever seen in your life. Yes, we've been completely open about it. I think we have a little advantage of Werner there, which is, again, these guys have to deliver into small stores using hand trucks or liftgates. So they sort of don't -- I don't have -- they have a fear because they know that right now, that job is very safe and will be, we think, for the foreseeable future.

So but yes, we've been very open about it. And we were ready for pushback, right? drivers always ask great questions. But I think the -- they actually get a little excited about it, too, and they get the safety point as well. The good drivers want more good drivers on the road and they sort of view it that way.

Yes. And I very much resound what he's saying on that. We conduct a weekly driver call with our drivers, I get on and do a fully unscripted Q&A. It does come up often, but these guys mentioned drivers are the lifeblood of what we do. None of us would be even sitting on the stage if we didn't have a good capable drivers to help us drive our business forward. So what Eric said is you do see good drivers, they get really excited about it because sometimes your good drivers are running next 2 drivers that might not be the best drivers. So when they know that you're building a team that's adding more reliability to the roads, more safety to the roads, you do see the more professional drivers to be very excited about this technology.

David Vernon from Bernstein. Thanks for participating in the panel. Eric and Daragh, I guess, it sounds like you're talking about a future where the driverless technology is doing the work your drivers don't want to do and is somehow complementary with your existing drivers. But if you're not taking the driver out of the cab, how does that affect the economics of the implementation, the first and last mile cost.

When I talk to trucking companies about adoption of the stuff there seems to be less certainty around what the actual total cost could be because of some of those business model issues around the first mile to last mile, things like that. Could you talk a little bit about how this -- how the economics or your view of the economics of these technologies are affected by the fact that you might still also still have a driver in the cab?

I think it's different types of freight, right? I think you said it may be in a good way, which is like you use intermodal when that makes sense to use drivers when that makes sense to use Aurora when that makes sense.

So I think if you looked at the whole company, how would affect McLean's economics, I don't know that I want to get into that, what I do see is a tremendous amount of value that can be driven TCO wise on millions upon millions of miles McLean runs today. Right? Because I have -- because of redistribution and other things, I have to move full truckloads of freight from A to B before they get it broken up or even gets unhooked and then goes into the city and makes all the deliveries.

And if I can get savings on those millions of miles. Sure, I'm not getting savings on these other millions of miles, I still need a driver, but that's very beneficial to my economics as a whole.

Yes. I mean same answer. I mean we can -- if we have a driverless operation, we wouldn't have a driver in the truck between Houston and Atlanta, for example. And if we're doing that at 100 times a week or whatever the number is significant savings. But I think we have to just think about the market is growing, right? Retail is growing, retail is our biggest customer.

So we're going to be moving more freight, not less freight over time, need more drivers, drivers are hard to get. So there is a hole that it fills for us just by nature of the fact that we're growing. And then I think it's also important to realize that there's other costs besides just the cost of the driving a truck. But to get a driver in a truck, we have to recruit the driver. We have to train the driver. Like all of those costs are significant, as you guys know.

So I think when you add up all the economics and when we get to a point where we're happy with our negotiation and then when this gets to scale, that's the -- again, I don't know if the Aurora people will disagree me here, but I think that's the real inflection point for us is when they get to scale, and all of a sudden, those prices start to drop, not just for the truck and the hardware in the truck, but put the tech and everything that Aurora does becomes more economically viable, becomes more economically viable for us too.

So I think the driver out of certain routes helps us it doesn't eliminate. We said want drivers talking to our customers. So it doesn't eliminate that. We have a similar to you. Like we have retail stores that we unload and walk pallets into as well. So we still have those drivers at the final mile points, but middle mile for sure.

I'm sure we have to transition. I do want to know like on the stuff we run with Aurora, we don't want a driver in the truck. There is no driver in the truck just to make sure that was clear.

Great. I think we have time for one more for this panel.

Andre Shepard from Cantor Fitzgerald. First and foremost, thank you for the Aurora team to putting this day together and congrats on all the great success. I think the team has done a great job articulating the value proposition, cost savings, higher efficiency increased safety, of course. I'm curious if we can maybe better understand like your aha moment, like how long did it take for you visualize it, understand it, implement it, how long can it take you to convert into a customer. I'm curious if you could maybe talk about kind of what kind of industry reaction do you expect? Are you the consensus? Or are you the outlier? Just curious to kind of understand like what really drove it in home for you. Obviously, we talked about the benefits, but was there something specific and how long is that.

Maybe we'll start with Matt is the most recent adopter.

Yes. I mean the aha moment is doubling utilization for us really. And then again, mentioning the safety case, we're driving down Interstate 20. I don't know if you ever driven down Interstate 20, between middle and low debt, but it's a disaster, and it's disaster all the time. It's always under construction. There's always accidents. There's always traffic. And since we've deployed this technology with Aurora, which we started at the beginning of this year, right, it's almost been an absolute perfect safety case.

So that's an aha moment for us, the ability to double utilization Customer feedback has been great. There's been a lot of excitement about it, especially right now. I mean, you've seen capacity shortages in the broader freight market over the last 8 to 12 months. Historically, in oil and gas, we run about 8 to 12 months behind. So we're really starting to see the driver crunch right now, a big capacity crunch, which is developing even more excitement from our customers in the industry.

So those 2 moments really being the aha moment for us and the industry, again, is very excited to look at this. When you look at oil and gas, they've been under significant pressure, right, to get their operation or control. Like no one wants boomer bust anymore, everybody wants to see significant returns.

So if they can baseload their operations with guaranteed capacity helping to fix their cost long term brings excitement. So all in all, those have been really the biggest positive things for us and what we've seen.

Multiple aha moments.

For me, I don't know if it was aha, but when our 20-plus year safety person walked into my office and said, okay, you can go meet Aurora because they had validated that the safety worked. I say, -- can I go now? No, you can so that -- that was probably a great. I don't know if it had was a real fun moment in my office because I thought, okay, we're really going to do this. That was pretty exciting.

Yes. I think there's multiple for me. I mean as a tech guy is a geek like it was the first time I sat in there or a truck like you go wholly? I mean this really works. And that's been almost how it's been 5 years ago. So like for me, that was just exciting. It was one of the reasons I came to Werner was just this concept of autonomous trucking and how it would get there, loved what I saw.

So that was a big aha moment for me. This actually really works. And I think the second one was there's probably multiple trucks -- like the safety case always felt like the hardest one because everybody was struggling with it and Aurora took a totally different approach to it. And when they finally we sat down 2 years ago and went through it in great detail. There was multiple aha moments during that period, well, okay, this really is safe, this can work [indiscernible] there, safety is there.

Now we just got to work everything else. But I think in general, it's been a series of harm moments, and it's been fantastic to be involved.

Lawyers don't have aha moment.

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I was going to say, Eric, I thought it was the first time we met. That's a great note to bring us home on. Thank you all for your partnership and your conviction, and we're really excited to be on this ride with you all. Thank you.

And now I'd like to turn it over to our Senior Vice President of Hardware Products, Sean Berna, who will talk to us about our multi-platform path to scale. Please welcome [indiscernible]

Thanks [indiscernible] so when it comes to physical AI, it's hard to be more physical than autonomous trucking. And as with all physical AI, the actual hardware is critical. And frankly, hardware is cool. So our hardware road map and multi-vehicle approach is both deliberate and highly differentiated. We're the only autonomous trucking company with such a deep partnership ecosystem and such a carefully thought out road map and that is what will enable true industrial scale.

Our second-generation hardware kit is currently being produced at our contract manufacturer, Fabrinet. Fabrinet is a top-tier CM based in Thailand with over $4.5 billion of annual revenue and the 3 million square feet of manufacturing space. This is our 8,500 square foot clean room in [indiscernible] Thailand. The Aurora Kit was designed with 3 key objectives: first, meaningful unit cost reduction on the order of 50%.

Secondly, increased reliability to 1 million miles, a 1 million miles drives down the cost per mile. In addition, this has been tested to demanding OEM specifications with the goal of enabling line-side production. And it has the headroom to scale up to 1,500 trucks. It's already on the road power and driverless operations today, and we're ramping to build over 50 kits per week this year.

Once the kit is finished, it heads to our outfit partner, Roche in Livonia, Michigan. Roche has 5 decades of excellence in vehicle upfit. They have extensive experience with autonomous vehicles. We have a 20,000 square foot Aurora dedicated facility with a multi-station assembly line. The first trucks are already off the line and here in Texas today. We're establishing capacity to 20 per week beginning next month and 20 per week is 1,000 trucks in a year.

So now let's take a moment to look at what's happening in Michigan right now. That's pretty fine. I got to be asked. I think you were showing off a little bit. So our second generation hardware is also being installed line side onto the Volvo VNL autonomous truck at Volvo's New River Valley Virginia manufacturing facility. Volvo Autonomous Solutions recently announced that we will have driverless operations in the first quarter of next year, and these trucks will be powered by the Aurora Driver. Volvo expects to exit 2027 with 300 driverless trucks, paving the way for industrial scaling in 2028.

The second-generation hardware supports our initial scaling to over 1,000 trucks. But now let's talk about our long-term strategy. We're partnering with Aumivio to develop our third-generation kit. This will be industrialized automotive-grade hardware with tens of thousands, enabling tens of thousands of autonomous trucks over time. It is an industry-first hardware-as-a-service structure. So our hardware cost is paid per mile. That means no new upfront capital expense for our customers, and it enables an asset-light model for Aurora to support our SaaS-like gross margin strategy objective. And for Aumivio, this partnership unlocks a brand-new recurring revenue stream. The incentives are mutually aligned across the entire ecosystem and everyone benefits the more miles our trucks drive. The start of production is expected in the second half of next year, with material economic benefit in 2028 and beyond.

Our third-generation hardware kit will power all of our truck platforms, whether it's upfit with the International LT Series at Roche or [ LineSight ] install at Volvo and PACCAR. This multi-platform approach allows for customers preferences and perspectives and provide scalable supply. This will position us to meet this market-defining opportunity.

Now I'd like to welcome panel partners to join me here on stage to talk about the ecosystem we're building together. Please help me welcome Jeremy McLean from Aumivio. Noel, [indiscernible] from PACCAR, Brad Catani from Rauch and Sasko Suglob from Boloutonomous Solutions.

Thanks, everyone, for joining me. Let's start with you, Brad, from Roche. Roche has dedicated facility to upfitting Aurora's second-generation hardware onto trucks. Why is this program so important for Roche?

Well, as a -- we're a product development company. We're a contract manufacturer, and we have products of our own. So we very much understand urgency and importance for our customers to get their products to market as fast as possible and of quality. So it's near and dear to our hearts. And also, we have, as a company, 50 years of reputation for delivering for our customers and [indiscernible] So it's a very important program to us.

Great. [indiscernible] So together with Volvo Trucks, that has made a remarkable progress towards line site integration of the Aurora Driver. What makes the depth and velocity of the Aurora relationship unique to you? And as you execute on your commercial autonomous road map?

I mean -- it has been a long journey, right?

Yes.

The first time we met you guys was 2017 or something in Mountain View. I think at that point in time, you were like 20, 30 persons or so. You are a completely different company today. One year later, we integrated for the first time the Aurora Driver with the Volvo Truck, a European FH. And we tested that worked out in a fantastic way. And to be honest, we felt that we, in a way, clicked on many, many aspects with Aurora already from the start, safety. We have talked about safety already. We both share the same values when it comes to safety, super important, the most important topic for autonomous.

We aligned on responsibility splits. One thing that stood out as well was that you really wanted to do or Aurora really wanted to do this together with us and not as the other players, and we met all at that point in time, where I said more, give us the truck and then we will take care of the rest. So it's a long-lasting partnership that we value a lot. And just to emphasize on the partnership, this is not about Aurora providing a driver to us and then we integrate it or we provide a truck with some [indiscernible] files to Aurora to integrate. It is really a joint program. We work side by side in developing and integrating and commercializing the solutions.

So I think we have built something very, very strong here.

Jeremy. So Tier 1 industrial relation is super important to get to scale. And we're incredibly proud of the partnership we've built together. Why is this program Central Aumivio's growth strategy? And how do you view this opportunity?

Yes. I mean first of all, we're a very new but a very old company. So we having spun off from Continental just last year, a year ago. We've got a long legacy and it's a very long story to Saska's point, building building safety into products at scale. So if you want to -- what do we do well, we build safe, reliable products at large scale. And we've been working in ADAS, and I'll tell me for many, many years. This is roughly 3 decades. We put our first automotive radar sensor into the market in 1999. And I've been working personally on autonomy for many years, and we've been working personally on autonomy for many years, and it was about finding the right point in time, what is the inflection point when it makes sense to bring that expertise, building safe, reliable products at large commercial, industrial scale to autonomy.

And exactly that moment is here, and the partnership has been running for a couple of years. And I think the interesting thing about the partnership was the exactly seeing the need to be able to prove that the technology was ready and was safe and could be deployed and in parallel, making sure that ready for that industrial scale. And that's what we've been doing. And the third generation hardware is back there. And it's exactly that inflection point that makes it exciting for us because that is the next growth opportunity. We typically grow with volumes. And there, you get a kind of saturated market if you look at ADAS. And it's about how do we unlock that next opportunity, you unlock that next opportunity by bringing autonomy to industrial scale. So we're quite excited about it.

Nice. Turning to PACCAR, Noel. The freight industry, as we've heard earlier, continues to face a lot of challenges. What are you hearing from your customers about the prospects and value of autonomy?

Yes. Thank you. And thank you, Sandro, for having me on the panel. The customer panel that was up here earlier, did a great job kind of answering this. But I think the big change has been from a focus on the technology to discussions now about the business efficiency opportunities. It's really pivoted with our customers, and there's a huge conversation about just the challenges the industry is facing with the diesel prices with labor shortages. And they want solutions that are safe, reliable, making sure that they're efficient in their business because really, the business is there and successful making money.

So they're shifting to how can they incorporate this technology into their businesses to be more efficient. And at the end of the day, it's not just about our customers that want this technology, but it's what will it do for them to deliver their customers more reliably freight on time, meeting their commitments at a scalable option. And so they're very excited about where this can go for them and how they can incorporate it into their business.

All right. Let's go back to you, Brad. A lot of people may not be that familiar with upfit model. Could you walk through how the [indiscernible] process works and how we can get to 20 trucks per week.

Absolutely. So we saw a quick 2-minute version of it in the run footage is great. It really starts with the -- there's 8 overall steps that happen. There's many stations in the manufacturing process that you can see. Step 1 is we received the vehicle, we inspect it, make sure it meets the specifications and it's good to proceed to the next step. Once we get into our facility, we wash all the trucks, our certified technicians then start actually decontenting the trucks, taking the parts off, getting it ready for the hardware system.

The third step is the fabrication. So that's when we're drilling holes, we're cutting holes into the body panels and the truck to actually prep it for the hardware install. Simultaneously, we're doing off-line subassembly. So a lot of the components that go into ruck, they still require some form of assembly that we do in our facility offline to where we can -- it's a lot more efficient and repeatable to do it that way. And then once those subassemblies are complete, they move to the main line, which you saw, and they get install in the vehicle.

Really the fifth step is the installing of the actual hardware, the autonomous equipment. That's done through our MES system, our manufacturing system. We have digital work instructions, everything talks to our system, torques, traceability as those get installed. The sixth kind of step is kind of throughout the entire process, which is in process quality. So we don't just wait until the end to check the [indiscernible] for build what we're supposed to be building, that is built in across the entire process from when that truck arrives at our facility all the way to the end throughout that process. We're checking and making sure we're doing what we're supposed to be doing as we go. So Seventh part of the process is the bring-up part.

So that's when the truck is -- everything is really installed. That's really to bring the drug up, test the software, make sure everything -- it's really a functionality check of everything that was just installed and make sure that's operating properly. And then the final step is the final quality sign-off. So our quality team will go through and check to make sure that everything is completed, that's supposed to be completed.

There's no open items need addressed and that the vehicle is 100% ready to go to Aurora.

And how are we doing on getting to 20 a week?

We are on plan. So facility is an [indiscernible] up and running. We're fully staffed. All of our equipment, tools, fixtures. Those are all validated up and running. And as of last week, we actually just brought on our second shift operation. So we're building trucks 16 hours per day right now.

So let's go back to you, Noel. So PACCAR is known for being very disciplined and having a very responsible approach to new vehicle introduction. As we work together towards defining the third-generation integration, how do you see the autonomy ready truck fitting into the advancement of Peterbilt and Kenworth in general?

Yes. We do have a very disciplined approach to new product develop PACCAR, whether it's new powertrains, it's advanced safety systems, it's connectivity and now autonomy. We follow very similar processes. And that's why it's been a joint really to partner with Aurora to come up with a way that we can have this new technology in line on our Peterbilt and [indiscernible] products. And it's really -- the reason we're so disciplined in how we approach new technology and integrating new technology into our trucks is because we need to make sure that we are delivering safe, proven, reliable products to our customers, as well as the infrastructure to support them once they leave our facilities. And so it's really the approach that we take in the partnership with Aurora that we're following.

Great, Sasco. So as you go out and engage with major fleet operations about the Bovo Autonomous Solutions offering, how would you characterize that discussion?

I mean the -- I would say that the discussions we have had -- or we have with the fleets are going extremely well. We have had an approach where we said early on, let's not go out and talk to everyone because it creates a lot of expectations, let's instead join forces with like a handful of 5 to 10 customers that you -- that we work extremely tight with in a way in a partnership approach. And -- we have done that and built the sort of the ecosystem, developed the solutions together with them. And now when we have announced that we are launching in quarter 1 next year, Q1 2027, we are launching by the end of next year, we should have 300-plus trucks in operation, then we have opened up and talk to more customers and the interest is huge.

And what is -- have in mind when we talk about those numbers, these are purpose-built trucks for autonomy. With the redundancies in place for the safety-critical systems with the Aurora Driver integrated in our manufacturing facility in New River Valley, which has been an important thing for us. And and our manufacturing facility in Euro Valley, that's really like the flagship of the Volvo Group, where all our Volvo trucks are coming out, and we have already built the first batches of trucks coming out from the factory and as I said, 300 by the end of the year.

So huge interest. I can share some examples. Last week, we had a discussion with one of the big fleets that are super interested because today, they have problems, they have to turn down business. They don't have drivers. So they really see autonomous as the alternative here so that they can capture that business. Another one, one of the big ones they said, we want half of the 300 directly. So I would say that the confidence is high that we should be able to allocate those trucks.

Great. So back to you, Jeremy. So under the Hardware as a Service structure, Aumivio's economics are actually tied to operation of the fleet operation of the kits. How does this mutual incentive shape prioritization and execution at Aumivio?

Yes. It's really about aligned incentives, and I think that's the important thing we heard about it earlier in the earlier panel as well. Our traditional business scales with volume maybe scales with software, defined vehicles and so on. But if you look beyond that and where we stand here with autonomy, it's all about as a service business -- and we see it scaling in a very different way. It of course, scales with miles. The value of autonomous trucks, especially comes with reliable, safe, reliable and quality service. And of course, when we build a model around that, we find the unit economics that help us to recuperate those investments, which is, of course, important. -- but it also aligns the incentives to make sure that when we design together with Aurora, that third-generation kit, we designed it in a way that it's going to operate over the full life cycle -- and then we measure the performance against that target, by the way, it actually operates in the field, and we get incentivized to design it properly and as well to make sure that it operates properly in exactly that way.

So it's driving a different kind of business model for us. We did that on purpose with the vision that, that is one of the next frontiers as far as business models in our kind of Tier 1 space as a service business where we build that into the hardware, and we maintain it over its life, together with the fleet partners, together with the OEs in a way that generates new value streams and generates value for the end customer and the end customer in this case, it's not a consumer, but the fleets.

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Great. Thanks Thanks, Jeremy. Actually, at this point, we'd like to open it up to questions. So we've got quite a few.

This is Colin Rusch from Oppenheimer. This is really for the OEMs. I'm curious about how you're thinking about single source risk? And how you manage that? You talked about discussing with multiple partners as this industry starts to take shape and scale, how are you thinking about that risk managing that and preparing for multiple partners from a technology perspective.

Yes. So our approach at PACCAR is really to develop the truck as a system. So we call an ABP. So autonomous vehicle platform so that when we can, in the future, as the need grows, we can bring on more partners. Aurora is obviously the one we're working with right now. And then it's really a platform approach for us so that we can grow in the future.

Yes, similar answer from my side. So we are also developing our truck, our autonomy enabled truck in a platform with a platform approach that we call COST. So this is not something that is specific for autonomy. It's how we develop all our products. So COST stands for common architecture and shared technology. So we developed that the autonomous truck according to that. We already have 2 partners that we are doing this with. So it's the same product, the same platform for several partners. And with this approach, we should be able to bring the autonomy also to different regions because we have other trucks in Europe, for example.

So it will make it faster and easier for us to also scale in other regions on other truck specification on different brands. We also have both Mac Trucks and Renault Trucks within the Volvo Group.

Ravi Shanker, Morgan Stanley. A question to PACCAR and Volvo. Again, we can debate the timing and the slope of the curve, but it's very clear that the trucking industry is changing. So I would love to know your internal discussions on what the truck market looks like 10, 20 years from now, who's going to be buying your trucks, how many OEMs, et cetera. And also with both Aumivio and Aurora moving to a per mile fee to monetize the product, is there any thought on you guys doing that for the truck itself and how that may potentially change your business model over time?

I can start. Let's start with the business models. We have been clear from the start that -- and this is based on the dialogue we have had with the customers actually where -- in the early stages, they told us more or less, hey, guys, we work tightly together with you, and we would like to continue to do that. We want you to take the full responsibility. So we have said that the starting phase we will offer this as a transport as a service. Basically, like what everyone else, I would say, is doing at this stage. And have in mind that we have been operating in a commercial setup almost for 2 years.

So the first phase is transport as a service. Then we have always said that we are extremely humble to different types of models. And we are already now looking into additional business models, where it's more that the customer operates and so on and so on. So we will, of course, follow what will happen in the industry and listen in. So we would be stupid if we go the other direction when everyone wants to something else. So that's on the business model. And then the first question was the industry looks like in 10 years. I think we had -- or we had a Capital Markets Day when it was at mid this year, where Neil's our President talked about that, that in 5 years or so, every -- every tenth truck will be an autonomous truck. So it will we will start to see a lot of autonomous trucks going forward. That's what we see.

Yes. On the PACCAR side, I mean, I would definitely echo the Volvo view is that we're really partnering with our customers and want to deliver what our customers want. So whether that's truck as a service or per mile kind of approach, from a [indiscernible] sense, for example, or if they just want to purchase the vehicle and then work with Aurora separately. We're really open to making sure that our business model is what customers want and deserve. We're not going to push on them. And so we've been very open in talking with our customers around that. And then on where we see the industry in 10 years, other than PACCAR obviously growing market share rapidly.

Thank you for laughing. It's going to happen, but thank you for recognizing the joke. Other than that, it's really we're going to make sure that we are ready to deliver what customers need and want and grow their business with us because it's really all about partnering with our customers.

Mark Delaney from Goldman Sachs. A question for Noel and Sasco. You both mentioned you're developing your autonomous trucks as platforms and would consider other technology partners or maybe already are in some instances. Can you just talk a little bit more around your experiences specifically with Aurora and how you see Aurora relative to some of the other competitors? Why are you working with Aurora now and just other things that may stand out from Aurora compared to other technology providers?

Yes. I think PACCAR, as we mentioned, PACCAR's approach very disciplined in product development. And so we partnered with Aurora because we see that they also are very disciplined focused on safety, and that's our #1 focus is we want to make sure that we have safety at the forefront, proven technology, reliability for our customers. And that's why we partnered with Aurora and are working with them to make sure that we have Kamath and Peterbilt trucks that will support the Aurora Driver. I forgot your second part of your question, sorry.

Well, I mean, we picked Aurora for a reason, and I think that's probably enough said for me on the PACCAR side.

Yes. I mean I touched upon it in one of the previous questions where we have felt that already from the start that we share a lot of the values that are important for us in terms of safety and -- so we click there. And then again, I mean, the partnership is -- it's almost like -- it's like a marriage. So we need to find your ways and we have done that and build something strong. We have not always agreed on everything, but I sorted it out.

So it's really a joint program, joint initiative. We work hand in hand. Now when we are talking about integrating Aurora into our manufacturing facility, we do that together with Aurora. So we really take care of everything. It's not always easy discussions, but we -- in a true partnership way we solve it. So it is, again, a true partnership that we feel is extremely strong, and we value a lot -- then we have other partners. I don't want to go in here and start to compare. But yes, we value Aurora a lot in our partnerships.

Okay. I think we have time for one more.

Ryan Sigdahl, Craig-Hallum. Maybe this is for everyone. Just from a capacity standpoint, Brad, it's great to hear you guys are on track, but we always want more and look to the future. So as you think about capacity expansion, if demand is there, can you ramp faster go quicker. And then maybe for Sasco and Noel from an OEM assembly line standpoint, talk about retooling, if the demand is there, again, what the process is, how quickly you can actually ramp volume capacity? Should there be the demand quicker?

As mentioned, we're completely on plan right now to reach the planned volume that we're talking about. Our team feels after building. Obviously, we have many vehicles off the line. We feel very confident good in meeting or exceeding that with our current line. And then we always have the option to expand capacity if needed. So we're very flexible on the route side. So if that demand were to increase, we can pretty rapidly grow that operation.

Yes. And then on the PACCAR side, we're really -- the program that we're working on right now is to really tool and have in place the online installation of ABP. So that's really for as the customer demand grows, we are ready to achieve that.

Yes. And on our side, like the whole program has been driven with scaling and industrialization in mind from day one. So this is not about being about producing 10 trucks and go to hit the pilots. It has been with scaling industrialization in mind. We have in the plan, as we said, 300-plus trucks from our factory next year, and then we want to be able to go to 1,000.

So I don't see that, that will be the problem to meet from a manufacturing perspective to meet the demand. Just would address it from the Aumivio side as well, there's a plant in New Broncos, Texas, 4.5 hours south of here, which is exactly being ramped up to be prepared to produce that third-generation hardware that's in the back of the room at scale to be ready to hit those volume demands. And I would encourage you all to go in the back and take a look at that third generation of hardware that is now designed complete this in design validation and the product validation runs will happen from the plant in Texas here in the very near future.

So it's really exciting to see that we ramp towards scale. That's really an exciting milestone for the industry, for the business, for the partnerships and something we're excited about.

Well, thank you, everyone. Really appreciate your time here. Okay. So now I'll hand it over to our CFO, David Maday. He will have more to share with you starting with the conversation about insurance. So thank you.

All right. That was super exciting. Thanks to the panelists for participating I think when Sasco mentioned, we've had our share of arguments that could be with me, so that's interesting. We've talked a lot from the beginning about safety and the importance of safety and we're getting strong receptivity from customers, from our OEM partners and as well from our insurance providers. And so I know it's top of mind to many of you, how the insurance and liability piece is going to work. So we are going to be joined if this all works out brilliantly, be a video link from London. We're going to be joined by Chris Moore.

So Chris, is the Chief Underwriting Officer at Apollo, I bought. This is a syndicate for Lloyd's of London. They are 1 of the recognized leaders in complex specialized technology and mobility risk. They were the first and really leading the way with companies like Uber, Airbnb and of course, Aurora. Chris has a background in mathematics and machine learning engineering so as a hell a lot smarter than me. But he also understands how to look at potential liabilities through a distinct quantitative lens. And so hopefully, here, we're going to be able to be joined by Chris.

Hey Chris, can you hear us?

Yes.

Excellent. I'm going to sit by myself since he's on video, and thanks again for joining from London through his busy schedule, we're going to -- I'm going to have a couple of prepared questions. But we've got about 15 minutes. I want to enable you guys to ask a lot of questions. This is for you. I'm going to start, though, Chris, if you can just -- just tell us a little bit about Apollo and what excites you about the AV industry and then Aurora in particular.

4 Yes. I think is probably the biggest opportunity facing the intent it also onsite risk for us as an industry and as well. If you think about the new auto market, that's about half of if I continue the material like for other parts in place, you're talking about frequency of action accent will be as high as -- so the premium to that market is not that from 100 million to 50 million. Now that's the. But for us, test I don't want to progress on peak ICO. So I'd be worried to both guys why you into really deepen by the partnerships with companies like Aurora. And if I can capture a 50 million results [indiscernible] March but I'll be happy to me. So it's a huge opportunity for us. I have not to mention the benefits that come with autonomy, saving lives, getting goods and services to people in America and globally [indiscernible] kind of more affordable rate. There's low sole benefit.

Yes, for us, as an insuring of a partnership where the insurance costs for those companies, specifically trucking, trucking a very hard insurance risk. And when you get those parties where they're really in where insurance is really valuable. That's a really great place for me to work.

Excellent. Great. Now I know that -- it looks like from here, the reception is a little bit good as everybody -- I know we're going to be continuing to fine-tune it. So if we have some disruptions, we might go no video in just the audio. All right. Let's talk a little bit about from an underwriter's perspective, and you being the Chief Underwriter, how do you evaluate and differentiate risk across different autonomous technology stacks in the marketplace today.

Yes, sure. So we've been actually ensuring autonomous vehicles for over a decade. So we've built up quite a large states. We've also built a risk assessment framework for autonomy. So we look at why is the use case of the technology? Is it trucking? Is it robotaxis, is it autonomous roles. We'll have that as a key consideration then we'll look at the ODD, so where we're doing the operation themselves. A truck driving up the Arizona is very different to a robot to actually operate on the street to San Francisco.

Then we'll start looking at the experience, which Again, autonomy has performed very, very well compared to the human drivers that we ensure. And so there's not a huge amount of developed claims data, but we're certainly building up that data set. And the final piece that we look at when we're trying to assess autonomy is all about culture. And it's super important. And if you asked me 5, 6, 7 years ago, and that may not have been part of our risk assessment framework, but it's so important about how we collect it how we're going to look at those expansion? What are we doing from a safety perspective? How are we partnering? How do we get very, very purposeful in how we want to position insurance because U.S. the U.S. legal system can be a very challenging one for insurance obstructive and trucking has had a lot of nucleonics. We want to make sure that if there is ever and a current or an access and involving an autonomous vehicle, but we are very well prepared for that. We know exactly how we're going to fund the technology in a potentially in front of major in a core North America.

All right. Great. I'll ask one more question that's definitely top of mind. We talked a lot about cost structure for the trucking industry. Insurance is obviously a big cost item. When you look at the economics of underwriting autonomous trucks compared to traditional fleets, how do you see the pricing evolving over time as these platforms continue to scale?

Yes. I think we have into 2 key considerations, which will be frequency and severity. So if I deal with frequency, so the number of accidents, the number of collisions we already have enough developed data that we can really lean into that. And no, we're not at the 90% to 95% that certain mathematical reports have been released, but -- every year, we're seeing that frequency reduction, and we can lean in and price that in. The unknown buy is the severity because we have not seen a large number of claims involved in autonomous vehicles, hitting courtroom steps.

So -- that is some of the uncertainty I would say if I'm ensuring a human driver, it's a very linear relationship to the risk. So if you do 10,000 miles in 1 year, my premium is x, -- if you do 20,000 miles, I'm pretty much going to charge you double because it's a lineation. It's not that for autonomy because every mile driven is slightly better than previously -- and so you're starting to see a different curve. And so with every mile driven, you're seeing the price of insurance lower.

Now again, that is subject to the U.S. legal system, and we have seen some difficulties in human driving at the Montgomery Supremium cohort case. So for me, leaning into that regulation and legal side is where I'm spending a lot of my effort at the moment. But undoubtedly, in this space, rates for insurance are going down every year.

That's excellent. All right. Well, why don't I instead me asking a whole bunch of questions. I'm sure you have a lot, and you usually ask me these questions. So I will ask somebody that knows more about it than I do. So let's just take some questions from the crowd.

Mike Latimore, Northland Capital. I guess in terms of today's pricing, how do you -- what is the price of a virtual driver versus a human driver with similar frequency severity.

Yes. Good question. It differs -- I'll say it differs by state, but we're probably slightly above where a human driver is purely on that [indiscernible] That being said, I think that changes rapidly. And by quite a large amount, to be honest. So I think what we kind of see at the moment when I was talking about those rate decreases you're probably looking in the 15% to 25% range every year. And that doesn't take very long for that to compound to be a really significant factor.

All right. Other questions?

[indiscernible] from Morgan Stanley. That was a very interesting point about you guys already preparing to defend the technology in court against any potential accident. Can you just unpack that a little bit more? You said you've been working with autonomy for over 10 years. When you go to like prior technologies, kind of what is that first precedent case look like? And kind of how obviously, there's no circumstances, but how easy does that get over time?

Great question. I think my concern is slightly alleviated, and we can thank our friends in the robo taxi space for this. I think Uber now making these partnerships we had an autonomy on the platform and having human driving on the platform has unlocked the defense for me in that scenario that I haven't been able to rely on before. So the way -- and please indulge me. What I would say now is if an autonomous vehicle go into an accident, I imagine a plaintiff audio that's looking for a big nuclear verdict can make big headlines would say something along the lines of if you put a dangerous vehicle on the road, and we need to publish you because you put our community risk, they scare people, and that's how it worked. And that really try to defend that. And what I mean by being proactive is working with the engineering and said, how would we defend the claim, how would we use a sense how we use the cameras at tenge to show what actually happened here and how we're trying to be the safest possible company in operation.

What's brilliant now is because we will have a direct comparison, if that happens and they sue Uber, they'll say, well, my human driers go into [indiscernible] once every 50,000 miles, and the average severity of the entry is x. Now they can have a direct comparison to say, but the autonomous vehicles operating are 90% less likely to to get into Acton. And because of the braking speeds and the reaction times the severity is 50%. So I've actually connected you with a same perform transition, you can't come for me. My concern then for the rest of the market driving a you just sold me that the same as formal transportation was the AV for the money anyway. So I think the cost of human driving is just going to keep increasing. -- and the cost of autonomy will keep lowering. And then eventually, you get some inflection point you say it's just too expensive to allow humans to drive.

And his best part was when it broke up a little bit, but

I think you guys got the -- all right sorry, David.

David Vernon, Bernstein. So as you think about the technology being in the cab and having all the information about causal liability being one source of being cheaper for autonomy versus the actual driver being safer -- like how do you think of what the technology brings to the table just in terms of being able to say, look, it wasn't the truck's fault or that was somebody else's fault? How do you like separate the benefit you get out of that from knowing how much safer the driver actually is?

Yes, yes. So it's that dampening severity point again. So I look at that as it's a great discovery tool. I just need to have a playbook, but I can use it in a call or where it's as impactful as it should be. There's lots of different jurisdictions, some jurisdictions may see you're confusing the jewelry, we it's inadmissible. So that's what we have to prepare that playbook. And where I love about the partnership with Helen heist team at Aurora, they're having those active conversations before anything -- now that's someone that has proven to me that they have a safety culture because you don't really talk about things like this unless it really means something and you see the importance. I do think what you touched on with the product itself is there's an argument to say that autonomy does has no place to sit in auto liability insurance. There is an argument to say it's a product liability risk, and that comes with a completely different framework for litigation and defense and pricing. So it's a really fascinating time that we're seeing companies like Aurora and partner insurers to say, we're going to create an insurance product. It's not just good for us, it's fit for our clients and all our stakeholders we work with.

All right. time for a few more.

Ryan Sigdahl, Craig-Hallum. How do you think about underwriting different AV technology providers and the due diligence as you think about building that defense case, the safety case kind of everything -- and is there a differentiation between Aurora and others and maybe talk through that process and...

Yes, it's a great question. I think when I was talking about our risk assessment framework that culture pillar is really key, and that's kind of where I think your question is sitting -- we won't ensure anyone in autonomy unless we meet them in person have numerous conversations. It's quite a long process. There's not a 20, 50, 100 insurers queuing up to it autonomous vehicle risk, which I find staggering, but that's just me. We have those conversations and that fleshes out whether we have appetite. It is a true partnership, the way that we look at things, and there has to be a lot of transparency and willingness to share information both ways.

So yes, I'm receiving information on the exposures that Aurora are operating in. But I'm also sending about trends, and I'm sending back how this our pricing model works to the rate. So they can see and balance those financials. And I do think financials will be so compelling to impart the future autonomy. You can -- for me, I find not straight away whether the company is going to be a good partner for us and when we are super selective in who are going to ensure.

Okay. I think we have time for 1 more question.

Chris Pierce from Needham. I just want to tie together, you mentioned prices coming down for a year, but then you also mentioned you're surprised by the lack of competition in the space. As you get these miles, are you building in a more competitive space and more competitive bidding in that 15% to 20%? Or could we see it come down even more as there's more companies like yourselves that want to these draft miles?

Yes, I think it's a great question on further than that. Again, if the market is in and provide capacity I think what I hope for Apollo is obviously, we have long-term partnerships, and then there'll be an open conversation about what those rates do. We tend to have like a renewal retention on portfolio in the high 90s. I think it's really difficult one. If you ask me why more insurers jumping into this risk, it is because it's kind of cannibalizing a lot of their business. They have 50 years of developed loss data, why would they go into an industry and support an industry that's going to potentially completely disrupt the cash cow that they've had for a long time. I'm not in the personal line space.

So it doesn't really affect me. So it's why I can lean in is a very exciting space and try to lead it. The capacity will come. You can't ignore the experience. And then -- and that's where I love about again, the data and the transparency. I'm not going to ensure someone for 10 years unless I show them how they perform and we have a very sensible discussion on what margin looks like for both parties.

And I would just add for that. So we treat insurance partners. We use the word partners a lot. They're just like every one of our other partners, whether they're on the customer panel, the OEMs or the Tier 1s. We're all partners together, we will not be successful if we try, especially early on, just bid out to the cheapest person. We really believe in select folks that believe in the technology. Apollo is a leader in this technology. They believe it. They have a substantial -- they carry a lot of insurance for us, and they will in the future. But of course, as new competition comes and it came to modes, but more than anything else, they're looking to actually increase their level of exposure into us. So I think it's a healthy relationship that we have.

All right. Chris, I'm going to let you go. Thank you very much for the session and shed some light into insurance because you're a lot better at it than I am.

Okay. We're almost to the end run, almost time to drive trucks, which is going to be way more exciting. But I got to tell you, this has been a great event. I haven't -- I'm so excited. The ability to not only tell our story and talk about this commercial inflection point, but also listen to so many of the people that are helping us get here and their excitement and this aligned vision is what keeps us all excited. But I know we're also excited about the financials, and you all want to hear about them. So we'll talk a little bit about our path to scale and economics and long-term value creation. And of course, our press release went out this morning. So a lot of you saw the punchline at the end, but we'll build you into it.

Okay. It's important to start off again with the market opportunity, and we talked about this multiple times. The U.S. is a $1 trillion market based on 200 billion vehicle miles traveled. And this is a place where we can have an opportunity for unmatched value creation with autonomy. We really can't help influence this on a lot of levels. For us, the market has very attractive unit economics. And as Chris, Osa and a lot of the panel members talked about, it resonates. They can see the value in the technology.

In the near term, our focus as you can see, is a $60 billion vehicle mile traveled market by 2028. For context, we're about $4 billion today. So we're going to be operating in a much bigger place. Even at a very reasonable single-digit percentage market share, that represents more than $1 billion of revenue opportunity for Aurora. So it's a great opportunity. So it's also important for us to remember what we've accomplished thus far. We always want to reflect on our road map. Are we delivering to the things that we said. You've heard multiple types right, that we are the only company operating in driveless on public roads today in trucking. We've surpassed 500,000 miles. And this isn't just like demos. These are commercial miles with all the commercial pains and challenges that trucking experiences today. We are fully allocated to exit 2026 with 200 driveless trucks, which would represent a $80 million revenue run rate on our Transportation as a Service fleet.

And as a reminder, that's where we own and operate the trucks on behalf of our customers. And as [indiscernible] outlined, we're building the capacity with our upfit Center at Roche to achieve more than 1,000 trucks. So we're really on a good path. This is what we're delivering today. We really believe we're hitting this commercial inflection point at the end of this year. And it really is going to be the key to our growth trajectory in 2027 and beyond. -- right? For us, in 2027, DAS is our business model. That's our driver as a Service business well. That's the 1 that you heard a lot of earlier today. That's the 1 that the customers would like to own and operate the trucks and they like that because they can deliver real value. They can maximize the value of the transportation as a service -- or the drivers of a service business. By the end of 2027, we will have also launched our Inovio Hardware as a Service partnership. This is our asset-light DaaS framework. This is the one that allows us to build tens of thousands of trucks and this is where we believe we will surpass 30,000 trucks in 2030.

Now to really understand the financial trajectory, let's just make sure we understand the 2 models. Our Transportation as a Service model is our customer adoption model. That's where we are today. We've talked about the ownership. We expect to get roughly 200,000 miles per truck on average per year. pricing is roughly $2 per mile, including fuel surcharge on average. It varies by lane, it varies by customer. This is a great customer adoption model, but it is also capital intensive and we are going to our driver as a Service asset-light business model. So we are going to limit this fleet to roughly 500 trucks. We then shift to our driver as a Service business model. That's where all the growth will occur. We also expect because the actual customers are owning and operating the trucks, they are able to maximize through their network optimization, the miles per truck, and we expect the actual miles per truck to increase closer to 250,000 miles per year. The revenue drops down from the $2 to $0.85 plus per mile, that's natural, right?

As Osa pointed out in the cost comparison, now we're just focused on replacing the driver costs and not the overall cost. This still allows us to have high margin potential for the business. And so we're -- and we think it's a great strategy. We know that's what the customers want to have. And so that's what we've been building for the last several years. Now if I look out to the next 4 years, we project rapid top line revenue growth and margin expansion.

Starting in 2027, we expect end the year at over 1,000 trucks -- that will represent roughly $200 million in revenue for the year. We also expect to achieve positive gross profit. Now our target to achieve positive gross profit on a run rate basis is in the first half of 2027. Now this target slightly moved from where we were at the -- where we were talking about the end of this year. And that's really just reflecting a slightly slower fleet ramp. All the revenue enablers and all the cost reduction enablers, including the labor and support scale efficiencies, delivering to customer end points and even really getting the full benefit of our hardware set are in place. So we're excited. We're on a path to achieve positive gross margin. If you look at 2028, we again believe that we will achieve positive free cash flow on a run rate basis in 2028. Now we expect to achieve this with roughly 7,500 trucks operating on the road. Then if you look into the future, and again, our targets going into the future, we really do expect rapid growth.

We'll have the full benefit of everything that we put in our DaaS business model, our Aumivio partnership, being able to operate everywhere. And so we expect $5 billion of revenue, and we expect to exceed 60% gross margin really on our pathway to get to 70% gross margin. So with this rapid revenue expansion, we do expect that we would deliver compelling return on operating expenses and capital efficiency. And that's really important. We have spent a significant amount of money getting to this leadership position, putting ourselves in a position to be at this commercial inflection point. And we are going to continue to spend money to accelerate our lead and grow the top line revenue.

So from an R&D perspective, we expect to continue R&D roughly where it's at today. I would say, adjusting for inflation, of course. But like we are going to continue to invest in our leadership position. If you look in the future, that means that an R&D dollar is generating $7 revenue in the future. And it's only going to get better, right? We really think this is going to get to, I think, 12% to 14% is really industry leading at that point. And so we're well on our path to get there. If you look at capital expenditures, for 2027, we expect to spend about $185 million. This number is largely comprised of 2 factors.

Number one, building out the rest of our transportation as a service fleet, so buying more trucks and getting them on the road. And the second thing is buying the remainder of the second-generation hardware kits that we're going to put on the road before we go to the Aumivio business model. If you look at 2028, we expect our capital expenditures to drop to below $50 million. And on a go-forward basis, CapEx as a percentage of revenue is going to be less than 1%. -- we will be fully in our driver as a Service business model. Okay? And then the last thing is SG&A. We are going to increase spending to achieve the commercial growth that we're targeting. It's -- we're establishing a target of roughly 7% SG&A as a percent of revenue out in 2030, and we'll continue to monitor that each and every year. This is really set up so that we can scale the business long term, 30,000 trucks, there's a lot of trucks. You need a lot of support to be able to do that.

All right. So let's close it out where Chris began, right? We are extremely excited about the industrialization of the or driver, right? If you look at 2030, we expect to be operating in a $150 billion VMT market. Remember, the total market is about 200. We expect to be operating almost everywhere. We're going to deliver more than $5 billion in revenue, more than 30,000 trucks, exceeding 60% gross margin and having high return on our R&D spend. And this is just the U.S. trucking market, right? We're going to be able to take opportunities to go to global markets and additional adjacent applications. And so this is just the beginning for us.

So this is a compelling business just for the U.S. Honestly, Aurora is driving the commercial inflection point in autonomous freight today. okay? And we are exceptionally well positioned to maintain our leadership position. I can say that. I know you asked others what they thought. We really truly feel we are in a leadership position. We're taking advantage of all the investments we've made, and we're really at that commercial inflection point. We also believe that we're well positioned to generate tremendous long-term shareholder value for our investors.

So with that, I'll ask Chris to come back on stage and bring us home.

Thank you, Dave. If you talk to Dave for the next few years are going to be tremendous. You've talked to OSA the next few years is going to be fun. If you talk to me they're going to be exciting. One thing is clear, the pieces are plain place, right? We are on the road operating day in, day out commercially drive lessly for our customers. And the thing to remember is trucking in the U.S. is only the beginning. Right? You can count on the fact that we're going to take the show on the road and go and deploy this to global markets and expand in that direction. But it's also important to remember that the foundational investments we've made in building safety-critical verifiable sets us up to go and take on other exciting commercial applications. If you think about wherever a vehicle needs to be guided to operate safely through the world, that's a place where you're going to find Aurora.

Transforming trucking is really just the first step in delivering the benefit of self-driving technology safely, quickly and broadly. With that, I want to say thank you again for spending your valuable time with us today. I'm going to welcome the executive team up on the stage here, so we can answer the questions you haven't got to ask yet today. So maybe you guys want to join us up here?

I don't know why I'm clapping.

Because you're so damn excited.

I'm so excited. It's going to be fun and tremendous.

Ravi Shanker, Morgan Stanley. Maybe 1 for David, 1 for Chris. David, can you give us some level of detail on how you got to the 30,000 target number? And if top down, bottom up, et cetera. And Chris, I like your -- and 1 more thing video at the very end in other end markets -- when do you start thinking about those? When do we start talking about those.

Okay. It's a little bit of both, right? So we have a top-down vision of where we expect to go to and that's largely based on macroeconomic factors, like 30,000 trucks does sounds like a lot to some people. But when you look at the market, there's over 2 million trucks operating on the roads today. They build over 250,000 trucks every year. So I know it seems like a lot, and it will be -- there's a lot of research out there that says the trucking market -- autonomous trucking market is going to be 10% of the market. So there's a little bit of that. But we always have to balance that with our plans. So we look at both the supply side, what do we have relative to our hardware set working with the Movio team, working with our OEM partner where are we going to build? How much can we build? What do we think is the desired and reasonable capacity each year. And we balance that with OSA and the business development side to understand where do we think the customers are going and again, we look at it from a VMT perspective as well.

So if you think about a $150 billion BMT that you can operate in, 30,000 trucks and you do the math, it's like it's not that much of share gain. So I think we're appropriately conservative in some ways, but we want to also put a vision out there that like this is -- we really are at the inflection point some of the biggest challenges we've faced in the past is, is the technology going to be there? Will customers be ready? Can we ensure it? Can we build it -- I mean all those things have been answered -- and now we just are going to go and execute it and deliver the value. That doesn't mean that there is not a ton of hard work that has to be done. But the doubt about whether it could happen I think, has been erased. And so now it's about taking advantage and getting to that true commercial inflection.

Yes. It's going to be a lot of fun. It's exciting tremendous. And on the other domains. So first of all, as David has made the case, if all we do is deliver the market leader in trucking, I'm going to be pretty damn satisfied. And I think for everyone here, we'll make a hell of a lot of money for you and your clients, and we'd be proud to do that. At the same time, we're ambitious. And we have a lead, and we have a capability that no 1 else can replicate right now. And so we are starting in a very lightweight way to assess where is the right opportunity to go and apply this technology yet. This is not taking our eye off the ball on the core business because we have to really get that established and build it and shame on me and shame on us if we let that slip.

So there's no effort to take the foot off the gas in any way in that space. But we are starting to think, okay, the Gen 3 hardware is in validation at this point. Right? Where do we want to go apply next, where are the markets? What are the opportunities? And so we're starting to think about it. You'll start to see more over the next couple of years from my expectation.

Ryan Sigdahl, Craig-Hallum. Dave, maybe first gross margin 60% in 2030 previously at 70% in 2028, maybe talk through the puts and takes on the change there. And then, Chris, just on the last point, are those all AI creations? Or is any of that actually products that we're showing editions at.

The today is AI creation.

Yes. Yes. I think when we did it 2 years ago, I think our target is still to get to about 70%. I think we're going to be above 60%. We put a little bit of a hedge in there in terms of that, just understanding kind of the business a little bit stronger than did before, right? I would say though that it's probably reasonably conservative as well. And I thought it was appropriate to say it at that, Mark. There is no reason we can't deliver outstanding gross margins and reach 70%. But there are some uncertainties out there of things that we have to do. And frankly, there's a -- there's been a lot of supply chain headwinds as well that we're accounting for and addressing. So it's just appropriately conservative, I think, at this point. It's also -- by the way, somebody asked to and at 60% at $5 billion our free cash flow looks awesome or tremendous, I guess.

Mark Delaney with Goldman. Well, first, in terms of the exciting and fun. I'm very interested and excited to do the actually on-road demos this afternoon and remembering a couple of years ago, your last Investor Day was on your closed course is -- so really exciting to see the progress and actually get to participate in that. So thanks to all of you for allowing us to do that later.

A quick question for Dave, on the financials. Maybe talk a little bit more on the '27 [indiscernible] you're starting to lay out. So you talked about exiting this year, 200 trucks over 1,000. Should we think about kind of the back half weighted '27 when Aumivio comes on or more linear -- and in terms of some of the CapEx numbers you shared, are those numbers that you think maybe you can offset if you find financing and partnership options? Or is that a pretty firm expectation at this point around cash out from Aurora next year?

Two really good questions. I think on the first, it will be a little bit more linear next year. We really have the installed capacity in place to build 1,000 trucks, so 20 per week. So I think this year, it was really about getting to that capacity, and that's why it was back-end loaded. We're just going to build upon that over time. So I think the numbers are going to consistently get higher but it's going to be more of a linear trend than back weighted. So -- and with regard to the CapEx, you're exactly right. We did identify it as CapEx. We have looked at the cost of equity, the cost of capital. We've looked at various financing options. Right now, I think I'm leaning more towards just purchasing them and calling on CapEx. But -- that doesn't mean we aren't evaluating other options as well. It's just -- I think that is probably the more likely option at this point in time.

George Gianarikas here from Canaccord. Just a couple of caring questions for Dave. And I'm sorry, I missed some of this stuff, but I just found out my water heater brooks, so I'm a little bit of the runoff. So maybe on 2027 guidance you mentioned you'll be exiting with 1,000 trucks. I'm assuming that's both DaaS and TaaS. And you capped TaaS, I think at 500 and Volvo just told us there will be a 300. So I'm assuming that's an inclusive number that may include other OEM trucks as well. Is that an accurate?

So we're going to be greater than 1,000. We'll give like -- and this is our target, we'll give you your guidance like we would normally do after a after the Q4 earnings. But yes, we'll be over 1,000 trucks. It's a combination of our international upfit, which can be both TaaS and DaaS as well as it will be Volvo. And in Volvo's case, we would consider them more DaaS because they're owning and operating it. We're not doing the 1 and operating. So anything that was in Volvo, we would probably consider under the DaaS we will definitely have more DaaS trucks operating than task trucks by the end of next year, or at least that's our expectation.

Just a couple of more clarifying, I'm sorry. So.

That's why we're here.

The 4%, I think SG&A guidance long term.

Okay, good. And the 7x and then the R&D efficient, what does that SP-70 Help us transit.

Yes. So for every R&D dollar, we're going to be generating at least $7 in revenue. And then like we've done some benchmarking, and some of the very best are at about 12. And so a lot of people talk about our R&D investments and what we're making. We firmly believe this is what separates us from everybody else. Like everybody talks about doing a tech stack and the things. But like there's a lot to this building that amazing architecture back building our Ara services platform to make sure we operate -- we want to continue to invest in that. And so the way we look at it is, everybody says, yes, it's really high today versus the revenue -- and for short years, regenerating $7 per every R&D dollar. And beyond that, we're going to be achieving $12, $14 per every R&D dollar and that is actually some of the benchmarking that some of the industry leaders.

Okay. And then last clarifying point the 2030 guidance, it implies at least a run rate, I think, of close to $7 billion miles and your revenue guidance is for $5 billion. I know these are sort of approximations, but that's about $0.75. Is there room for upside to that because you talked about 80.

There's a little bit of upside.

[indiscernible] from Cantor Fitzgerald again. First of all, once again, congratulations on all the great accomplishments and successes I guess first clarifying question is, Dave, can we say we're now in the walking phase. We've gone from a grain or a light do kind of where we are.

And I think we're in the tremendous phase.

We've certainly stretched and we're starting to do, I think.

I guess my other 2 quick questions are. The first is I wonder if you can maybe expand on what are some other use cases and verticals, perhaps industries that we haven't talked about today that you could see this being a great solution for, whether it's military defense, whether it's international markets, Curious to get your take there? And then maybe the second part of the question, I was just wondering if you could maybe give us an update on your relationship or partnership with Uber -- there's been some conversations there. So just curious if you could maybe give us their perspective.

Yes. So certainly, first, let's talk international and the markets. When we look at it kind of globally, the U.S. is clearly outside of China, the largest possible market. And so we want to make sure we win here. China, we think it's basically off limits for as far out as I can imagine. -- next places like Japan and Korea are particularly interesting because the cost of labor is high. And with the population dynamics, the need and the amount of logistics they are freight logistics have the move by truck is large, and so we seem like very interesting markets.

They're also long lead term or long lead time markets there's a lot of engagement. You have to have partners. The good news is in both of those countries, we have relationships with long-standing relationships, whether it's with Toyota or Honda, they may ultimately be helpful in building entry there. The Gulf region is also interesting, right? They want to be technology leading. They have a large nonemergent workforce. The challenge there is 1 of labor cost. And so as a capital allocator, do I want to put a truck on the road in the U.S. where I can generate this much revenue? Or do I put it on the road in in Saudi or somewhere where I can generate a fraction of that. And so we have conversations globally about what are the incentives and how would you align interest so that, that becomes something that meets their objectives and meets our economic is for deploying the technology.

So those are kind of globally adjacent markets, there's clearly opportunities in nearby logistics. So moving from Class 8 to Class Class 7 trucks. Glad that worked going to be a legend. We see that as just a very clear obvious next step. Robotaxi is interesting, but it's a much different, I think, harder business. There's a lot more capital investment that you have to make to scale and we really like the idea of working with partners who have those capital and have already made that investment, and we can leverage it. So we'll continue to pay attention to Robotech, you figure out when the right entry point is there. Off-highway, mining, ultra trucks. That's another place where there's already significant capital that's been invested. We can help those companies accelerate and improve their economics. So -- but like I said, what we have built is a competence to deliver safe to critical physical AI systems. And so anywhere something drives where something moves, we can go help with that. we just need to be disciplined in when we start to invest in that.

On the Uber relationship, Uber is great, right? Daragh was a Board member, continue to have a tight relationship with him. They have a business objective that they've been clear about, which is creating competition in the AV robotaxi space. And they've been clear for some time about the need to take capital and recirculate it from us into funding that kind of a defensive measure for their business. So we've seen this coming. I actually think it's a great thing. Right? This was a large concentrated position from a holder that had no intent to hold it long term. And so it's been an overhang in the stock. And so the fact that, that those shares have recirculated to folks who we expect will want to hold for the long term. I think is a really good thing for our shareholders. And so I'm actually pretty excited about it.

Itay Michaeli from TD Cowen over here. Just 2 questions. Chris, you mentioned opening lanes going from 6 weeks to 6 days. I'm curious kind of when you think you can hit that? What the significance is maybe for costs when you get there? And then how transferable is that rate of change to markets. And then 1 for Dave, just on the 60% gross margins, is that all assumed to be on the third-generation hardware and kind of fourth generation down the road present some upside to that?

Do you want to go first? Yes. So I'll talk first about the lane pension. So this has been our expectation, right? This has been our thesis this as we continue to improve the generalization, there's fewer new things to learn. So you were a driver obviously more rapidly deploy -- we don't believe in like this 1 shot, Yallo and hope kind of strategy. We actually want to know when we put it there. It wouldn't just get lucky today that every time it's on that route, it's going to be safe. And so there's an investment we make in verifying and validating this for these new lines.

That's something that didn't matter initially, but we have been accelerating that work. And I think it's less about cost more about flexibility and the ability to go and be adaptive and responsive to customer need. And so when a customer comes to us and says, "I really want to operate between 2 places that currently aren't in our network. It goes from, okay, we need to plan ahead to allowing our sales team to say, "Yes, we'll be there next week, right? And that flexibility and ultimately, the compounding and network effects that will come from this interconnected network of routes will really, again, kind of compound into the value that we provide to customers expectation.

And relative to the $60 million to $70 million. So the short answer is, yes, I still think there are a lot of ways that we will get to 70%. I still think that is going to be our target. -- if we work with our Inovio partners in Jeremy back there, like we're already talking about, all right, what changes would we make on the hardware that really productive as well as more cost effective. I think there's a lot of things also like 4 years from now, the cost of the human driver is going to be substantially more is today. I think the cost of ensuring AV trucks is going to be substantially lower for our customers. And I think that's going to create more value.

So I think there's a ton of opportunities there. We certainly believe that 70% is a target, and it might just take a year longer to get there. I think we have time for quick questions. We've got them right here.

Mike Latimore, Northland Capital. So on the economics you showed -- is it materially different between long haul and say, more regional use case I think about your mix, what do you think about the mix of kind of customers doing long more recently use cases that.

Yes. Long haul has definitely been the most popular thesis that people come to us on. But as you heard from Matt, the short haul use case is tremendous and sees value near instantaneous. And so we have customers in both camps that are growing very quickly. I'd say the growth in each segment now that they're better understood is equal, but we just have a much larger pipeline on the long haul.

And in terms of improving the economics, our cost base is for serving them. I don't think there's a material difference to us, whether it's short haul or long haul, we really think about it as amortize on a per mile basis. And so yes, not particularly.

Kenneth Hoexter from BofA. And the rides a little later on. Maybe just talk a little bit about lane expansion, you've talked about the speed you can do it moving north going into -- I mean we haven't really hit on weather and different kind of lanes and your expansion speed and where you want to target and maybe throw in also regulation inter -- as you do that, are you now free to go everywhere?

Yes. So we're -- 1 question turns into like 5. That was well played. So well played. So yes, I just got a Okay. It's all good. So on the land expansion side, yes, from a build the map of verified validate it doesn't really matter whether in Texas or Arkansas or in Minnesota, right? So that -- the competence for building those maps. That's not it. and verifying validating them doesn't really matter across them. On the dimension of weather, today, we're operating in a variety of weather conditions, including good rate -- we'll continue to push that. It's really incremental work.

By the end of this year, we expect to be operating in light snow. When we start to move to snow, this is 1 of the things that, by the way, about 15 years ago, I created a bugaboo about snow and like I wish I could go back and reset that conversation. But if you think about what does snow mean, there's kind of 3 ways that affects the road drivers. So 1 is there's stuff in the air, which makes it harder to see -- in certain conditions, the ground can have a lower friction, which means it's hard to control the vehicle, at least you have to be less dynamic. And the third is that the world looks different.

The first of those, we already have them, right? We drive through dust, we drive through rate. We need to do the work to make sure there's nothing surprising. But this is not really a thing that we worry about. The low friction part of this, again, this is an incremental step of validation, where we just want to go -- we'll go through and check that the control system doesn't do anything goofy when you get to a particularly low degree of traction on the road and then make sure that we have encoded the behavior so that we can respond when we identify those things. And then when the world looks a little bit different, again, this is something that's just incremental work. It's not a big deal. The last part of the question was around regulation. And as Osi anecdote led into, like we're seeing an incredible amount of progress on that front. More action federal level than we've seen -- than I've seen in, I don't know, 20 years of working this.

So that's exciting to see. We're also seeing a lot of enthusiasm from the states we operate into. It's going to be a while where we continue to operate with 50 different regulatory regimes, even with the enthusiasm we see for build 250 which is the the legislation basically the Surface Reauthorization Act, which is putting in place a framework for regulation for our vehicles. That's going to take a while to come into action. But we have a team that has put a lot of effort into building relationships and trust with the federal and state regulators. And so we feel very comfortable at our ability to unlock kind of key economic elements of expansion across the U.S. It will take effort, but we feel good about it.

I took too long with that last question. I [indiscernible] Ken. So with that, thank you all. I know this was a big commitment of time. Hopefully, you found it useful. Hopefully, you come away with the enthusiasm and energy and excitement that we have from this. For those of you here in Dallas, I am psych to go get you in a driverless truck operating on the freeway here.

It is something does not get bored or to get boring. So glad to have you with us. Glad to have you come do that. With that, let's roll. Thank you.

Great. Thank you, and welcome, everyone, back to the 14th Annual Morgan Stanley Laguna Conference and over the next 3 days, we have a ton of freight transportation and airlines content for you, but very, very happy to kick off with Aurora Innovation and Co-Founder and CEO, Chris Urmson. Chris, welcome back to Laguna.

Glad to be here. Thanks so much for having me.

Absolutely. So maybe if you are unfamiliar with the Aurora story, we believe Aurora is a leader in autonomous trucking, if not autonomous driving of any kind in the U.S. today, maybe the world today. And you've had -- again, it's been a great year for the stock. It's been a great year with commercial progress. I think 2025 was a great year for you, '26 has kind of built on top of that.

So maybe it's a great way to start with just kind of recapping the commercial milestones you've hit so far and kind of where the story is right now.

Yes. So again, thanks for having me. I appreciate folks taking the time out of the day to come to listen to us today. It is just an incredible moment for us as a company. We're at this inflection point where for the last better part of a decade, we have been toiling away to make safety-critical self-driving capabilities available to deliver the benefits of self-driving technology safely, quickly and broadly. Last year, we had the major milestone of beginning driverless operations. This April, we launched our second-generation hardware, which is really about scaling and building the business. And so this inflection point is real.

With this hardware now, we expect to build on order of 1,500 tractors. With that, we work with amazing customers, FedEx, Werner, Hirschbach, Detmar, McLean, Schneider. If you are in trucking, hopefully, we will get a chance to work with you, and we're very privileged to work with these amazing companies. And this new technology, more reliable, lower cost for us, which allows us to get to ultimately our profitability goals. And then it sets us up to build over the course of next year into '27, where we'll launch our third-generation hardware, which will unlock true automotive scale, tens of thousands of units. So really amazing moment for us as a company.

Got it. Congratulations on that. Maybe a couple of follow-ups on the Gen 2 here, expected to drive a 50% plus reduction in hardware costs. I think 20 to 25 trucks is the run rate right now. You plan to exit the year with a 200-plus or 200-ish run rate. Like you said, the capacity is for 1,000 plus. How do we see that Gen 2 ramping and handing off to Gen 3 next year?

Yes. So as you said, we expect to end the quarter with 20 to 25 trucks in operation, which is a huge step from the handful we have had for a while. And in Q4, we expect to be producing the trucks at a rate of 20 trucks a week. So that's very exciting. That's working with our partner, Roush, taking International trucks, delivering them up to our facilities with them in Livonia, upfitting those, turning them into automated trucks and then getting them out into the market serving customers. That ramp will continue to grow, and we expect, like I said, to be about 1,000 units a year run rate with them.

Very excitingly, in Q1 of next year, we expect to be launching the autonomous Volvo VNL. And they have said publicly they expect to do that in Q1, and they expect to have 300-plus trucks on the road next year. I can tell you those will predominantly be driven, if not all driven by the Aurora Driver. So that scale will kind of get us to on order of 1,000-plus trucks end of next year. And then really, the investment we've been making with AUMOVIO will then kick in. And AUMOVIO, for those of you are not familiar, is one of the world's leading Tier 1 manufacturers. The spinout of the Tier 1 business from Continental. We've been working with them for many years to put in place the supply chain, the manufacturing and design this third-generation hardware, which will take yet another step function in cost out of the system. And that will truly be scalable.

And so our strategy has been to bridge from first-generation hardware to prove the concept that we could build ourselves, second generation to bridge the gap between what we can build ourselves versus where a Tier 1 is actually interested in engaging, right? The Tier 1 doesn't get out of bed for fewer than 10,000 units a year or tens of thousands of units a year, and we're kind of on the low end of that for the near term. And so this second-generation hardware allows us to bridge the gap between tens and 10,000s and allows us to get the customer demand in place to actually support the supply that will come off the line with them.

And then, of course, that Tier 1 partnership with AUMOVIO really allows us to fit nicely into the manufacturing supply chain for our OEM partners, right? If it's all well and good to build the technology, it's good to be able to manufacture it, but to really actually support an OEM. Having a Tier 1 partner who knows how to do that is profound. And this is kind of core to the way we've built our business. It's focused on to be the best in world -- sorry about that, which is the driving technology and then work in partnership with others who know how to do the other parts of the business that enable it to ultimately flourish.

Got it. So it sounds like you're pretty set for next year with AUMOVIO and the Gen 3. Just maybe one more follow-up on Gen 2 here. Is it just bridging the hardware gap between Gen 1 and Gen 3? Or are there learnings to be had? Are there tests you're running? Or kind of what's the ramp?

It's really about commercialization, right, and building that. So it allows us to -- it both reduces the cost of the hardware, the bill of materials, but it's also roughly triple the durability of what we had with our Gen 1 hardware. And so the combination of that durability and reducing costs helps drive down the amortized cost per mile, which gets us to this point where we expect to be able to be profitable on a unit economic basis.

Got it. Let's shift gears and talk about commercial momentum. You've done 6 million miles in total, almost 0.5 million fully driverless miles here. You announced Hirschbach and McLean Food orders earlier this year. You've announced others with Detmar and Value Truck and Charger Logistics. So the logos are starting to show up. How would you characterize what that process has been like and where this eventually becomes a bit of a virtuous circle?

Yes, it is accelerating is how I'd characterize it, right? We are fortunate that there are some amazing companies who were willing to take a bet on us when the technology wasn't yet proven and have been along the journey with us. They've been learning, we've been learning. It's been, I think, mutually beneficial on that front. But if you look at the cycle from going from conversation to kind of order, it was years, right, where we would run the pilots, we were generating commercial income from that, but it wasn't what we would think of as building the business. At this point, when we have a conversation with a customer, that conversation kind of gets to the point and then we're handing them at the end of that first conversation, here's a contract to start.

All the conversations we've had have really been selective. It's been about is this a customer who wants to embrace the technology and actually, importantly, has the capacity to do so at a reasonable scale. And so it's been exciting. We've seen kind of momentum. We were able to share that we're fully allocated for 2026. And there's nothing like a little bit of FOMO to help move the conversations along. And then the proof points stack up, right? Our customers are all rational, thoughtful folks. They can see kind of conceptually the benefit of this for their business, but they need to see it derisked. They need to see that the technology works. They want to see proof of it actually operating in their business. They want to see is their neighbor using it, right? And I think as we get more and more evidence of that piling up and we get -- we're seeing that quarter-on-quarter, the energy and enthusiasm is growing fantastically.

Great. Maybe a couple of follow-ups on that. On the last point, is it as we -- again, shout out to our big autonomous trucking deep dive report we published on Friday that Nancy worked on. But we kind of characterized it as a lot of the stakeholders in the industry need to dot their i's and cross their t's over the next 12 months until we hit the run rate commercial production here. Is that a fair characterization? And can you kind of help unpack what that dotting of i's is going to be like?

Yes. And I think, first, it's important to recognize, and I haven't had a chance to read the whole report, but what I have seen of it is pretty phenomenal. So thank you for that. It's good to have folks helping make the case for what we believe in as well. But first, it's important to recognize that the customers -- it's not a homogeneous set, right? There are different kind of risk tolerances across that. And there's different scale and kind of entrepreneurial energy, let me go with, about how quickly they want to bring this technology into their business. And so for some, it's actually a relatively quick process, right, where they come and we talk them through our safety case. We talk them through all the work we do. We talk through the economic opportunity. And generally, this is with the relatively small but still good-sized carriers and those move very quickly.

And then you look at a customer who has tens of thousands of trucks, they're going to be a little more deliberate like you would expect. But in all those cases, if I look at one of those potential customers, having third parties come in and do an audit of what we've done, having in-depth conversations with our engineering teams, having a lot of conversations, of course, with our corporate teams and our business development teams. But I do think that what happens -- and I think it's not unexpected for new technology come to market. But as you have more of these marquee players say, "Yes, this has got my blessing," then I think that we will and we are seeing that cycle kind of compress, which I think is important for us in the long term.

Got it. And just following up again on something you said, which is the other side of the argument about how you want an appropriate customer partner as well. What are those attributes that you look for in signing up with someone?

Yes. So again, there's an importance that they are able to achieve a level of scale that we're not in the business of doing demos. We're pretty convinced the technology works. It's where can we actually go build traction and where does it allow us to learn in this early stage of the business and where do we see a committed partner who's going to be able to go through what will be inevitable little bumps along the way of deploying something new in their market. We also need to have belief that they're going to be willing to transition from a state where we own and operate the asset, what we call TaaS to Driver as a Service where they own and operate the asset. And the good news is that's not really a high bar to get over. Most carriers believe that they are effective and have an advantage in the way that they operate and own those assets. And so -- but we need to know that they're going to make that step.

Got it. Maybe switching gears here. Obviously, you spoke about your customer partnerships. You spoke about the AUMOVIO partnership, the OEM side. So you mentioned earlier that Volvo has committed to manufacturing 300 trucks off the line -- commercial line next year, you said the very vast majority of all of them are going to be Aurora powered. What's the PACCAR relationship like, kind of how does that -- what are some of the milestones there? And maybe if you can talk about kind of other OEMs and kind of how you see them evolving over time?

Yes. So today, our deepest relationships are with PACCAR and Volvo. And together, they represent about 50% of the trucks in the U.S. market. With Volvo, we've been working for several years and have seen the fruits of this labor pay off where we're working to not just integrate with the truck, but integrate into their manufacturing line. And that is a big step, right? There's a lot more than just kind of bolt some stuff on the truck and hope it works, right, actually making sure that we have all the process and procedures and that they could actually assemble the thing aligned with their takt times line. And so that's been a multiyear effort. And we will see that with the trucks that are coming off the line now and the 300 next year, they will ultimately transition to our third-generation hardware from AUMOVIO as well, and that will really unlock what they would think of as commercial scale. So that's exciting and moving forward.

With PACCAR, we continue to work closely with them. Those of you who follow PACCAR know that they will not announce when they're going to launch something effectively until they've launched it. And so I can't say more about the time line for that. But what I can say is that we expect them to launch our third-generation hardware. And of course, we expect that to be a line-fit install as well.

And then, of course, we also work with International. This is a bit of a different model where we are actually taking a stock truck from international, taking to our partner, Roush up in Livonia, Michigan. And there, we're adding our by-wire capability. We're adding our driverless capability, the Aurora Driver kit onto it and then delivering that to customers. That has allowed us to move safely but quickly to meet the customer need we have in market. We see this as a technique we can continue to use for the foreseeable future. Ultimately, we'd love, of course, to work with International to line-fit it directly with them, but we'll figure out when that comes along.

And then finally, the fourth potential partner is Daimler and Freightliner in the U.S. We continue -- they have 40% market share. They're clearly a market leader in the space. We're the leader in autonomous trucking. It makes a lot of sense to work together. And hopefully, at some point, we'll be able to do so.

That's very exciting. Just kind of on the OEM partnership itself, again, you spoke about what do you expect from a prospective customer. What do you expect from a prospective OEM partner? Is it a case of -- like how closely involved are you? Do you help them design like the basic of the truck or the steering, braking as well? Do you just give them a bunch of ODD kind of parameters?

Just hope and YOLO. We know we don't do that. No. So yes, let's -- no, we work very closely with them. We have been for many years. Again, I said earlier, we believe we can be -- we are the best in world in delivering the driving capability for these trucks. We work with partners. They've been around for 80 years. They know what they're doing. They're very competent. We want to complement them. So we work with them in helping define the requirements and specifications. They understand the trucking business better than we do, of course. They've been at it for a long time, so they can bring that side of it. We can help make sure that they're meeting what we see as the necessary requirements to deliver a safe product. And so we're very intimately engaged with them in those conversations and have been for a long time.

Got it. Maybe switching gears a little bit and talking about some of the financials here. 2026 revenue guidance, $14 million to $16 million. 4Q expected to contribute over half of that, obviously, very back-half loaded as you ramp up to 200 trucks. Exiting with 200 trucks implies about $80 million TaaS revenue run rate, which is kind of a healthy starting point for next year. How does that TaaS to DaaS transition look like in '27? And kind of what -- how does that change the financial profile?

Yes. And just a reminder for those folks who aren't around this all time. So Transportation as a Service, we own and operate the asset. We get paid basically as a 3PL. We don't go out and seek the business from shippers, but we contract to the carriers to provide capacity to their business. In Driver as a Service, we basically provide the driver. And so it looks very much like the model that our carrier customers and private fleet customers think about today where they buy that truck and then they pay someone to drive it. It just happens to be that they pay Aurora to drive it.

We like the Transportation as a Service model as a way to introduce the technology to customers in a very white glove way in a way that allows them to learn and experience it and then be able to make the commitment into their fleet purchase plans. We expect to cap the number of trucks we have on our Transportation as a Service fleet at about 500, if not less, right? We do not want to be a trucking company. That is not our business. We want to support trucking companies and grow their businesses. So over the course of '27, we expect to transition from TaaS to DaaS. We will keep a TaaS fleet because it will be a tool that we can use in new customer acquisition and kind of grow and help them learn, but we don't expect to scale it. By the end of '27, we expect the majority of the vehicles in our fleet to be Driver as a Service, so owned and operated by customers.

Got it. And just kind of on that note, on the liquidity side, you ended 2Q with approximately $1.2 billion in liquidity, gives you plenty of runway into 2027. How are you thinking about capital needs, the ATM program and kind of how you use that as you get up to that...

Yes. We feel very good about the balance sheet we have. It's a pretty strong position to be in. We look at the ATM and we found ways to use that. We use it -- we have historically used it and intend to use it to cover things like the tax on RSUs, so we can kind of spread that out rather than have the vendor we use for RSU management to kind of hit it on the market all in one day. We're also using it to cover our cash bonus. And historically, we've used it as a way to fund the business, and we've been pretty capital efficient in doing that. So we'll expect to continue to have that tool available. We do expect at some point to probably do something a little more structured to be the kind of last capital we ultimately have to raise for the business.

Got it. Just on that note, kind of how are you guys with resources, headcount, chips kind of everything you need to scale up because it seems like you're ready to go from your side that the supply chain needs.

Yes. it would be great if people stop building data centers. That's great.

You will send that message to the courts.

So -- but no, we're managing through it. The run on RAM is impacting everybody, and that's certainly something we're navigating. Similarly, with slots for CPUs and again access those, it's again something we're navigating. But we feel like it's navigable. Again, it would be easier if we didn't have to deal with, but this is the real world.

And then in terms of talent, I couldn't be prouder of the talent we have at the company, I would take it as pound for pound against anyone else. And we're past the part of being a research lab that was a long time ago. We're now in the part of industrializing technology, and that takes effort. The actual research part of kind of making it work is probably 10% of the overall effort it takes to actually deliver a thing and deliver in a way that is actually useful to customers. And so we're excited about that. We're on order of 2,000 people today.

Got it. Switching gears, I want to talk about the competitive landscape for a little bit. Obviously, very, very early innings here. In our view, you guys are clear leaders in the space, but I think we have also been very clear in our view that we don't think it's going to be a winner-take-all space. I think you view that...

It's too big a market, right? It's $1 trillion market. You have to be irrational. I think it's one player.

Right. So how do you see yourselves kind of competing with other players out there? There's been a lot of talk about the old school way of doing driverless vehicles, which is actual rubber on road and kind of testing this in the real world versus purely simulation versus a combination thereof. How do you see all of that changing? And kind of maybe -- do your customers care about how you bring the truck to market?

No, they care that it's safe. They care that it's going to be valuable and useful for their business, right? That is what the customer cares about. I think that's the important thing to recognize, right? So one, we do all of the cool AI stuff. But we put in a framework that we call verifiable AI that allows us to ensure that we can validate the system and that it's going to be safe on the road, and we're not going to end up one day with it having a hallucination and driving into a ditch. That just -- we can't afford that. And so we have to architect the system to minimize the risk of that.

We're seeing real time some of the challenges in alignment that you see in the LLM world. And I think we've been thoughtful about how to architect the system to constrain it to behave in ways that we actually want, right? And that comes from things even kind of the way we -- the structure of the models enables us. At the end of the day, we've been very clear from literally day 1 of the company that this was a data game and it was a learning game, but learning in the right framework was critical. And so we've invested in that over many years, and we continue to invest and advance in that. We've also been very clear from day 1 that simulation was essential for this. We have our own internal simulation tools and stacks and simulation is a span of technologies. And so we, of course, use that. When we launched the second-generation Aurora Driver 2 system, I think we put it through 18 million and some tests. The vast majority of that, of course, is online simulation tests of various forms. It's the only way that you can do this, and we've been clear about that for the better part of a decade now, right? You're not going to get -- it's kind of entertaining. There's a point early in our company's history where people were beating on us for not having enough vehicles on the road. How come you -- how can you compete with these other people who've got -- and now it was like, "Oh, you're doing it all in simulation." Of course, you do it in simulation, but you also do need to have it out in the real world. So otherwise, you're playing a video game and that doesn't deliver a whole lot of value.

Understood. And so what do you see -- how do you see this business kind of evolving or unfolding in the first few innings of the rollout here? Obviously, you are not exclusive to your OEM partners, your OEM partners are not exclusive to you. Do you think everybody ends up working with everybody else? Or is like a 60-40, 60-30-20?

Yes. So as I look at the landscape today, I think we have a multiyear lead relative to our competition. Part of that is the technical driving competence that we have. Part of that, though, is things that don't sound sexy in an AI-centric world around supply chain and manufacturing base. It takes between 3 and 7 years to take a new capability and integrate it into a vehicle, design the parts. We've been working with AUMOVIO for 5 years now, I think. And you don't -- there isn't really a shortcut there.

And so as far as I -- when I look at our competitive landscape, I don't really see in folks that are working in trucking with the exception of Torc, someone who actually has a supply base that can actually produce vehicles at scale. And we will be producing at modest scale this year and significant scale next year. And I don't know that anyone else has a path to that. So that feels really pretty compelling. I also think that the experience we are getting from being in the real world with customers, understanding what matters, there is a flywheel that will accelerate our advantage there. The more we understand the customer, the better the first experience with the next customer is and the bigger the gap is from someone who has just showed the technology demonstration to the commercial product. And so I think that matters.

And then ultimately, we're the only people running driverless trucks on public roads today. We do that day in and day out. So I feel pretty good about that. And my expectation is at some point -- like I will always be excited to talk about the technology because that's where I come from and it's cool. But at some point, what's going to matter is how many trucks we have on the road, how useful are they for customers and how much revenue is that generating for us and our partners.

Understood. Any questions from the audience? Can we get a mic out here.

I want to discuss the regulatory environment a bit. I know California recently joined the majority of U.S. states permitting driverless trucks. I guess how would you characterize that environment right now? And what are the remaining gating factors for broader commercial deployment?

Yes. I think in a word, generally enthusiastic, right, that in the majority of states in the U.S. today, we can operate driverlessly. And so it will be on us to deploy and scale into those and align that with customer need. What we're seeing, as you mentioned, that California after about a decade has now -- more than a decade, has now put regulations in place that allow automated trucks. And so we've received our first permit for that. It will probably -- I'd say it's going to take us between 12 and 18 months to go through the regulatory process to be fully certified in California.

Across the Sunbelt, the majority of those states, we either have or have a path -- a very clear path to have the permits in hand to be able to operate there. And then at a federal level, we're seeing tremendous support, whether it's from Secretary Duffy and his safe innovation agenda, where we're seeing real motion of the Department of Transportation or whether it's in America BUILD 250 Act, I think, is what it's called, which passed, I think, 62 to 2. And so -- and there, it actually puts in place a framework for automated vehicles, commercial automated vehicle trucking. And then even out of the White House, we're seeing the Vice President speak positively about automated trucks. So the regulatory environment feels very conducive right now.

Chris, maybe a follow-up on that, kind of what does that federal support really mean on the ground for you guys? Because driving regulations in the U.S. are like famously a patchwork of state laws. So does the federal support here and kind of having a set of federal guidelines, you have guidelines now you'll have a law with the new thing. Does that help clear the path for states to follow quickly? Or how does that...

Yes. So maybe just a quick primer on how it works. So in the U.S., the federal government is responsible for the safety of the vehicle and the states are responsible for the safe operation of the vehicle. That's why you have a state driver's license, but your car passes federal FMVSS regulations. And so what we do is kind of in a blurry middle, and so that creates some of the confusion.

I believe, and it's been a little while since I read the act, but the BUILD 250 Act doesn't -- it creates an opportunity for preemption, which could then be used to help kind of homologate regulations across states. I think more importantly, though, is it creates something for state regulators to point to. And this has been one of the conversations that we've heard for a long time is folks in government are working their butts off trying to do the right thing and trying to help keep both our roads safe and move America forward. And they recognize in many cases that they don't have the technical acumen to appropriately regulate these vehicles. And so be able to point to the federal agency that does allow them to model or align regulation in the states with the federal regulation or be able to point to and say the Feds have got this, we don't -- we can be silent on it and operate. So I don't think it's a snap your fingers. But I do think over the longer term, it will create alignment across the country. And yes, as someone who has to work across many states because our business is intrinsically interstate commerce, it would be easier if there was one regulation, but it is not -- this is the thing we can work through. It just adds a little structural cost where we have to manage that, but it's a thing we're working through without much difficulty.

Great. Any other questions from the audience? Chris, I wanted to follow up with you on just going back to the topic of commercial traction here. Obviously, a big theme of this conference on the transportation side is going to be the freight cycle as we are in right now with a lot of these supply side pressures, whether it's the immigration regulations for drivers or the Montgomery case verdict that's putting a lot of scrutiny on just examining driver standards as a whole. How much has what is happening to the cycle as a whole changed your customer behavior and them maybe now taking a much more serious look at autonomous trucking versus before?

Yes. I would say that for all of our customers, there has not been a question strategically about the trends. Cost of labor goes up, the amount of freight we need to move increases. And so the argument strategically was clear the value of automated vehicles. When you take supply out of the market on the driver side, that makes it more acute in the near term. That certainly helps move the needle. When you see freight prices start to recover, that gives them a little more breathing room to think beyond how do I solve the next quarter and so to think. So I think that, that is certainly a good tailwind for us. But it doesn't really change the underlying economics, underlying benefit, right, that labor has always been a limit in this. Automated vehicles are going to complement people driving trucks for as far in the future as I can see. All of our customers think safety first and then how do we have this work alongside our people. There's not one that said, "Boy, I'm really looking for automated vehicles so I can move on from the great staff I have." It's all like I just need to complement them.

And then, of course, the policies where we are reducing non-domiciled CDLs in America, that's again, pinching this further. So the combination of steady supply, increased utilization, we see a 10% improvement like-for-like in fuel economy between the automated vehicles and people driving trucks. Again, with today's economics, that's a pretty big deal. And then the overall package, we think, just drives dramatic improvement in both the revenue and the profitability of our customers. And I am a believer that in the next 5 years, if you are not using our stuff, you just will not be competitive. And so it's -- yes, it's both tactical tailwinds, but strategically, it didn't really move the conversation.

Got it. In the couple of minutes we have left here, maybe 2 round out questions for me. You're obviously at a very, very key inflection point in the story going into the start of serial commercial production next year. You have an Investor Day coming up next week. Not to steal your thunder from the event, but kind of what can we expect to kind of give us a little sneak peek.

Yes, I'm not going to do that.

I tried.

So no, you tried. I think we look forward to a host of folks there. We'll be down in Dallas. What I will tell you is there's nothing quite like riding in a driverless truck. Yes, 70,000 pound thing moving down the road, 70 miles an hour. I've been doing this for a while. And every time the 8-year-old boy in me goes, boy, big truck. And then the person who spent their life working on automated vehicles is like this is incredible. So being able to share that. And we can talk about all these academic analyses and this and that on the approach. I think there is a real element of seeing is believing. And it's pretty unbelievable.

Right. And to the point of all the academic analyses, including what we put in our report, there's...

I did not mean it that way.

No, no. Again, my point is that for now, I think a lot of those benefits kind of exist in, I'd say, almost a theoretical realm until you're actually experiencing the trucks, running the pilots, seeing the data. So can you just help unpack what kind of conversations and what kind of work is going on behind the scenes between the 4 stakeholders involved, right? So there's autonomous technology companies like yourselves, there's the truck OEMs, there's the fleet operators and there's the shippers, right? So 4 stakeholders involved. What are the kind of conversations that are going on? Who is asking you what kind of questions, what kind of information is being shared that investors may not appreciate kind of because it may not be coming out in the public domain.

No, I think that the most compelling thing to me is that our customers want more, right? And that to me says that we have crossed the threshold from that's a cute little science project they want to experiment with to, I'm going to buy 500 of my 3,000 truck fleet and make it autonomous, right? And so the conversations are with our OEMs on how can we get there more quickly as they're starting to hear more customer pull, which is great. It's no longer a push that this would be useful. It's customers going and saying, "I would like this, how do I get it?" With our carriers, it's really about can you -- we want this, how soon can you go to this location for us or that location for us. And then we're balancing that between the different demands we're seeing from different customers and how do we actually roll this out in a way that ensures the quality of the product, the safety of the product and the speed at which we want to unveil it.

Great. Chris, our brave new world is upon us. Thank you for being here. I'm really looking forward to riding the truck next week and seeing that [indiscernible].

Awesome. Thank you.

Okay. Great. Thank you, everybody, for joining. My name is Mark Delaney, and I cover Aurora for Goldman Sachs. I'm very pleased to have with us yet again this year Chris Urmson, who is the Co-Founder and CEO of Aurora. Thanks for coming.

Glad to be here. Thanks for having me.

Well, let's jump right into it. I mean a lot of interesting stuff that Aurora has been working on, several exciting announcements on your journey and now launch of autonomous trucking, so really exciting stuff. And maybe we can start right there because the company announced actually just this July that you started driverless operations without an observer. Maybe you can talk more around how that launch has gone. Any key learnings so far?

Yes. Now that we've woken everybody up, so glad to have everyone here. Yes, it's gone kind of incredibly, right? So it's been a long journey. A year ago, we proved that the technology worked with our launch then. This year, we've been able to launch our second-generation hardware. AV is really hard, let me remind you. And this is really a platform that will allow us to scale up to 1,500 units and then put us in position to go scale with our third-generation hardware that comes online at the end of next year.

So it's been great to see it out on the road. It's been another proof point that's enabled customer enthusiasm and excitement and kind of helped move those conversations forward. And it's really just -- it's kind of the starting line for us building and scaling the business.

And any surprises or things you didn't expect to have that you've learned just since you've taken the observer out?

It feels good, right? It's a lot of work for the team. It really -- yes, we launched last year, began operating driverlessly, but we have the kind of the optics challenges. There was a person who sat there, is this observer. And we knew the bar we were holding it to. We knew that it was safe and operating, but it's very different for the outside world to have that visceral image of, no, there's nobody there. The Aurora Driver is fully operating this. So I think that's been very powerful. And even the most cynical observers can look at that and say, "Oh, this is real."

No, very exciting stuff. In order to get those vehicles out, you upfitted a truck. You're using Roush as a partner to do some of that upfitting as well as some in-house up-fitting capabilities. Maybe just talk about some of the costs and implications of doing the upfit model here in the -- at least the near term?

Yes, so our second-generation hardware kit, it is a major step function both in performance but also in cost reduction. That first generation was really to prove the technology worked. The second generation was about actually having something that was commercially viable in market that we can ultimately be profitable with, and we're seeing that in practice.

Roush is great. If you heard me talk about our strategy in the past, it's really been one of let us focus on what we do best in world and then go work with folks who are best in world on what they do. And that's what Roush brings to the table. And they are a very well-known quantity in the automotive space, where if you're an OEM and you need something modified and scaled up or repaired, they're the folks who do it. If you buy an F-150 Raptor, Roush made it a Raptor instead of an F-150.

So they know how to do volume. They're working with us now on mass production of this or large -- I guess, modest scale in OEMs terms; for automated vehicles, large-scale production. And we're off to the races. We're in that period of kind of production hell, I guess, some people might call it, as we kind of get the ramp up, but we're expecting 20 to 25 trucks on the road at the end of this month, and we'll be building 20 trucks a week in the not distant future here.

That's great. Well, those trucks need to drive somewhere and one of the key initiatives of the company has been expanding the operating design domain in terms of where you can drive, weather conditions. One of the interesting things I thought Aurora has been focused on has been driving right to customer sites, not just on highway. Tell us a little bit more around how you're doing with that direct-to-customer end point part of the ODD.

Yes. And this is just one of the things that just makes sense, right? Customers want their stuff to go from A to B, not from some other C to D. And so this has been core to how we've been thinking about the business for a very long time, and we're seeing this in action. We've been operating from customer end points for some time now. We're now with our customer, Detmar, operating from the sand mine to the distribution point, just running that many times a day in and out, and we're continuing to operate more places for customers as well.

So it's operating exactly the way we expected. It's important to remember that we've been driving between our terminals off-highway to these places, right? Our location in Houston is a 5-mile drive from the freeway to that terminal, and so it's not really surprising that we drive to these points for customers as well.

So you're already doing this today, not just for the off-highway but even sort of on public road, you're doing that direct end point.

Yes. When I say -- sorry, when I meant off-highway, I meant on public roads. Like we -- it turns out that they don't just put the sand mine connected to the freeway, right? You have to drive through the town and get to the place. And similarly, when we talk with our customers in Phoenix, our customers in Dallas, right, these are places where we're going to end point locations for them today.

Okay. That makes sense. Well, another aspect of expanding the ODD is about lanes. And you've got a number of different routes you've been adding on. Talk a little bit more around where the company is expanding to.

Yes. So we're really going where our customers need us today. We expect to have 200 trucks on the road by the end of the year. And it turns out Texas is big, and there's a lot of places for those trucks to go right there. At the same time, we are accelerating our ability to open new lanes, and to open new lanes for us is really 2 parts. So one is putting in place the map. So the truck can have this kind of anticipation of what's about to happen down the road and not just what it can see over its horizon. And then the other part, of course, is the competence to drive across the different features that are in the world out there.

On the mapping side, we've talked for a long time about our Atlas technology, this ability to shard the map and build it efficiently. That just continues to get faster and faster. And the first lane, it took us, what, 6 years or something to open. The second lane took us 6 months, the third lane 6 weeks, and we continue to see that accelerate.

And then on the capability to drive, every time we open a new lane, we go through the place that we're going to operate and ask is there something novel here. And any time we find something novel, we'll go and build tests. Those tests will tell us can the Aurora Driver operate through that or not. If the answer comes back that we're not confident in the performance of it, then we add a little backlog under the engineering cycle, and then we kick it off.

But every time we solve one of those things that's novel, that is not just solving it for that GPS coordinate here, right? It's solving it for every other instance of that thing that was novel there. So if, for example, it was a 3-way stop was the thing that we couldn't handle or we hadn't got the test in place for, once we've tested 3-way stops, it's now, okay, every other 3-way stop that we would encounter is in scope and able to drive. And so you can see how very quickly, with not many places that you drive that are useful, you've accumulated the skills that are necessary to really generalize and operate broadly across the sub-elements, we're very excited about seeing.

You do some of those test and validation points. How much of that is something that needs to be done with real world test and validation versus what do you think you can do with simulation? And can simulation replace a lot or all of some of those types of things?

Yes. So simulation is a very broad set of technologies, everything from replaying data and kind of ad libbing what the actions are to generating the full synthetic perception system and everything in between. And we use a combination of all of those tools to do this validation. So this is where we're seeing some real lift from generative techniques.

So we can take a real world scene and augment that in certain interesting ways. We have a process by which we will go ground that simulation with reality to have conviction that we're not just playing a video game. We're actually operating in a world, a simulated world that's reflective of reality. And then we can use that to get to the point where we're now confident that this thing's actually working and go release the 70,000-pound truck down the road.

One of the things that we do not believe in is kind of one-shot YOLO, right, like, oh, we saw it work once, cool. Let's let it go, right? That's not how you deliver a safe real product into the world. That's how you cause real damage.

Dovetails well with my next question, which is on your approach to AI more generally and obviously guided by safety, but you've written a lot and talked a lot about verifiable AI. Tell us more about what that means for Aurora.

Yes. Verifiable AI means making sure we are using the most cutting-edge techniques but ensuring that we have the tools and the architecture so that we can have conviction that they're actually going to behave the way we want, right? We -- again, when you're driving a 70,000-pound thing down the road at 70 miles an hour, it's not okay to have an oopsie moment. And if you're really just going to throw data in one end, train a model and kick it out on the road and talk about the magic of AI, you're destined to have these problems, right?

And we see it constantly in the entertaining output we get from LMMs, a massive amount of value and opportunities there, but they brain fart, for lack of a better word for it, pretty regularly, and we just can't afford that. And so for us, verifiable AI is this combination of how do we take these modern techniques, use them but put them in sufficient box, so we can actually test and validate them and that we can put constraints on how they operate such that we know that the behavior is going to be good.

Yes. Said another way, you're not an end-to-end AI proponent.

No. I think that, again, the tools are super useful, but a black box between sensors and pedals where you just hope that the outcome is always going to be right is a recipe for disaster.

I know you and I have spoken about how important this might be for regulations and talking to regulators because you can point to specific things and why your software made the choices it did. I know you're engaged right now, I think, with some regulators, including in California. Maybe talk around some of the key regulatory things that Aurora is working through.

Yes. So we continue to be really happy with the regulatory environment in the United States. It's a giant market, of course, and it's an important market for us and continue to see really positive support, both at the state and federal level.

Recently, California put in place regulations that will allow automated trucks on the road. This has been a many year journey to get there, and so we're excited to see those. We've already received our testing permit. We expect it will take some time to move through that regulatory process. I think the DOT in California has been appropriately careful, and so we'll just continue to work through that and work with them to get this technology unlocked in the state of California here.

And then at the federal level, again, we're seeing tremendous support and traction in the surface reauthorization bill this year, this explicit engagement around automated vehicles and automated trucking. And so we're seeing really positive traction there. And the Secretary of Transportation, Secretary Duffy has really taken a step forward with this innovation agenda, ensuring we maintain safety but continue to allow America innovate in this space.

And I think one of the other angles there was around you potentially needing to warn other cars if there is a breakdown and the truck's on the side of the road. I mean this is a long-standing regulation, but the existing one was like a person has to walk and put these flares and cones. Where are you with the warning lights and more of a digital solution?

Yes. So back in the day, somebody thought, hey, it'd be good if people put triangles or flares behind cars. And there was no data to support it, but it seems like not a bad idea. And that got turned into regulation. And so obviously, when we don't have a person on the truck, we could find ways to do this. We can imagine a little dropper on the back of the truck that drops triangles or flares. But we prefer to do something more rational, and that is turn on blinking lights.

This is what police vehicles do. This is what other emergency responders do. This is what construction vehicles do. This is what tow trucks do to indicate there's something here. Don't hit me. So we made the deep, bold, innovative step of saying let's do that for trucks. And we've used it. We've collected the data now to show that it's actually as effective, if not more effective than dropping cones. And so we have an exemption from the DOT to move forward with this. And we look forward to having a more permanent kind of common sense solution for this.

Very helpful. I want to talk about the ramp. You already said earlier, on track for the 20 to 25 trucks by the end of this quarter and 200 by the end of the year. But you also mentioned production is difficult early stage and a lot of companies have made that...

Welcome to physical things. Yes.

Maybe just talk about how you're working with supply chain. I mean, actually, the theme at this conference has been certain components are pretty tight right now. So anything you'd point to as you're working through that ramp?

Yes. I think this is one of the things where we have a really strong advantage relative to competitors in the space, right, is that the part that gets the headlines is the very cool and technically complicated and kind of sexy AI driving stuff. And we are very good at that. We're best in world with that. But for that to actually go out into the world and do something, you need the physical parts to put it on the truck. And this is where our first-generation hardware was stuff we made in-house. We knew how to test it. We were confident in the safety of it, but we could produce that at the scale of tens of things.

The Generation 2 hardware that we just launched, we worked with Fabrinet, which is a global contract manufacturer, that we can produce at the scale of 1,500 units. We talked about Roush earlier and the supply chain. We have to upfit those trucks to add by-wire capability to them and add our vehicles -- our road driver kit onto that. That allows us to get to a scale that's unprecedented in automated trucking and will allow us to bring customers along to kind of allow them to experience it, to start to build this into fleets and actually really gain significant traction and ultimately generate meaningful revenue.

And then our third-generation hardware, we're codeveloping with AUMOVIO, and that is produced at scales of tens of thousands of units. And that is where we get to true scale and true inflection in the business. And that path that we've been on of simultaneously developing the first-, second- and third-generation hardware has been critical to enable us to go scale.

And so for us, this is gigantic, right? We think we have a multiyear lead on kind of the hard tech AI driving capability. We think we have a perhaps even larger multiyear lead on the supply chain and hardware side of this, where if you do not have a path to produce the hardware, I don't even know what you're doing. And we're clearly well ahead on that. So super excited there.

Very helpful. And as you kind of exit this year with the 200 trucks, you further ramp into 2027. As you do ramp in '27, maybe talk about the business model in terms of do you haul the cargo as well and as Transportation as a Service? Or do you do more just the virtual driver and is Driver as a Service next year?

Yes. So it's going to be very exciting, right? Today, we're operating a handful of trucks. We will be operating 20 to 25 trucks driverlessly by the end of the month. And then we will be adding 20 trucks a week as we get into Q4. Just the scale of that growth in this space is -- again, it's super exciting. It is turning a corner. Today, we operate in what we call Transportation as a Service, which means we own and operate the trucks. We operate them for carriers.

So we don't go out and bid with shippers, right? That's not our business. We are not a trucking company. We operate under contract for companies like Werner, Schneider, Hirschbach, Federal Express, Detmar and several others, where we're providing capability for them. This allows them to experience the benefits of automated driving, to see these trucks in action and get a way to have a relatively low-risk opportunity to learn about the technology and then commit to it.

As we go into 2027, we will transition to Driver as a Service. And this is where customers go from having us own and operate the asset to leaning into their core strengths, being able to own, operate and maintain those assets and pay us a subscription fee for driving it. And this is the long-term model we've been talking about for our business for the last several years. We want to be asset light. We want to focus on what we do best at world, which is build that driving capability and allow our customers to excel and benefit from that technology but run their business in the way they're used to.

And so we're -- we had a very exciting announcement earlier this year with Hirschbach, where we signed an MOU with them for 500 tractors, where we will provide the driver service. They will own and operate the tractor. And we continue to have further conversation with other customers for that volume in '27 and beyond.

And from the conversations you're having or the MAUs you've been signed, is your sense that customers are willing to do the Driver-as-a-Service model on upfitted trucks?

Yes. And they want this model, right? If you are a major carrier in this country, you see your ability to own, operate and maintain that asset as a competitive advantage. That is what you do best in world along with the customer service and the rest of the operational rigor that you put around it. And so for us, being able to slot into the business that they already have, their model today is they buy the asset. They pay someone to drive it for them and they do the rest of the work around that. That's what our business model will look like to them, and that's exciting and compelling. And yes, folks are interested in these Roush upfit International Trucks.

One of the really interesting parts of the business model on Driver as a Service, at least in the longer term, is that not only do you get paid per mile, but you're going to pay on cost per mile with this Gen 3 and with AUMOVIO. But in the '27 time frame, if you do Driver as a Service, do you still have that structure where you pay cost per mile or is it going to be a little different for a period of time?

No. And maybe I can just unpack that for a moment. So the partnership we have with AUMOVIO is this kind of first-of-its-kind agreement where we're co-developing with AUMOVIO the hardware that will make up our third-generation kit, but the economics of that are what we call Hardware as a Service. So they're investing upfront to develop it. They'll put in place a manufacturing capability to manufacture it. And then they will finance the hardware, and then we pay them on a per-mile basis for the utilization of that hardware.

So this is great for us because it means that we don't have this massive upfront capital expenditure that we have to carry on our books to support our customers owning and operating these assets. It's great for our friends at AUMOVIO because, for decades, these companies have tried to get into value-based pricing instead of the should cost pricing that all the OEMs beat them down to.

And so it will create a really interesting significant revenue stream for them. It creates a really interesting significant revenue stream for us. And so it's very much aligned. And by the way, it's 100% aligned with our customers because the more that truck drives, the more money they make. So all the way down the stack, everybody makes more money the more these things operate. And so we're all aligned.

Now with our second-generation hardware, we don't have that structure. So these, we will have to have on our balance sheet and own -- finance them in some way.

Okay. No, Very helpful. But a very interesting longer-term business model in my opinion.

100%. And we have to go through this phase to get to that phase, right? It's important to realize that if you're a Tier 1 manufacturer, you don't get out of bed for less than 10,000 -- generally tens of thousands of units. And so to bridge the gap from onesies of units to thousands of units, you have to do something. And that's what we've been able to do with this Fabrinet partnership in the interim.

Okay. You mentioned Hirschbach already, and you've got the MOU there for 500 trucks. Any sense on timing as to when the full 500 could be realized?

What we said is those will be realized over '27 and '28.

Okay. Helpful. And then you're doing some upfitting now with Roush. You mentioned that ramping toward 20 trucks a week, so obviously, some volume opportunity there. But you also have ambitions to integrate lineside. You have formal announcements with both PACCAR and Volvo. What's sort of that opportunity? What would that look like as you move to lineside integration?

And it's exciting because it's more than ambitions. We're executing on this. So with Volvo, they are producing vehicles lineside today. They've announced that in Q1 of '27, they will begin operating driverless trucks. Those will be Aurora-driven trucks, and they expect to have 300 plus of them on the road by the end of the year. And then as our Gen 3 hardware comes online, those will be integrated lineside as well.

And that's where they get very excited because that's now serious production scale and off to the races. So we're super excited about that. And that has been a multiyear investment of effort from both companies, right? It's hard to understate how hard it is to bring a fundamentally new technology into one of these vehicle manufacturing lines and the effort we've put in to do that has been meaningful. It's been meaningful by this tremendous partner we have with Volvo, and so we're very excited about that.

With PACCAR, as you probably all know, PACCAR does not share time lines on any product they're going to ship. And so what we can say there is that we're working with them to lineside install the third-generation hardware, and we expect that to come to market.

Okay. Helpful. And given that you're currently working with International Trucks and upfitting those with Roush, would it make sense to do one of these lineside integrations with International at some point?

We would love to at some point, right? We -- the approach we're taking right now is one that allows us to safely control the time lines to deliver those trucks and allow us to meet the customer demand we have today and demonstrate this technology on the world operating safely. So it's been a really important tool for us, and it's one we will continue to use going forward. And we're capacitized for 1,000 units a year or 20 units a week at this point. We can imagine scaling that up should we find an appropriate reason to do so. In the long term, we do see value in having this lineside installed with Roush -- with International, and that would be great. But we'll cross that bridge when we come to it.

We spoke a bit on some of the different generations of your hardware stack that you're bringing to Gen 2 now and then Gen 3 next year. Could you talk more around what that means for cost reduction? I think 50% for Gen 2, if I'm not mistaken, but talk about Gen 2 cost downs and even what Gen 3 might look like.

Yes. So when we moved from Gen 1 to Gen 2, we reduced the cost of bill of materials by about a factor of 2, but we also extended the durability of the product by a factor of 3 -- 2 to 3, somewhere in that range. And so when you think about the amortization of that cost over the life of the million mile life of the product, that's a pretty big deal. And now as we move to the AUMOVIO-produced third-generation hardware kit, that will be another significant step down on order of a factor of 2 or so.

Okay. And I think in the last earnings call, you said you're already starting to work with AUMOVIO and getting ready for that next year. I mean how are things going with them?

Yes. It's not like getting started with these automotive programs or many year programs, as you know. And so we've been working with them for, I don't know, 5 years or so at this point, and we're well along in that program and continue to expect to launch that in the back half of next year. And that, by the way, is another superpower for us on the supply chain side, right?

For a company like us, we are very good at the system design. We're very good at the automated driving part of this. But managing the supply chain is a whole additional skill set. Doing significant DFM at scale is another skill set. And this is a thing that we're smart people. We could go hire a bunch of great people and do it ourselves or we could lean into a partner who has aligned incentives and work with them and do it in a way that is much more capital efficient and delivers exactly on the objectives we're trying to together. And so we're thrilled about this. This is big deal. And it's -- Philipp and the team at AUMOVIO are tremendous, and we've kind of grown together over the last several years.

That's good to get that update. I guess speaking of partnerships, Uber has been a partnership of yours. They've owned equity for part of the tech team that you brought over years ago from Uber. Well, so I think Uber Freight as well. They did sell some stocks. It's public, so I don't know if you can share anything around how that partnership is going. Any changes given what they did [indiscernible]?

I appreciate you bringing it up. This is one of those questions, so maybe just take it head on. So the question is like, hey, Uber is a big shareholder. Do they know something I don't? And so they're dumping it because they know that. And the answer is, no, like definitively no. Uber has been clear. The management team over there, Dara has been very clear that they had put a lot of money into our partnership, and we're a significant shareholder. And they need to recycle that capital from us into their kind of automated robotaxi fragmentation strategy to ensure that there are many players to support their marketplace on the AV side of it.

So it makes total sense. They've been clear and transparent about it. We have -- I continue to very much appreciate Dara, continue to very much appreciate the relationship we have with Uber and Uber Freight. I'm also actually kind of happy to see it happen, right? It sucks those days, but the fact that we're taking this large shareholder and dispersing those shares out into folks who want to hold the stock, and if you look at the quality of the shareholder base we have, it is awesome.

And so it had to happen at some point. Because I like Dara, I think he should have held it longer and like actually made more money off the shares. But for everyone who's coming to the stock, I think this is great, and it allows us to diversify the shareholder base. It is something that is actually long-term sustainable because, at some point, they're not Berkshire Hathaway. At some point, they're going to divest it. Let's do it now, get it out of the way.

Helpful context. I want to talk a bit about the business model and pricing. At the 2024 Investor Day, Aurora spoke about how ASPs under the Driver-as-a-Service model could be $0.65 to $0.85. Obviously, there's been a lot of inflation in the whole economy, including in wages for truck drivers. So as you think about the economics of the business, any thoughts you can share around where pricing can land?

Yes. We -- I think the last time we shared something around pricing, we said we expect it to be $0.85 plus per mile in Driver as a Service. And we continue to see that moving in a higher direction, right? The cost of labor is going up. It will continue to. This government has taken -- this administration has taken a stand about removing nondomiciled commercial drivers from the market. That further tightens what was already an undersupply of drivers. And so we expect this to continue to go up. So we look forward to having the Aurora Driver in market working side by side with people driving trucks, and we continue to see that human labor cost as a very significant pricing umbrella for our product.

Yes. I mean, I think some of the data you've shared, I mean it's third-party data, but driver wages and benefits alone are north of $1 per mile and have been increasing.

Yes. Our best estimate today is that based on ATRI, which is the American Trucking Research Institute, that direct wages plus indirect are somewhere around $1.18 a mile. And so when you think as a customer of Aurora, the cost of the driver that we could provide, the fact that we will improve fuel economy for you, today, we're seeing 10% improvement in fuel efficiency like for like between our automated vehicles and when our humans are driving the trucks. Given the cost of diesel today, that's actually a pretty big deal. The improvement in road safety that we expect you'll see and then the fact that you'll be able to utilize this asset twice as much, all of that means that this will be transformational for your business to the customer. And we look forward to really helping our customers realize that benefit.

Your autonomous technology, both from the software and hardware side, can be applicable to a lot of different areas. You guys have spoken about the potential to do robotaxis. You also have an interesting Lidar. Some Lidar companies are even taking their semiconductor chips and trying to repurpose those into other areas like into the data center. So would love to get your thoughts. I know you probably talked about this for an hour. But any kind of things where you may think about your software or hardware being applicable to other areas that you can point to?

So let me begin by saying truck in the U.S. is a $1 trillion market, and we are well ahead in that market, and we are going to go play to win in that market, right? Shame on us if we squander that opportunity because we can create an immense amount of social good and immense amount of economic value and a lot of value for our shareholders and customers, right? So let us go win that and make sure we don't take the eye off the ball there.

At the same time, the capabilities we've built as a company to understand the world, to validate safety-critical software and if you think about an 80,000-pound truck driving down the road at 70 miles an hour, that is pretty freakin' safety critical, and be able to take that process and tools and all the rest of the infrastructure we have and point it to other applications is super exciting, right?

And whether that is look at medium-duty trucks, box vans and box trucks or whether that is go look at robotaxi or whether that is looking mining and agriculture or aviation and drones, like there are a lot of places where we can go find ways to take this competence we've developed and apply it.

And we're going to start doing that. And of course, we're going to be looking at international markets as well that are very relevant. But we are not going to take our eye off the ball of delivering the product promise here in the U.S. and making sure we take every advantage we can of the lead we've invested and built.

Okay. No, makes a lot of sense. Maybe talk about funding the company. You are still cash flow negative. You talked about a path to cash flow positive. But how long might that take? And any sense of the capital that may be needed in the meantime?

Yes. We feel like we are in a very strong position. We had a strong balance sheet, I think $1.2 billion of the balance sheet at the end of last quarter. That positions us as well to go win in this space, we think. We continue to expect to get to free cash flow positive on a run rate basis in '28. And so we feel very strong about our position.

Well, I'd be remiss if I didn't mention you have an Investor Day coming up in just a couple of weeks. So I'll be seeing you shortly in Texas. But any things you'd point to that investors should be looking out for as we head to Dallas?

It's been a couple of years since we've hosted one. We're very excited to have folks out there. I think we'll take an opportunity to share a bit more about the business. We will be offering folks there an opportunity to come ride in a driverless truck, which is pretty darn cool. So tune in and look forward to seeing you then.

I've got my slot on the agenda. So I'm really looking forward to doing that. I mean, you and I were talking, the last one you did in Pittsburgh was kind of on the test track and it was really fascinating to see it from standing on the side, but this one, we'll actually be doing it ourselves.

It was fun, right? I still remember walking up to our test track and you see these 2 giant trucks driving around. It kind of felt like swimming with whales. It's a whole other level of real once you get in the truck and it's on the road. And when you do that, and there's nobody behind the seat and it's just -- and knowing that this is happening day in and day out is a big deal. And I think it's going to be -- it's a lot of fun, right? And I'm still an 8 year old at heart. You see a big truck. That's pretty darn cool and then you get into it, and it just goes. It's spectacular.

Well, I can't wait to see it in a few weeks. Chris, really appreciate you joining yet again this year.

Appreciate it. Thanks so much.

Thank you, everyone, for joining us today. Before we begin the Q&A portion of today's town hall, I want to quickly note that as you just saw at the end of the video, we will be making forward-looking statements. These statements are based on assumptions and beliefs as of today's date and are subject to risks and uncertainties that could cause actual results to differ materially. Please refer to the risk factors and other disclosures in our most recent annual report on Form 10-K and our other filings with the SEC.

Now on to Q&A.

First, thank you to everyone who submitted and upvoted questions. We had a tremendous turnout. We're going to extend our time together today to cover as much ground as possible.

A quick note on how the segment will work. We'll be addressing the top of voted questions submitted by our retail investor community, all of which have been anonymized. Please keep in mind, we aren't in a position to provide investment advice, and we won't be discussing our financial outlook beyond the 2026 guidance we've already provided.

With that, let's dive in. Chris, Dave, the most upvoted question we received is, there has been a lot of speculation about AI leading to commoditization of autonomous drivers. How would you respond to this speculation? Do you believe Aurora has a defensible moat? Is the industry nearing an inflection point where it's nearly impossible for new competitors to enter the market?

That's a great question, right? We're all seeing the incredible advances in AI, and we're seeing those actually help our business and help move us forward. It's important, though, to understand that there's a big gap between a demo you could write code together or the way that you can leverage AI to get part of the problem, what it takes to really solve and industrialize a safety critical problem like what we have.

Deploying our models on the road, we take the responsibility of that very seriously. I think anyone should. We're operating an 80,000-pound vehicle moving at 70 miles an hour down the freeway. There's a lot of things that go beyond just kind of train it quick on a model or train a model quickly and then see what happens.

Beyond that, we're actually making a physical thing. And we've invested over many years into 3 generations of hardware, the hardware that we had on the road initially that allowed us to prove the technology, begin operating driverless, do that safely. Our second-generation hardware that we just launched now that will allow us to scale to 1,500 units. And then our third-generation hardware with AUMOVIO. That supply chain moat, the know-how that comes along with that, the ability to actually just produce hardware, I think, is going to be an incredible asset for us.

Of course, we also have this amazing network of customers and ecosystem that we've built around us. And each day that we're operating, as we put more trucks on the road, as we learn more with those customers, so those customers learn more about the Aurora Driver, get used to using it, that first-mover advantage and lead that we have, we think, will continue to compound. It's important to note that today, we are the only company running driverless trucks on the road. And every day we're doing that, we are learning. We're building trust with customers. We're building that base, and we think that, that will continue to compound into an advantage, and we really see that moving forward.

So do I see us having a moat? Absolutely. Do I see us continue to widen that moat? For sure. And do I think AI is an important part of how we are going to continue to build the Aurora Driver, how we operate our business? Absolutely.

Absolutely. Our next question, what's a realistic -- excuse me, given the existing liquidity is sufficient to achieve positive free cash flow by 2028, when do you expect to transition away from equity dilutive financing such as the ATM Program and incorporate nondilutive methods, say, debt facilities or equipment financing?

Thanks, Stacy, and thanks for the question. It's a great question. And we're always concerned about dilutive financing, and we take this impact on shareholders seriously. At the same time, we need to make sure that we have sufficient cash and runway to operate our business with the flexibility that's needed.

We think we're in an amazing position right now. We have a really strong balance sheet, $1.2 billion in liquidity, which we believe will get us to a positive free cash flow in 2028. When you think about the ATM usage in the near term, really, it's -- for us, we're only planning it to, one, cover RSU tax liabilities and cash bonus payouts in 2027. And then we'll use it opportunistically like we've done before.

I think for us, we have to continuously evaluate what financing mechanisms we have in place to make sure that we have an appropriate cash balance, not just to achieve positive free cash flow, but an appropriate cash balance for the long-term. And so we're always exploring new opportunities, and we're really excited about where we are today.

Great. Thanks, Dave. Moving on to the next one. What's a realistic time line for converting current pilot evaluation relationships into named binding customer announcements?

Yes. So great news is this has already happened, right? We are revenue generating with customers today. We're excited to see customers on the road making commitments. We've shared a number of customers who are operating with us and we'll continue -- we expect to continue to grow their fleets.

It's really important to understand the context of the conversation here, right, that self-driving trucks are a new thing. We -- as we began operating them, we were really fortunate to have an incredible set of customers who are top-tier, best-in-class in the logistics space that are learning with us and adapting it -- adopting this technology. Of course, they want to see it.

I was talking with Zac, who leads our BD team earlier today and -- or leads our BD team. And back in 2023, it was kind of -- we'd expect it to take a couple of years, right? This is just brand new. It goes through a process. They have to get comfortable with it. There really isn't other proof points out there of this working.

At this point, the initial conversation often we have with the customer ends without sending them a contract. And on that contract, we're talking about driverless operation. So we're excited to see this. The validation we get from our customers, these incredible partners that we have is really helping fuel the funnel and momentum here. And we're seeing a lot of demand, right? We mentioned we're already fully allocated for this year, and we continue to see demand for our Driver as a Service business going forward.

Absolutely. And our next question, how many Aurora Driver equipped trucks do you expect to be fully driverless and generating commercial revenue by the end of 2026 and the end of 2027. And what are the main constraints that could prevent production capacity from converting into deployed trucks?

Yes, that's a great question. Again, for 2026, we're really excited about where we are. We expect -- and again, our target was to have at least 200 trucks operating commercially driverless on public roads, and we expect to achieve that. And we're fully contracted to be able to achieve that right now. So for us, 2026, we've got clear line of sight.

Importantly, one of the things that was critical is not just 2026, but do you have the capacity? Do you have the partners in place to go and achieve some of our scale goals? Like we've talked about scaling to 1,000-plus trucks in the future, right? And for us, we've got our partnerships with Roush that will allow us to build 20 trucks a week by October, sometime in October time frame, that equates to 1,000 trucks a year. We've got the Volvo partnership where they've announced planning to have up to 300 trucks deployed by 2027.

We have strong partnerships with a lot of our other partners such as Fabrinet, who's going to supply our kits for this next year. For us, the focus is on execution and coordination, and that was what will help us ensure that we can deliver the trucks that are out there. And I think Chris already talked about the strong foundation we have with the customers to have the demand side. So we're really excited about where we are today.

Great. Moving down the list. You've highlighted customers planning to deploy large fleets. From a customer perspective, what is the payback period or ROI they expect when adopting the Aurora Driver compared to traditional human-operated trucks? And how quickly can they onboard these units into their existing operations?

Yes. Also a really good question. There's always a little bit of a misunderstanding in terms of like the ROI. So for our Driver as a Service business model, it's important to note that for the hardware itself, which is a key component of the Aurora Driver, customers are not buying the hardware. That's embedded in their subscription price. So they're buying a truck. So they don't necessarily think about it in the traditional ROI way of I'm spending more capital. They look at what's the value proposition. And for us, it's important to talk about the fact that they care about total cost of ownership, right?

And in addition to all the safety benefits that we're so confident we're going to be able to deliver, we are driving real cost advantage, whether it's labor savings, whether it's fuel cost savings that can get anywhere from 10% all the way up to 32% when we continue to optimize. We've got reduced insurance overhead. And of course, we're able to double the asset utilization. So a truck can run 20-plus hours today. There is no hours of service limitation. So for us, these are all really important elements of the business and the value proposition for customers.

I think the second part of this is on the onboarding is our focus is really seamless fleet integration. So we want to make the onboarding as straightforward as possible. Obviously, we're going to target that with Hirschbach and the announcement of the 500 trucks across 2027 and 2028. But our goal is to have an autonomous truck go out the same way a regular truck goes out with the same amount of effort, not an increased level of effort. And so that's been our focus. That's why we've been piloting with customers so long to really refine this element. So we're excited about where we're headed.

Great. Thanks, Dave. Our next question, how long does it usually take to establish a new truck lane to another city? Might you have any timetable to go to more destinations? Any color is appreciated.

Yes. This is one of the things that I'm super excited about is if we look at how long it took us to roll out new lanes, we're on this just dramatically improving trajectory. The first lane obviously took us about 8 years to get to. We opened our second lane in about 6 months, and we opened our third lane in 6 weeks. And we continue to see that accelerating.

When we look at what it takes to open a new lane, there's really 2 capabilities. So one is we want to provide the Aurora Driver a map. It allows it to have a prior understanding of what's happening out in the world. It really increases the performance of the system. And so that is -- our ability to build those maps continues to accelerate. We just do not see that as a rate limiter going forward.

The second is that the software has to be able to drive on those -- on the places in the map, right? It has to be generalized enough and importantly, not just kind of generalized and hope that it works, but generalized and us have certainty that it will work. And so as we look at the performance of Aurora Driver now, it is very generalizable or it is very generalized. It works a lot of places. We go through for each of these new lanes and do an assessment to make sure there's not something surprising on that lane that would put us out of the distribution that the driver is used to operating in.

And that kind of safety step is critical because, yes, we could probably go one-shot and run these places. That's cool. But we're not really in the kind of the science kind of experiment business. We're really in the production business, and that means we want certainty and our customers want certainty in the safety of that. So we go through this process.

Overall, this is really quite a quick process for us. It's going to continue to accelerate as we put more and more automation and the tooling for this. And it's really going to be driven purely by where the customer demand is so that we can meet those customer needs. And we're excited to see ourselves expanding across the Sunbelt this year and then across the rest of the United States over the coming years.

I think I would just add, important to note, we're fully allocated on the 200 trucks we expect to exit the year with our current routes.

Yes.

And our next question, could you address the recent pattern of insider and affiliated fund share sales filed under SEC rules? How should retail investors interpret these sales relative to management's internal view of the company's long-term valuation and upcoming commercial inflection points?

Yes. So I would say relative to management's long-term view of the company, I think it's a mistake. I'm kind of incredibly excited about where we're going with the company. What I'd say is I think this is something we should talk about -- we want to just talk about directly. And kind of the question that comes to mind is, do they know something I don't know, right? And the answer definitively is no. This is really just a natural function of kind of the capital cycles that are associated with these businesses.

We have been blessed to have early investors that kind of stuck with us and have been with us for the 9-plus years that the company has been around. And in the VC world, those funds, the way they work is they take capital from a limited partner and they have a time horizon that they ultimately have to return that capital to the partner. And what we're seeing is those early funds cycle through and cycle out.

The unfortunate thing for us is that because we went public through a SPAC, there's this SEC technicality, which complicates the transfer of those shares. And so effectively to return the capital, they're having to sell the shares in the market. So for us, this looks -- this is a normal part of the capital cycle. It's not anything indicative of the state of the business. It's really just a testament to the patience they've had with us and the progress we've made in the company. And so we're incredibly thankful for the companies who have -- who supported us and been investing with us.

The other thing that we've seen is Uber moving out of their position in Aurora. And again, this is both a natural thing and I think a good thing. Uber is not a holding company, right? They're not Berkshire Hathaway. They're not owning companies just to kind of see the appreciation of the value. They're actually trying to put that capital to work to build their business. The management team at Uber has been transparent about needing to take the investment they made in Aurora and use that capital to fund their kind of somewhat fragmented approach to ensuring there is AV robotaxi players out in the market. And robotaxi is just not our business today.

And so again, this is a natural thing. As a shareholder of the company, a significant shareholder of the company, I'm actually quite excited to see capital that's not going to be here for the long-term rotate out and get replaced with folks who are going to be holding shares. We have this incredible investor base. And they -- it's kind of just proud to have the folks that are with us along for the ride and excited to see that stage of capital investment kind of be able to ride along as we continue to execute and hopefully see a lot of value creation here.

Yes. Thanks, Chris. Our next question, are you still expecting sufficient liquidity until cash flow positive in 2028? I think Dave addressed that one. So we will move to the next one. PACCAR is named as one of Aurora's partners. Where are they in developing their autonomous trucks?

PACCAR is great. It's an incredible company. It's been incredibly durable. We're proud to be a partner of PACCAR. If you follow PACCAR, one of the things you'll know is they are famously tight-lipped about time lines. They don't -- something might be launching 3 weeks from now, they're not going to tell you about it until it actually launches.

And so for us, we're excited to see the progress that they're making on their autonomy-enabled truck platform. We're excited to be working with them to ultimately Lineside install what will be our third generation of hardware do that so that we can support our customers at scale. Just proud to see the progress that's happening. And unfortunately, we're going to have to honor kind of our partners' process here and look forward to sharing more with the time lines when we can.

Absolutely. Okay. Moving down the list. What is the latest update regarding the company's relationship with FedEx? And how do you anticipate that partnership evolving in the future?

Yes. Again, we're just so fortunate to have these incredible partners part of the Aurora ecosystem. FedEx is a very technology-forward company. We've been operating with them since, I think, 2021. We continue to work with them on key routes. We're excited to see where it goes with them. We expect that we can help them grow their business and support their customers, and I look forward to sharing more as we're able to do so going forward.

Great. What areas of the software still need most development to scale to 10,000 trucks, rescue rates, efficiency metrics, complex construction, fleet management?

Yes. I think right now, we're very excited about the state of the Aurora Driver. It operates day and night. It operates in weather. It's operating across 4 states today, and we're looking to continue to expand that. So we're seeing it generalized quite well. We're going to continue to be pushing on things that drive quality for our customers and reliability and availability. So all of the things mentioned here will continue to improve.

One of the areas that we're excited about recently is the kind of dynamic rerouting. So if the primary road is closed, we have the ability to kind of find alternative routes nearby. We continue to expect to see improvements and increases in the kind of weather conditions we can operate in. We've shared by the end of the year, we expect to be operating in light snow and colder weather. And so all of that will really ultimately compound into value for our customers and make the Aurora Driver even more useful for them. So we continue to push on that.

We continue to see really good progress on improving our operating efficiency and our ability to kind of get to a point where this will ultimately be profitable on a unit economic basis and then ultimately achieve the margins that we're aspiring towards.

Great. Truck driver and investor here. I'm very keen on hearing how you were dealing with highway work zones. They tend to be very messy. For example, the lines on the road often are not drawn properly or even visible at all during heavy rain.

Yes. This is a great question. And as a truck driver, you've seen kind of the craziness, which is American highways. And this is why we take safety so seriously, right, is that, again, you could throw a truck out there and have it drive with an automated system, and it will seem to work. And it will work pretty well. And then you'll come across one of these places where the cone zones and the folks who do construction on our highways work hard. They give it their best, but it is a difficult demanding environment. And it can be confusing.

And this is one of the places where we've invested heavily. It is making sure that we can actually interpret these scenes where we can use a combination of cues from the geometry of the cones or barriers, the paint on the road, the shape of other -- like these are all cues that we're able to incorporate into how the Aurora Driver responds to it, much like a person will do in driving through these scenes. So really great question is an incredibly challenging problem and really proud of the progress we've been making and the capability that we have to operate through these conditions today.

For sure. Our next question, you've shown an exciting route map for 2026 expansion. Can you provide us with a priority list for which opens first with at least a rough timeline for expansion?

Thanks for the question. Yes, we are really excited about where we're operating today, right? We have 10 driverless routes approved today. We have 12 routes overall that are active, the last 2 being up and back to from Dallas over to Oklahoma City. These routes are foundational for our 2026 volume -- contracted volume allocation. So we're basically going to take those 200 trucks and operate them on those areas. Obviously, we can't stop with that. We have a build plan and aspirations to grow. We will continue to front-load new routes where we can continue to offer. A lot of that will be based on customer interest, right?

Some customers want to go maybe to Memphis or to Atlanta or we added Laredo not too long ago, and that was kind of really strong customer demand. We'll connect some of the triangle, the Texas Triangle. So we're going to go where our customers want us to go. I think Chris mentioned, when we're sufficiently generalized and able to go in a lot of areas, it doesn't take long to do that. And so we're really going to follow the customer demand as the key component.

I think when you look at the end of Q3, we're going to be operating 20 to 25 trucks. End of the year, 200 trucks, but like we'll have to have more routes, and we'll announce those routes in advance, but you'll have to have more routes to scale the business in '27.

I kind of looked at where we are in '28. When we start '28, we're going to be operating through a large portion of the Sunbelt and even up a little bit north of that. We expect that, that's going to represent about 60 billion vehicle miles traveled, including the addition of California that recently announced a process to go to driverless, and we have that permitting process. So we're really excited about where we're headed and more to come. We really want to be customer-focused in terms of the next priority.

Great. Thanks, Dave. Our next question, you have more supply capacity than you were contracting for even 2026. I think you have built enough muscle in sales. Thought about what's required transitioning from an R&D lab to a commercial company. Do you have the right people in place, evidence of customer benefits you claim to be transformational?

Well, this is a good question. So I'll try to hit most of them. I think the one thing is, I think for 2026, kind of our supply and demand are well matched, right? Like again, we said we're going to have 200 trucks operating. That's what we have. So if we had more capacity, I'm sure we can fill it, right? It's just -- we kind of got to balance the supply and demand side pretty well.

We are very selective in terms of how we think about partnerships and partnership strategies. It's not just about running a couple of trucks this year. It's about the ability to scale a Driver as a Service business. And so there might be some customers that aren't as valuable in that area. So we have to kind of segment them differently and continue to demonstrate the proof points.

In terms of like the transition of the team, like our R&D team is great. They're going to continue to give us this outstanding leadership position in terms of technology capability, the only company that is operating driverless on public roads. The sales team, the business development teams, they are growing appropriately with where we're headed. We're adding incremental skill sets. It's not just about the sales. It's about the customer support. It's about the integration with the fleet partners. And so it's a little bit more than just selling the product. This one takes a little bit more integration.

In terms of transformational elements, look, we wouldn't be here today if we didn't think that we're transformational in terms of safety and what we can provide the industry. So I think that's really important. But if you want a couple of others, we have the ability to double the asset utilization.

So let's say, a 200-truck fleet can operate like 400 trucks operating with human drivers in terms of the service. So that's very transformational. And if you think about the cost structure of this industry, it's a tremendous industry. It's been around forever. They're super efficient. This is -- but this is a technology unlock that can drastically change the total cost of ownership perspective. And that's what transformational technology is supposed to be able to do. And we can do the cost, the safety, the efficiency, the asset utilization. There's very few technologies that can hit all of those levers. So we're really excited about where we are. Now we're going to go execute.

Well said, Dave. And our next question, what are the limiting factors stopping you from kicking into the next gear and running faster now that you have real autonomous trucks?

Yes. This is exciting. If you've heard us talk, we consistently talk about crawl, walk, run, right? And the first generation was really about crawling, making sure that we could deliver something safe to the road, really start to pilot value for customers, really make sure we're getting the safety right. We're doing something, as Dave said, that is transformational that the outside world looks at and is surprised that it exists. And so we want to be good stewards of that as you're going to have to vanguard of this.

We're now definitely into the walking and starting to pick up our pace phase. The fact that we're going to go from a handful of trucks to 200-plus trucks on the road at the end of the year, like that is a big deal. It is kind of exponential scaling. And then we expect that the next year to take another large step in the number of vehicles we have on the road. So we're very excited about this. You're going to see us continue to accelerate.

I don't think there is anything to stop us from accelerating. That is -- this is a deliberate pace we put -- we're executing at. We're excited about it. We're excited about the ramp that's coming, and we'll look forward to continue to build the business responsibly and create a lot of value here.

Sure. Moving down the list, our next one. How do you cope with difficult to detect conditions such as flooded roads and black ice?

Yes. This is a great question. Again, this is where you don't dilly-dally with it, right? Like we take the process of putting these vehicles on the road really seriously. We have a whole systems engineering function whose job it is, along with our engineering teams to think about, okay, here are the challenges of the vehicle face on the road. Here's how the nominal system responds to it. And then what are the mitigations or additional safety features we put in place around that.

So for our system, when it's driving down the road, it's constantly monitoring conditions. If it gets into a condition where it's starting to feel kind of to humanize uncomfortable, then it will take an appropriate response. That may be it will slow down to 55 miles an hour from 65 or 75. It may be that if it's appropriate, it will pull off the road to find a safe haven and let weather pass if it's a particularly heavy storm or something like that. Or it may be in really particularly bad conditions, it may be pull the shoulder and stop you blow out a tire, that's what it's going to do.

And so the ability for the system to understand the environment around it, respond appropriately and make sure we've kind of done our work upfront to identify hazards to -- so that we can respond is key to the whole process.

Great. Moving down the list, will Volvo trucks be solely equipped with your hardware? We see that they are also working with other virtual driver competitors.

Yes. Volvo, again, another great company, proud to be a partner of. They've shared that they expect to be operating driverlessly in Q1 '27, and then they're going to build to a few hundred driverless trucks, 300-plus driverless trucks next year. We're excited to be a launch partner with them on that. We're looking forward to having our driverless trucks on the road. We don't necessarily expect this to be a winner-take-all market, but we do expect a winner-take-most, and we feel pretty darn good about our position in that race.

Great. Our next one. Chris and David, thanks for doing this. Since launching driverless operations, are partners seeing cost savings or other business benefits? And what's the most encouraging feedback? And looking ahead 12 months, what do you think long-term Aurora investors should be most excited about and why?

Yes. Thanks. Great question. I think the strongest feedback we get is that they want more, right? But you can use a lot of platitudes, you can talk about the elements of it. But at the end of the day, our customers are coming back and saying, yes, we'd like to grow the fleet that we're operating with you and ultimately own and operate these assets. So we think that's really excited.

The pipeline is strong and the customer interest. We actually have more demand than we can supply this year, which is exciting as a company, an exciting place to be. And what we see is this kind of multiplicative factor, right, that as we are able to bring excited customers, some of the luminaries in the field into the fold to be customers of ours, that it gets more interest.

There's a lot of, "Hey, that company that I respect thinks this is a useful product. I should check that out." We end up having those conversations and the flywheel kind of accelerates. So really just excited to see the investment that the team has made here in time and the investment that our investment partners have made with us start to translate into real value to customers and ultimately value to the company.

Great. Switching gears a bit here. More of a technical question. What gives you confidence in the simulator accuracy so that Aurora can handle correctly and timely in edge cases, such as a pedestrian getting thrown onto by another vehicle or a multi-vehicle pileup on icy freeway or police highway chase in wrong lanes, the crucial factor when scaling operation?

Yes. This is a great question, really insightful. A simulator by itself is just a video game, right, that it's pretty pictures in some physics to actually get to the point where you can trust a simulator and ultimately use it as part of the evidence we use to close our safety case, we actually have to ground it, which means going out and gathering an equivalent scene in the real world and one in the simulation and confirming that at each level of fidelity that matters that we're matching. We have a process internally we call -- I think it's the STAR process, where we'll go through and ensure that our simulator is actually fit for purpose for whatever the test we're going to run is.

And this is not just kind of an academic exercise. We've actually, at times, found like, hey, there's a gap between what we expected -- what we saw in simulation and what we see at the track. And so then that turns -- creates an engineering iteration loop for us to go and figure out, okay, why is that? Is it something in the simulator has some of the way the systems plug together. We can then iterate and then ultimately, we can close that out and say, okay, now we're convinced that this works.

An example of this was for us with a very -- this is several years ago now, but with a very high-speed motorbike crossing the road in front of the Aurora Driver and blowing through a traffic light, there's -- we observed that the perception system didn't track that cyclist in simulation the same way that it did in the real world. And so we were able to take that, go figure out that actually, yes, the thing that we found in simulation was actually something we need to work on in the perception system, but there was also an issue with the way the simulator is working.

And so by closing that loop, we get to a point where we have conviction that, yes, the simulator serves these purposes. And then for other purposes, we have to go and do track testing or we'll go and use real-world data from other sources to get conviction in the performance of the system. We have this massive test volume that comes out of this. And ultimately, the processes that we use, we have review to go through to make sure we have conviction these things actually are valuable and work.

Great. Another bit of a technical question here. How does Aurora handle sudden extreme weather events that exceed the Aurora Driver's operational design domain? Specifically, what protocols are in place to balance safety with delivery reliability being on time when trucks must execute minimal risk maneuvers or pull over during unexpected conditions?

Yes. Another great insightful question here. So first, if you ask any of our customers, it's not a balance safety with on-time delivery, it's safety first, right? And we take that philosophy here as well. And so that is the priority, and we put that ahead of time.

This idea of being out of ODD, it turns out once the truck is on the road, you have to deal with what's there. Now it may be that you deal with it by minimizing the time that you're in that condition and get off the roads we talked about earlier, much like a regular truck driver does, right? If you're in a monsoon rain in Arizona as a truck driver, there's a point where it's so bad, you pull the side of the road and you find a way on your own and pass you get off the road because it is just too difficult driving.

We handle that the same way with the Aurora Driver. We also do proactive avoidance. So part of our -- the Aurora Services layer is this command center where we are monitoring real-time conditions. And if we notice this particularly -- if there's a hurricane or there's particularly bad pattern of weather, we're able to actually proactively avoid encountering that condition, have the vehicle wait it out and then continue to -- on its way.

One of the advantages that maybe is not obvious here is that because the Aurora Driver doesn't have an hours of service limitation, it's actually okay for it to wait it out. And it doesn't have to need -- it doesn't have to kind of double down and white knuckle it through the weather because otherwise, it's not going to get where it needs to go before it gets to a hotel or is able to sleep with a truck stop. They can just patiently wait, let the weather pass and then get on its way. And again, given that for our customers, it is safety first and then everything else after that, this is something that we feel very confident in.

Great. Our next one is back to more of a business focus. As Aurora expands from its initial launch lanes, what do you believe will be the biggest bottleneck to scaling from hundreds of autonomous trucks to thousands? Is it hardware production, carrier adoption, OEM manufacturing capacity, regulatory approvals or something else?

Yes. It's also a really good question. I think if you look at the demand side and the regulatory side, we really don't see those as bottlenecks today. I think we've talked a lot about the demand and the value that we can create and the interest that continues to come. So we're pretty excited about that.

If you -- and again, looking at some of the value proposition things we have like the 2x utilization and the lower cost. I think -- the regulatory landscape is very favorable right now. If you look at the existing laws and regulations that are on the books, we can apply or operate autonomously in the vast majority of the U.S. today. And the momentum, at least at this point, has been pretty favorable for autonomous technology adoption. So we're excited about that.

Certainly, in the past and even today, we have to manage the capacity side of the situation, right? We're building our second-generation hardware set that we've just launched. We had to utilize a partner, Fabrinet. They're a leading contract manufacturer, and so they're going to build our second-generation kit. And then I think you all know that we've partnered with AUMOVIO. They're a leading Tier 1 partner to build, design, engineer, manufacture, even finance and service our third-generation hardware kit. So we're super excited about that. We have mutually aligned incentives with them. So -- but there's always an element where you have to balance that capacity and make sure and address the key issues.

What's great about like our third gen with AUMOVIO is they're way better equipped to handle supply disruptions than we are today, right? Like they're just a more capable company. They've got a couple of thousand purchasing and supply chain folks and like that's more than our company today. So like we have a really solid partner.

I think the other thing we have to match is we have to match the demand coming in from the kits with the OEM supply of trucks, right? And in the past, this has been our primary constraint. But we've been working with our partners to try to eliminate and make that not a constraint anymore, but just continue to make that an advantage of the overall business.

Again, Volvo is going to be launching next year. We have a really strong partnership with PACCAR. We have really good supply of trucks from International. So we're really managing those, but really, it's really the capacity that we have to manage the most from a constraint perspective.

Great. Thanks, Dave. With the 200 truck capacity for 2026 fully allocated, what level of commercial demand or preorders are you seeing from major enterprise carriers for the 2027 to 2028 DaaS rollout, DaaS being Driver as a Service. Are Tier 1 carriers ready to commit to multi-hundred unit fleets once driverless operations are proven at scale?

Yes. Well, for sure, Hirschbach is a pretty good example of this, right? They've outlined plans to purchase 500 Aurora Driver trucks starting in '27 and '28 in the DaaS business model. So that's one example. We are working -- as I mentioned before, every partner that we select is with an eye towards the Driver as a Service business. So it's not just a pilot or getting a couple of trucks, it's always with the long-term plan in mind. We're actively negotiating for additional Driver as a Service commitments today. We'll be excited to share those in the future. These are large enterprise customers. So we're really excited about where we're headed.

Excellent. Okay. This is a bit of a logistical one. I'm looking for more logistical information. Does the truck back into docks without human intervention? Who fuels up the vehicles between stops? Who performs DOT inspections? Has AI and onboard centers replaced manual inspections? Do these vehicles bypass weigh stations?

Yes. Another great question. So today, we're really focused in doing the core. This is where the biggest value is for our customers. So leaving a customer gate, getting down the road and getting to the customer destination and delivering the goods there.

That's really where the biggest value unlock is customer, that's the thing that we want to do. We're really focused on drop and hook type operations. So we're not backing into docks today. Ultimately, we'll do that, right? Driving around a yard at low speed is something we can take on, and we don't see as particularly complicated or difficult to add. It's just not the core focus of the value to our customers.

When you're in the yard, there's other things that people have to do. Today, of course, like the most obvious one is just connecting the air hoses, right? That's a human thing that we're not putting the robot arms on the truck to do or anything like that. So there's definitely these human loop touch points.

If I just go through the elements here, so who fuels up the truck? We're actively running tests to try and find ways to work with existing infrastructure. So partners that have truck stops not far away where the Aurora Driver can drive up, notify ahead of time so that the attendant is coming, pull in, how to get fueled, get sent on its way to be able to leverage the infrastructure that exists and to kind of build that and continue helping accelerate those businesses ultimately over time.

Inspection, that's something that, of course, we need a person to do these things where you have to go and look and touch parts of the vehicles. So that will be part of one of the rules that will happen at the customer sites is our expectation. And then yes, we're able to bypass certain weigh stations just like people driving trucks are today. But we're also working with law enforcement to be able to transit through weigh stations when required to do so by the authorities. So we'll continue to kind of find ways to meet the world where it is today and integrate the Aurora Driver in a way that is seamless and useful for our customers.

Great. And I think we addressed this one a bit before, but if there's anything in other detail you want to provide, what is Aurora doing to address potentially driving in heavy snow? It seems snow is going to be a major bottleneck for Northern expansion. Trucks have to run year round.

Yes, absolutely. And today, of course, we're operating in the southern states. And part of the reason to do that is the weather is better. And it's really -- and there's this mythology that driving heavy snow is going to be this whole other thing, and it isn't, right? The reason why we operate in good conditions today is because that way, we don't have to boil the whole technical ocean to solve all of the problems. We can actually create value for customers in the near term.

When we think about operating through snow, it's comparable to operating through dust or operating through heavy rain, right? It just happens to be white and more flaky. And this is where we think things like our multimodal sensor technology, the combination of LiDAR, radar and camera gives us a huge advantage. This is where things like our proprietary FMCW FirstLight technology allows us to be able to penetrate through and kind of differentiate falling snow from physical things in the world. We can do clever things with looking at the traction response of the vehicle.

So like there's work we need to do here. But it's -- like I said, we expect to be operating in light snow later this year. And then we'll find the right time to introduce operating in heavy snow in the coming period of years.

Great. We have time for one more. So our final question for today, and it's been partially addressed, but partially not. How and where are Aurora trucks refueled during a highway run? Who fixes a flat tire or motor, et cetera, issue on highway?

Yes. Another great question. So first, it's important to realize those of us who aren't around trucks a lot, they have gigantic fuel tanks, 1,000-plus mile range. And so they can go a long way. So this is not like my normal car road trip kind of experience. And so first, there's that. And some of our customers will fuel on site because they see benefits to that. But as I mentioned, we're working with partners to figure out how we can actually have the truck pull into truck stops and use kind of used fueling infrastructure that already exists.

In terms of fixing a flat tire or an engine issue, this is going to look just the same as it does today, right, that if a truck breaks down on the road today, they're going to call their service support, like someone like Ryder, who we were working with today, will come out and bring a technician who can potentially change the tire more likely than not and tow the vehicle to a place to get a repair.

So we -- again, one of our approaches to build the business is to really work in partnership with other great companies and then to work with the world the way it is today and really kind of fit into the same structure, and that has a lot of benefits. It reduces the complexity of what we have to do. And it also allows that seamless integration that our customers and partners are looking for to allow us to build the business quickly and get out there and serve as many customers as possible.

Great. Thanks, everyone, for joining us today and for the incredibly thoughtful questions. We hope you found this town hall valuable. We'd also encourage you to tune in to our Analyst and Investor Day next month on September 23. We'll be announcing more details on that very soon. We hope you have a great rest of your day.

Greetings, and welcome to the Aurora Second Quarter 2026 Business Review Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce Stacy Feit, Vice President, Investor Relations. You may now begin.

Thanks, Paul. Good afternoon, everyone, and welcome to our second quarter 2026 business review call. We announced our results earlier this afternoon. Our shareholder letter and a presentation to accompany this call are available on our Investor Relations website at ir.aurora.tech. The shareholder letter was also furnished with our Form 8-K filed today with the SEC.

On the call with me today are Chris Urmson, Co-Founder and CEO; and David Maday, CFO. Chris will provide an update on the progress we've made across the key pillars of our business, and David will recap our second quarter financial results. We'll then open up the call to Q&A. A recording of this conference call will be available on our Investor Relations website at ir.aurora.tech shortly after this call has ended.

I'd like to take this opportunity to remind you that during the call, we will be making forward-looking statements. These statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed, projected or implied during this call. In particular, those described in our risk factors included in our annual report on Form 10-K for the year ended December 31, 2025, and other documents filed with the SEC as well as the current uncertainty and unpredictability in our business, the markets and economy. Additional information will also be set forth in our quarterly report on Form 10-Q for the quarter ended June 30, 2026. You should not rely on our forward-looking statements as predictions of future events. All forward-looking statements that we make on this call are based on assumptions and beliefs as of the date hereof, and Aurora disclaims any obligation to update any forward-looking statements, except as required by law.

Our discussion today may include non-GAAP financial measures. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results. Information regarding our non-GAAP financial results, including a reconciliation of our historical GAAP to non-GAAP results, may be found in our shareholder letter, which was furnished with our Form 8-K filed today with the SEC and may also be found on our Investor Relations website. Our discussion today may also include reference to forward-looking free cash flow, a non-GAAP financial measure. To the extent that this forward-looking financial measure is provided, it's presented on a non-GAAP basis without a reconciliation due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation.

With that, I will now turn the call over to Chris.

Thanks, Stacy. The second quarter represented a meaningful leap forward in our path to scale, anchored by a number of customer wins. To capitalize on this growing demand, we've launched our new fleet of driverless trucks based on the International LT series without a person behind the wheel. Last week, we debuted Aurora Driver 2, the combination of our new software, second-generation commercial hardware and this new truck platform. If you didn't get a chance to join the live stream, check out the video on Page 4 of the slide deck. This milestone officially moves Aurora into the start of our commercial scaling phase. Backed by this momentum, we are fully allocated to exit the year with 200 driverless trucks in operation and are in negotiations with a number of Driver-as-a-Service business customers for 2027 and beyond.

Our commercial momentum continues to accelerate after a strong start to the year, driven by a powerful customer flywheel effect. We recently executed Transportation as a Service agreements with two customers that aim to grow their networks with Aurora Driver-powered trucks, starting in Laredo, Texas, where near-shoring is driving unprecedented freight volume. Charger Logistics will utilize the Aurora Driver to add capacity on its network and drive higher utilization starting on the Dallas-Laredo route, one of the busiest corridors in Texas.

Value Truck will initially focus on boosting route density between two key corridors, Dallas-Laredo and Fort Worth-Phoenix. In addition, we expanded our operations with Volvo Autonomous Solutions with their launch of commercial freight service powered by the Aurora Driver for industry leaders, DSV and AVI-SPL.

Proving the value of our technology across complex networks and diverse applications lays the groundwork for widespread market adoption. Every new customer acts as a pipeline multiplier. As the broader logistics industry prepares to adopt autonomy, we're streamlining our customer onboarding cycle. This velocity is a powerful testament to the pent-up demand for a solution that helps address systemic industry bottlenecks.

While expanding our commercial relationships, the Aurora Driver completed nearly 440,000 driverless miles since launch through the end of June, maintaining 100% on-time performance record and zero Aurora Driver attributed collisions. With additional trucks entering service weekly, we expect driverless miles to accelerate meaningfully moving forward.

Our scaling plan for this new fleet prioritizes driverless delivery to and from customer facilities to further strengthen the Aurora Driver's value proposition. Our work with Detmar Logistics in West Texas illustrates this versatility. We have deployed driverless operations without a person behind the wheel between their facility in Midland, Texas and Capital Sand's mining site in Monahans, Texas along I-20. To support this deployment, we validated a frac sand trailer with minimal integration work, demonstrating the modularity and adaptability of the Aurora Driver.

To enable nationwide driverless trucking and ensure seamless end-to-end service for our customers, we recently began supervised testing of way station navigation and on-route fueling. While robotaxis will require extensive infrastructure build-out, the freight ecosystem's established service networks and turnkey truck stop footprint makes trucking a plug-and-play market for autonomous technology.

Leveraging this infrastructure, we're now piloting third-party fueling and scaling at truck stops. In these pilots, truck stop staff fuel the truck as the Aurora Driver navigates in and out of the fuel island. Looking ahead, truck stop personnel will utilize automated arrival notifications to efficiently secure, fuel and release Aurora Driver-powered trucks, enabling continuous long-haul travel.

To support customer demand that is accelerating, we continue to advance our hardware and autonomy-enabled truck programs. The launch of our new fleet of driverless trucks also marks the initial commercial deployment of our second-generation commercial hardware kit. Engineered for 1 million miles of operation, this kit is designed to significantly increase uptime and reliability. It also delivers substantial performance gains, including a more efficient computer and an extended 1 kilometer range for FirstLight, our proprietary long-range FMCW LiDAR. This long-range capability provides the Aurora Driver with more than 34 seconds of reaction time at highway speeds, setting a new superhuman standard for safety.

Crucially, we expect this kit to drive a 50% plus reduction in Aurora Driver hardware costs, a key lever supporting our breakeven gross margin target. We expect to have 20 to 25 driverless trucks in operation by the end of the third quarter. To support our scaling plan, our upfitter Roush has commenced manufacturing at a dedicated facility for Aurora. We've already received the initial builds and expect Roush to ramp to an annual run rate of 1,000 trucks in October.

Concurrently, our ecosystem for series production is on a clear trajectory to hit its stride. At Volvo Group's 2026 Capital Markets Day, the company announced plans for Volvo Autonomous Solutions to begin driverless operations on the Volvo VNL autonomous in the first quarter of 2027. These trucks will be driven by the Aurora Driver. They expect to exit 2027 with more than 300 driverless trucks, paving the way for industrial scaling in 2028. We're seeing broad enthusiasm and engagement around the industry with Volvo projecting $3 billion in autonomous revenue within five years. The industrialization of autonomous freight is definitively at an inflection point.

Volvo has already completed several Aurora Driver-powered trucks on their pilot line ahead of the first quarter 2027 driverless launch. Looking further ahead, we've also built Volvo development trucks equipped with components of our third-generation commercial hardware kit manufactured by AUMOVIO. Our partnership with AUMOVIO is intended to support tens of thousands of trucks. We look forward to testing these systems in the coming quarters ahead of AUMOVIO's planned start of production in the second half of 2027. In parallel, PACCAR and Aurora are jointly defining the path to a scalable launch of our third-generation commercial hardware kit integrated with PACCAR's future autonomy-enabled platform on their assembly lines.

We designed our strategy to enable our asset-light commercial model to be deployed across the leading truck platforms, giving us unmatched flexibility to meet diverse fleet preferences as autonomous trucking scales.

Our commercial readiness is matched by a highly supportive regulatory landscape. California recently joined the majority of other states in the U.S. to permit the deployment of driverless trucks. Last month, I had the privilege of representing our industry before the California Assembly Transportation Committee. This engagement provided an opportunity to share key learnings from our safe driverless operations, outline our thoughtful approach to regional expansion and foster shared confidence in the future of autonomous freight in the state. We have submitted our application to begin the required driver testing in California.

At the federal level, we're seeing historic momentum toward a unified national framework. In May, the U.S. House Transportation Infrastructure Committee passed the BUILD America 250 Act, 62-2, a truly bipartisan surface transportation reauthorization bill. This bill features a dedicated framework for the nationwide deployment of autonomous trucks that would help harmonize the current patchwork of state laws and addresses operational updates that Aurora has long championed. For example, the legislation would explicitly permit the use of cab-mounted warning beacons instead of manually placed warning devices when a commercial motor vehicle is stopped. We continue to engage closely with lawmakers to advance this critical legislation into law and secure American leadership in the global autonomous transportation race.

Improving road safety is an important component of that global leadership and core to the Aurora Driver's value proposition. To show you what this looks like in practice, I'd like to share a recent example that powerfully underscores our safety advantage. Earlier this month, one of our trucks was traveling on a frontage road in Fort Worth during a development mission. It was in manual mode, meaning the Aurora Driver system was not engaged in autonomy. The truck was being driven by one of our most experienced vehicle operators with over 2 million miles of Class 8 driving experience and a spotless safety record. The Aurora truck was proceeding into an intersection on a green light, which had been green for more than 25 seconds. Unfortunately, another vehicle entered the intersection against the red light and collided with our truck. Thankfully, no serious injuries were reported by either party. However, our truck and the other vehicles sustained significant damage. While the autonomy system was not engaged through a combination of log review and simulation, we were able to confirm the Aurora Driver perceived the red light runner nearly 6 seconds prior to the collision and would have slowed to avoid the collision even despite having the right of way with the green light.

Events like this motivate our team to keep doing this incredibly important work. Last year, we began operating the first driverless Class 8 trucks on U.S. public roads. As we continue to scale driverless operations, our commitment to safety and transparency remains a core cultural tenet and key differentiator.

Now we're entering our commercial scaling phase with Aurora Driver 2. We're already fully allocated to exit the year with 200 driverless trucks. We've earned third-party validation for our safety case, and we've advanced the industrial partnerships to deliver at the scale this opportunity demands. As our fleet grows week by week, we're positioning Aurora to power a meaningful share of the $1 trillion U.S. logistics industry.

I'm incredibly proud of the discipline our team has shown in executing our vision responsibly, establishing deep credibility and cultivating an ecosystem of partners, customers, regulators and investors who share our conviction in the future we're building.

With that, I'll now pass it over to Dave, who will review our financial results.

Thanks, Chris. Let's review our financial results for which we have provided a summary on Page 6 of the slide deck for reference. Second quarter 2026 revenue totaled $2 million across driverless and vehicle operator supervised commercial loads. The Aurora Driver achieved another record number of commercial miles driven during the quarter. Second quarter operating loss, including stock-based compensation, totaled $266 million. Excluding stock-based compensation of $60 million, R&D totaled $164 million, SG&A was $37 million and cost of revenue was $7 million. We used approximately $225 million in operating cash during the second quarter of 2026, and capital expenditures totaled $31 million. Excluding $63 million in cash bonus payments, which were funded through our at-the-market program, our cash spend was within our externally communicated quarterly average target.

During the quarter, we issued 30 million shares of Class A common stock through our at-the-market program for net proceeds of $215 million. Using a portion of these proceeds as planned to fund our -- the referenced cash bonus payments as well as the tax liability associated with the vesting of employee restricted stock units, we increased our liquidity by $126 million. In turn, we ended the quarter with a very strong balance sheet, including nearly $1.2 billion in cash and short-term investments.

We continue to expect 2026 revenue of $14 million to $16 million, up 400% year-over-year at the midpoint. Revenue will be back-end loaded with the fourth quarter projected to contribute over half of full year revenue as we scale driverless operations following the launch of our new fleet. We anticipate exiting the year with more than 200 driverless trucks in operation, which translates to an approximately $80 million revenue run rate for our Transportation-as-a-Service business. This establishes a powerful foundation for 2027 when we expect the core Driver-as-a-Service business model to commence. To support our scaling plan, we continue to expect quarterly cash use of approximately $190 million to $220 million on average in 2026. This includes approximately $150 million in anticipated full year capital expenditures, primarily attributed to our capacity plan. The focused execution driving Aurora's 2026 transition continued in the second quarter. We are making the strategic investments necessary to bring Aurora Driver 2 to large-scale industrial deployment. With every truck on the road, we are driving a safer, more efficient era for logistics.

With that, we will now open the call to Q&A.

[Operator Instructions] Our first question is from George Gianarikas with Canaccord Genuity.

Maybe to start, you clearly have several strong tailwinds at your back. You have a proven technology that's ready to scale, macro pressures like tightening freight capacity, rising fuel costs. So given the positive commercial momentum you've been announcing and recent industry announcements like the one from TFI yesterday around expanding its autonomous operations, what specific catalysts do you think will drive the next like real inflection point in commercial adoption? And if I may ask, are you directly involved with TFI?

Thanks, George. As you know, we're not going to comment about potential partnerships to customers until we're able to do that and aligned with them and whatnot. So no comment there.

In terms of [ catalyst ] demand, I think it's just a continued building of trust and credibility, right? And we've seen with each step forward of the technology and each step forward with the customer adoption, we get this flywheel effect where the engagement we have with our commercial team just continues to grow and grow. And I expect as we put more and more of these second-generation trucks on the road and we continue to build the volume there, it success begets success here is my expectation.

And maybe as a follow-up regarding the unit economics and the scaling road map. How confident are you that you can achieve your projected hardware cost downs given what's happening from an inflationary perspective? And maybe on the hardware maintenance front, specifically on your proprietary LiDAR, how resilient is the stack against real-world steel degradation? Should the units require service or replacement? How does that cost curve look like for maintaining your in-house components at scale?

Yes. So we continue to have confidence in our ability to bring -- to achieve the targets we have for the cost of the hardware kit and the maintenance support of that hardware kit to achieve our long-term economic objectives there. So continue to be very happy with that.

It's really important to understand the level of rigor and testing we put these systems through to achieve the durability we intend to get out of them. We've been testing these units for months already, and we'll continue to test them forward so we can continue to build confidence in them. We've already begun some of the reliability testing for the third-generation hardware components. So this is work that is in flight and gives us a lot of confidence on what we can expect going forward with the fleet.

I don't know, Dave, if there's more you'd add.

Yes. I think in terms of confidence of the economics just generally, obviously, we are already building our second-generation kit. So we have costs for the ones we're producing today and the ones that we'll be producing into next year, we have estimates. So we have a pretty good handle in terms of that.

Certainly, there are some headwinds in terms of costs, but these kits are also designed and expected to last 1 million miles. So some minor increases in component costs. When you look at it on a unit economic basis, George, for gross profit over a per mile basis are not materially going to impact our gross margin projections.

Our next question is from Ravi Shanker with Morgan Stanley.

Chris, you said that in the release that you are in negotiations with a number of customers for the DaaS business model for '27 and beyond. Can you just unpack that a little bit more and maybe give us a glimpse into what momentum of negotiations have been like, especially after the first few commercial agreements that you've announced in the last few months?

Yes. Enthusiastic, I guess, would be the right way to frame it. So we announced a few months ago now that MOU with Hirschbach, we continue to progress that deal forward. That really will create the framework for the rest of the partnerships that we have in the space. The core elements of that, we have clarity on, and we'll just continue to move that forward. Customers want to own these assets. They want to see the benefit from it, and we're excited to get them to them.

Yes. The other thing I'd say, Ravi, is that like for every customer that we sign up with Transportation-as-a-Service agreement, it is with the intent to then move into the Driver-as-a-Service in the following year. In terms of like the active negotiations, we are working with a couple of folks just to make sure that like the paper that we put in that we want to apply broadly works for everybody. And so that's why we're actively working with multiple folks. But the intent is, if you're a Transportation-as-a-Service customer today, we would expect that you'll start to add Driver-as-a-Service business model in 2027.

Understood. And maybe as a follow-up, again, to the comment that Volvo is projecting $3 billion in autonomous revenue in five years. Not to make you answer for Volvo, but I'm assuming if they're putting out a revenue target, they have done some fairly detailed math on what they think the truck is going to cost and how they share the economics and such. I'm wondering if they've shared any of that with you and if you can share with us.

Yes, we certainly can't share anything of Volvo's model with you, but I can share that we have clear an understanding of the economic arrangement between Aurora and Volvo, and we're excited for that. And we're excited to see them continue to grow their customer cohort, and we look forward to supporting them and helping them build their business.

Our next question is from Andres Sheppard with Cantor Fitzgerald.

Congratulations on the quarter and on getting Gen 2 out, very exciting. Wondering if you can maybe help us quantify the current fleet size, how many Gen 1 versus Gen 2 trucks are in operation today? As we think about your target for Q3, how should we think about that unit mix? And similarly, as we scale to the more than 200 trucks by year-end, how should we be thinking about that unit mix going forward?

Yes. Great question. Thank you. So today, we have on order of 25 trucks that are operating and a handful of them are the new international trucks. We expect to grow that to 20 to 25 trucks that are the international trucks by the end of this quarter. And then by the end of the year, as we said, have a couple of hundred trucks operating. You can expect the vast majority, if not all, of that fleet will be -- well, all of that fleet by the end of the year will either be international or Volvo. And so we're excited to see those come online. And we'll start to phase out the Peterbilt trucks with an eye to looking forward to reintroducing Peterbilt trucks with a third-generation hardware in the future.

Wonderful. Very helpful. And just a quick follow-up to that. You kind of alluded to there just at the end. So now that the Gen 2 has launched, will Gen 1 trucks just be phased out completely or upgrade? And how does the 50% improvement in hardware cost reduction on Gen 2, how does that change your path to profitability?

Yes. We do expect to just phase those trucks out. They've served a really important purpose for us in demonstrating the technology, starting to build early customer traction and really kind of being a tremendous learning test bed for us as a company. But we're very excited to get on to the Gen 2 platform with all the benefits that come along with that and the ability to scale that for customers. So excited for that.

In terms of the 50% cost reduction, this is what we've been talking about for some time as how that second-generation partner ultimately allows us to get to a point where we can operate the business with unit economic profitability. And so we expect that to continue to play out as we continue to improve our execution and drive efficiencies in the operations of the business and improve the system. And then ultimately, that third-generation hardware will take another step function in hardware cost for us, and that will allow us to drive to the ultimate margins that we anticipate in the business.

Excellent. Congrats again. We'll pass it on.

Thank you. Appreciate it.

Our next question is from Chris Pierce with Needham & Company.

This year, year-to-date, you've had a lot of customer announcements. I guess I just want to understand, how are customers thinking about why are they moving forward? Is it to add capacity and win share? Is it to better utilize their assets? Or is it about lowering per hour driver costs? Like how do you -- would you bucket those?

I'd say it's much more the first two of these. Every one of our customers put safety first and then talk about the importance of their people, their drivers and how this technology complements them. It really will -- we expect to allow them to expand their business, allow them to increase the utilization of their assets and allow them to have those incredible humans that they have on their team focus on things where they add the most value, where they can be the face of the company to their customers. So we're excited to see this help these customers grow and become more profitable.

And on that, is it fair to say they see a situation where they can outgrow their peers or they can really grow their business and kind of win share by those that are moving slower? Is that sort of the right way to think about it?

I think you'll have to ask them. But as we look at it, you've heard me say before that this technology is so impactful, transformational, improving safety, improving fuel economy, improving utilization for customers that if you're not using our stuff in the next five years, you just won't be competitive in long haul. So we're excited for that.

Okay. Perfect. And then just one last one. In the letter, it talked about streamlining customer onboarding. Can you kind of give us an example of a gating factor that was up and has come down on your side and sort of why you chose to kind of highlight this?

Yes. We're just seeing conversations move more quickly. We think part of that is just the visible experience and credibility we've built by operating driverless trucks for some time. Part of it is us just being smarter, understanding more what's involved in integrating with the customer business and getting the lessons learned from that and allowing us to do a better job of meeting the customers where they are today. So it's experience you just don't get without actually operating the fleet and serving customers.

I'd say the other thing on that is because we've reached a point in the autonomy performance and the generalizability and just where we are, our ability to take a customer request and go react to that quickly has really improved dramatically. And so we have a few more trucks, and we're adding a lot more trucks. We have more people to support them and the autonomy systems.

We can go react to customer requests much quicker. Remember, when we first started, we were on Dallas to Houston. So you couldn't talk about like when you were going to exactly get to like Oklahoma City right away. And then once we got to a point where we were comfortable and generalizable, adding Oklahoma City as a potential route took weeks to do. And so our ability to move faster is one of the key elements as well.

And then I'd just add to that one last point, which is you just wouldn't have been able to meet supply with trucks for our customers last year between both the limitation for first-generation hardware and the work we had to do the integration onto the new platform. And so at this point now, we kind of unlocked that ability to scale the business. And it's much easier to have a conversation with customers when we have clarity on how we can serve them and when we can serve them.

I think we have others in line for questions here still.

Paul, are you able to open the line to the next question?

Well, we apologize for folks waiting in line. We'll -- hopefully, the operator will come back here and connect us.

Our next question is from Ryan Sigdahl with Craig-Hallum Capital Group.

Chris, maybe curious on Volvo, just how you're thinking about Aurora's place in the AV ecosystem longer term as OEMs like Volvo work to build out their own TaaS businesses or as they call it BaaS. And if you ultimately care who you're selling to, whether it's an OEM running their own fleet or whether it's direct to the fleet customers yourself under a DaaS model.

And then maybe second to that, Dave, if you're willing to comment on the financial implications of OEMs TaaS versus fleet DaaS from an economics to Aurora standpoint?

Yes. So we really think about that relationship we have with Volvo is kind of having two dimensions. So one is the integration with the OEM platform and then the support and engagement we have with Volvo Autonomous Solutions and their business. And when we look at Volvo Autonomous Solutions, we have a close relationship with them, of course, because of that broader relationship around the platform. But really, we look at them as a driver as a service customer to us, and that's great, and we are excited for them to go out and serve customers and build their business, and we will continue to work with them that way.

Yes. Relative to the financial differences, I would say this, each of them, whether you're doing Aurora Driver for freight and selling a TaaS or a DaaS business or we're working with Volvo Autonomous Solutions, we have gross margin targets to run the business. We look at both our cost structure to support that business and then the necessary margins. And so we look at them all together. So it's a good balance.

I don't want to say they're exactly the same because the inputs and the cost to support those businesses are slightly different. But we do look at holistically each of them independently and then add them up together to make sure that it matches our overall projections.

Good. Then just on the Gen 2 international truck launch, in the video you posted last week, you could see at least a dozen, a little more than that kind of trucks in the background kind of implies you have high visibility to that 20 to 25 you guided for Q3. I guess, is that a reasonable inference? Or is there a reason some of those wouldn't necessarily be used for commercial operations?

And then kind of second to that, I guess, would be just the path with Roush on track for 1,000 unit annual capacity by October, that implies 250 trucks a quarter. I guess why wouldn't you exit the year with more than 200 commercial trucks on the road?

So we have really good visibility in our access to trucks to support the 2025 at the end of the quarter. As you know, there's a ramp-up that it takes whenever you stand up a new manufacturing line. And so we expect that to ramp in Q4 to the full velocity. But we also understand that there may be challenges along that path. And so we're trying to provide what we think is reasonable guidance to where we expect that to net out.

I don't know, Dave, if you'd add more there.

Yes. I think for certain, we have -- if we have the ability to build more, I'm sure we have stronger customer demand, and we'll take advantage of that. But for right now, we think that this is a pretty good plan to what we've guided to before, and it is our appropriate target at this point in time.

Relative to your trucks comp internally, the videos and everything you're going to see, we do have development trucks as well. We have first-generation and second-generation trucks out there. So I wouldn't look too much at it. I think the important thing for us is we've got a handful of the international trucks already operating driverless on multiple routes and two customer endpoints as well. And by the end of the quarter, we expect to have 20 to 25. That will be the highest number of dedicated commercial trucks we've had going forward, and we're just going to build upon that.

So we're super excited about the opportunity. Like this is like for a very long time, we've known this is coming, but like now we can confidently see the future and the growth in the truck supply. So we're excited as all about that.

Yes. For us internally here, we've been investing heavily to get to this point and be able to start to see these things come off the line and get used, and it's going to be a blast.

Our next question is from Colin Rusch with Oppenheimer.

Can you talk a little bit about what you're seeing from Roush from a tack time perspective in terms of production and validation that gives you some comfort around the scale up to the 1,000 trucks a year?

Yes. So first, I think it's just important to recognize that Roush does this, right? They're one of the folks that do finishing work from each OEMs and do this at scale, even scale much larger than what we're talking about. So part of the reason we selected them is the pedigree experience and competence that they have. So we have very little doubt there.

We're still early in the ramp, but they're familiar with the work. We engage with them on a, if not a daily basis. And we just have a high degree of confidence that's going to come together.

Yes. The other thing that I'd say, Colin, is tech time for like production supply when you're doing large scale, somewhat relevant here. This is a dedicated facility, dedicated stations. It moves through like an assembly line like instead of one person building the entire truck. So it will be highly efficient. But tech time is not necessarily the thing that we're looking for. We look at the number of stations and the number of trucks we can build per week, and we try to match that to the supply of the Aurora Driver hardware kits that we'll have coming forward.

Great. And then obviously, you guys are focused on the trucking market, but I'm sure you're getting a variety of components for other form factors and other applications. And given the sophistication of the platform and the kinds of learning cycles that you guys have demonstrated, just curious if you're starting to evolve your thinking about the ability to serve other markets and potentially carve out some other applications that could be a separate growth driver.

Yes. We consistently believe that the Aurora Driver itself and the broad competence and capabilities we built as a company that allows us to deliver a safety-critical, highly complicated AI-enabled system into the world is going to travel. Right now, we look at the trucking market, and it's hard to imagine a market that would give you both better precision for and that has better opportunity for us to grow and succeed in the business.

But for sure, we are starting to think about where are the other places that we should go apply this and exactly what the right timing is to begin investing in those spaces. But I would not forgive myself, and I'm sure our investors would not forgive us if we didn't execute with excellence in delivering on the trucking application. And so we'll keep that very much front and foremost.

Our next question is from Scott Group with Wolfe Research.

It's Cole on for Scott. Can you size roughly how many trucks carriers intend to put on to their balance sheets in 2027 following some of your customer negotiations around the DaaS model?

I don't think there's much more we can share there than what we've already said, which is with that MOU we have in place with Hirschbach, they're expecting to put 500 tractors into their fleet over '27 and '28. We'll look forward to sharing more with you as we can.

Okay. And maybe just on the OEM side, how do you think -- or do you think the OEM appetite to scale autonomous is keeping up with your targets? And what's the risk that you'll have to switch to a more transportation as a service dominated model going forward?

Yes. Those feel like very different questions, right? So can the OEMs keep up with the demand? I'm a big believer in the market system and that if customers are seeing the benefits that they will with the Aurora Driver and the pull that will generate, it's going to encourage OEMs to produce vehicles to meet that demand, because this is going to be transformational. It's going to have a huge positive impact for our customers. And so I think that the more we can demonstrate that value, the more enthusiasm and energy the customer pool will generate with OEM partners.

And then the second question is, do you think we'd have to pivot towards a Transportation-as-a-Service business? Not from where we see today. No. Again, why do we have the approach -- why do we take the approach we're taking? We think we're really good at building autonomy systems and the driving capability, but we have the humility to understand that others are great at what they do. And so I would much rather support a Werner or Hirschbach or Schneider or any of these other companies that we work with and help them build and grow their business and allow us to stay focused on what we do. And I think together, that's the way we have the biggest impact in the world and the way we succeed best.

Our next question is from Michael Latimore with Northland Capital Markets.

In terms of launching new routes, can you discuss a little bit about the time to launch a new route? Do you expect that to continue to shrink? Maybe can you quantify where it is now versus where it would be optimally?

Yes. So, first, we're really focused on where the customers want us to be operating, and that's going to drive route expansion for us. As we mentioned, there's a lot of excitement right now with routes coming out of Laredo given the nearshoring, and we're excited to be supporting customers there and continuing to build across the Southern Freight corridor. For us, we look at this as a thing where the cost for us to build new routes is going to continue to decrease and the time associated will continue to decrease. This is not a thing that I really worry about is driving the scale of our business over time. This is something where you'll see us start to pick up more routes as customer demand for it drives it and through the back half of this year and in years going forward. But it's not really something that we think of as a major cost driver for the business.

How many routes do you expect to have by year-end?

What we've shared is that we expect to be expanding into the Sunbelt through the year-end. We haven't been specific about the number of routes.

Okay. Great. And then on the Detmar program, any kind of additional opportunity there or expansion opportunities from kind of where you are now?

Yes. I think that I would imagine like any other business, as we prove our value and demonstrate how we're able to support and help them grow their business, that will drive increased demand. And so, so far, we're excited to be off and started with them and operating driverlessly between their relevant endpoints. And we look forward to updating you as we continue to build that relationship with them.

Our next question is from Itay Michaeli with TD Cowen and Company.

Just a first question on the Aurora Driver 2. I was hoping you could talk more about the degree of performance improvement in the new generation, just given it's both kind of hardware and software upgrades and whether that performance improvement comes in the form of safety or perhaps like just more ODD coverage?

Yes. It really drives both a reduction in cost, which is important for us to grow our business. And then it does have some important performance and ODD expansion capabilities. We certainly wouldn't have put anything on the road that we didn't believe was safe. And so this continues to be a safe product that we have out there. But that extra range that we have with the FirstLight LiDAR allows us to react sooner, particularly to situations at night, which is a big advantage. And then the conditions in which we can operate continue to expand, which does a better job of serving our customers.

Great. That's helpful. And then just as a follow-up, I'm curious what your latest thoughts on just like remote assistance and on-site support costs, kind of how to think about those over the next 12 to 18 months, just from what you've kind of gained experience with the last few quarters. And maybe along those lines, too, kind of how you think about insurance costs and how those are being treated in some of your latest customer agreements?

Yes. On both remote assist and on-site support, we continue to see positive trends in how we're deploying the technology and how that is translating to the rate of -- that we need to. And ultimately, that will drive the cost of delivering the Aurora Driver. So we're excited for that. We continue to be on track in delivering a product that's going to be performance and meet our business objectives there.

In terms of insurance, Dave, do you want to speak to that?

Yes. Because we are the DOT holder today, right, for our Transportation as a Service business, we carry the insurance associated with that. So we have insurance coverage for all of our trucks. We have really good rates really on a per truck basis because of the safety performance of the system. And while still limited in a track record, we've got a pretty impressive tracker coming up to leverage. And so we'll continue to expand upon that.

When we shift over to Driver-as-a-Service, this is an opportunity for both sides. It's an opportunity for us to just have coverage associated with the Aurora Driver itself and other things that happen. And for our customers, it's an opportunity for them to have increased level of confidence and reduce incidents and safety and coverage for them, all things that they don't have today. So I think it's a win-win across the board.

Our next question is from Mark Delaney with Goldman Sachs.

You have Aman on for Mark. Maybe starting with some of the comments you made on the kind of path exiting the year. You talked about being able to leave the year with 200-plus driverless trucks, but also transitioning to DaaS next year. How should we think about your ability and willingness to add trucks beyond that into '27 and beyond? And how might that impact your cash use per quarter targets that you've laid out for '26 going into '27?

Yes. So, in '27, it will be the transition year where we move from primarily Transportation as a service business to a primarily driver as a Service business over the course of the year. So we may add more trucks in '26 under the TaaS business. As we look at that, we obviously generate more revenue, but we expect to do so at a lower margin with a TaaS vehicle versus a DaaS vehicle.

But I don't know, David, if you want to add more to that?

Yes. We haven't provided any guidance for 2027 cash use and capital expenditures, but we do have projections. We will add additional TaaS units into 2027. It's not like we go from like on January 1, everything is DaaS. It's every customer, right, like this is customer adoption and support. So there's going to -- it's going to be kind of a customer-by-customer transition. We do have that built into our forecast for our overall liquidity projections. And I think we've shared before that we'd be willing to support up to 500 test trucks if needed. I don't think it will be that many, but like we obviously have flexibility in our modeling and in our financing to support that.

Understood. And maybe kind of to the earlier point that Chris, I think you made, how are you guys thinking about some of the other functions that you're planning to add like some of the other weather conditions and being able to haul different types of trailers? Can you maybe provide some color on progress there given that you're planning to do expansions more to customer demand?

Yes. We continue to expand the conditions the truck can operate in. Right now, it has a fairly broad operating environment. One of the things we'll be looking to add as we get towards the end of this year is operation in light snow and cold weather. That will be an important enabler for the vehicle or for the system as we go forward.

At this point, we have a fairly broad set of trailers that we do support, supporting many of the uses for our customers. But as we continue to add customers, we'll look at the trailers that are needed to support that growth of the business. Adding a trailer is not a big deal, right? We take safety very seriously. And so it means that we do go through a process, a deliberate process to make sure that it actually works, not just kind of one shot it in hope. But it's not a material amount of effort.

Our next question is from David Vernon with Bernstein Research.

This is Justine Laufer is speaking on behalf of David Vernon. So, first, it looks like the number of driverless trucks in operation expected by year-end has gone from more than 200 mentioned last quarter to this quarter's presentation saying just 200 trucks. Has something changed with build rates or deals that shifted that outlook down slightly?

Yes. Justin, it's Dave. Yes, I wouldn't read too much into that. We're fully allocated 200. We have the flexibility to go more. So I wouldn't look too much into it. if we had to get to 201, 202, 205, that's not really our concern. Right now, we've been really just trying to match the supply with our customer demand. And we said we have a lot of demand right now.

We just want to make sure that we're pretty solid on the supply. We'll actually have more trucks built than that, but we also have to have some trucks that are able to support development and then we have to have trucks that can backfill during regular scheduled repair and maintenance of base trucks and things like that. So I wouldn't read too much into it right now.

Got it. Okay. That's helpful. And then the other thing, I'm hoping that you can help us get a sense of the economic impact of these commercial deals being announced. Like when we see these press releases come out about new deals like the Hirschbach one or the value truck one, can you help us think about how to frame the revenue impact for investors? Like can you discuss and maybe like discuss the difference between the revenue impact of the TaaS versus DaaS deals?

Well, obviously, the TaaS deals have a higher per mile revenue outlook because it's the full service. So as we've said before, kind of in that $2-plus range, whereas DaaS is targeting the $0.85 plus. So there's a substantial difference in TaaS versus DaaS on the revenue side, but there's also a substantial difference on the cost side and on the margin side.

In terms of our announcements, essentially, I would guide it this way. We have -- we're fully allocated to 200 trucks. 200 trucks at the end of the year equals roughly a revenue run rate of $80 million, right? So by the end of the year, before we add any trucks in 27, before we add any more to go above $200 million, we would have a contractual rate, which is roughly $80 million revenue run rate. So, for us, if you think about where we were to start the year and then in 1 year having a run rate of $80 million, it's hyper growth for us.

Thank you. We have reached the end of our question-and-answer session. This does conclude today's conference call. We thank you again for your participation. You may disconnect your lines at this time.

Greetings, and welcome to the Aurora First Quarter 2026 Business Review Call. [Operator Instructions]. As a reminder, this conference is being recorded.

It is now my pleasure to introduce Stacy Feit, Vice President of Investor Relations. Please go ahead.

Thanks, Paul. Good afternoon, everyone, and welcome to our first quarter 2026 business review call. We announced our results earlier this afternoon. Our shareholder letter and a presentation to accompany this call are available on our Investor Relations website at ir.aurora.tech. The shareholder letter was also furnished with our Form 8-K filed today with the SEC.

On the call with me today are Chris Urmson Co-Founder and CEO; and David Maday, CFO. Chris will provide an update on the progress we have made across the key pillars of our business, and David will recap our first quarter financial results. We will then open the call to Q&A. A recording of this conference call will be available on our Investor Relations website at ir.aurora.tech, shortly after this call has ended.

I'd like to take this opportunity to remind you that during the call, we will be making forward-looking statements. These statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed, projected or implied during this call. In particular, those described in our risk factors included in our annual report on Form 10-K for the year ended December 31, 2025, and other documents filed with the SEC as well as the current uncertainty and unpredictability in our business, the markets and economy.

Additional information will also be set forth in our quarterly report on Form 10-Q for the quarter ended March 31, 2026. You should not rely on our forward-looking statements as predictions of future events. All forward-looking statements that we make on this call are based on assumptions and beliefs as of the date hereof, and Aurora disclaims any obligation to update any forward-looking statements except as required by law.

Our discussion today may include non-GAAP financial measures. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results. Information regarding our non-GAAP financial results, including a reconciliation of our historical GAAP to non-GAAP results, may be found in our shareholder letter, which was furnished with our Form 8-K filed today with the SEC and may also be found on our Investor Relations website. Our discussion today may also include reference to forward-looking free cash flow, a non-GAAP financial measure. To the extent that these forward-looking financial measure is provided, it is presented on a non-GAAP basis without a reconciliation due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation.

With that, I'll now turn the call over to Chris.

Thanks, Stacy. 2026 is the year Aurora begins to scale. Our strategic investments are fueling the momentum necessary to accelerate our growth and extend our lead in autonomous trucking market. The start of this year has been a period of disciplined transition a deliberate buildup before the inflection. Drawing on our deep experience, safely integrating the Aurora Driver across multiple platforms. We're on the cusp of launching our second-generation commercial hardware kit on a new fleet of driverless trucks.

This program positions us to exit the year with over 200 driverless trucks in operation across the Sunbelt and supports our broader scaling ambitions in 2027 and beyond. In preparation for this imminent launch, our forthcoming software release and commercial hardware kit are engineered specifically to deliver the reliability required as we scale our fleet. This progress is driving significant commercial momentum. In addition to the Transportation as a Service commitments we already have in place with Hirschbach we announced last week that they have selected Aurora to scale their autonomous fleet with intent to own and operate 500 trucks through our Driver-as-a-Service business model. We expect to finalize the definitive agreement, which represents a potential multiyear revenue stream in the hundreds of millions of dollars later this year with truck delivery slated to begin in 2027.

As we prepare to scale, we're seeing continued regulatory momentum with landmark progress at the state level. California has reached a watershed moment, joining the vast majority of states in enabling autonomous trucking. We now project a serviceable, addressable market of 60 billion vehicle miles traveled by 2028. And excitingly, California supports a seamless coast-to-coast operating environment.

With the Aurora Driver now sufficiently generalized for us to begin scaling across the Sunbelt aligned with customer demand, we strategically focused our resources on 3 key initiatives: expanding our driverless network, finalizing our latest software release and validating our second-generation commercial hardware kit. These efforts serve as the critical final steps in preparing for the imminent launch of our new driverless truck fleet transitioning Aurora from a phase of localized operations to one of wide-scale industrial deployment. Our expansion is progressing at an accelerated pace with our network now encompassing 12 distinct routes. At the end of March, we validated driverless operations on the bidirectional route between Dallas and Laredo within just 6 weeks of initiating supervised autonomous runs.

Building on this momentum, we also opened new bidirectional routes between Dallas and Oklahoma City. In collaboration with Volvo Autonomous Solutions, we have started supervised autonomous deliveries on this route to support one of their key customers.

Furthermore, we've expanded our driverless cohort to 7 customers, including transitioning commercial loads with [ McLean ] to driverless operations. Our forthcoming software release further increases the Aurora Driver's reliability in preparation for scaling, including validation of driverless operations in more severe rain as well as the full spectrum of complex construction scenarios on our highway routes.

To complement these advancements, we are augmenting our driverless network to support real-time dynamic rerouting, providing the operational agility required for high-volume commercial service. We're also in the process of validating our second-generation commercial hardware kit on multiple truck platforms through rigorous on-road, track and lab testing to prepare for our planned second quarter launch and are seeing impressive performance. Designed for 1 million miles of operation and with enhanced sensor cleaning capabilities, this kit meaningfully increases the Aurora Driver's reliability.

It also brings exciting performance gains including a more efficient computer and an extended 1-kilometer range for FirstLight, our proprietary long-range FMCW lidar. This is double the range of the closest FMCW lidar competitor and can give the Aurora Driver more than 34 seconds to react when at highway speeds, setting a new superhuman standard for safety. And importantly, we expect this kit to drive a 50-plus percent reduction in Aurora Driver hardware costs, a key lever supporting our breakeven gross margin target.

While advancing on these fronts, in April, the Aurora Driver surpassed 370,000 driverless miles with 100% on-time performance and 0 Aurora Driver attributed collisions. Notably, this growth was driven by a very strong utilization with a leaner active fleet. For example, the driverless trucks we are operating for Werner are already averaging 4,000-plus miles per week, which translates to an annual run rate of 225,000-plus miles per truck. With the performance we're seeing, we expect Aurora Driver powered trucks will be capable of more than doubling utilization and in turn, revenue per truck for our customers. Expanding driverless delivery to and from customers' facilities will further strengthen the Aurora Driver's value proposition.

We're continuing to ready Hirschbach, Detmar and Werner for endpoint operations. including in-yard autonomous operations at their facilities. We currently expect to generate a majority of our 2026 revenue through operations between customer facilities, reflecting our continued focus on increasing commercial value. To ensure seamless end-to-end service, we recently began supervised testing of way station navigation and on-route fueling at truck stops. Navigating these environments requires many of the same advanced surface Street capabilities we have already refined. For example, on the 7-mile, the Aurora Driver navigates to and from the highway in Houston.

The video on Page 8 of our presentation demonstrates the Aurora Driver's proficiency in these complex low-speed settings. To meet customer demand and support our path to scale, we've established a robust hardware and vehicle platform road map. We're closing in on the second quarter launch of our second-generation commercial hardware kit on a new fleet of trucks based on the international LT series that will enable driverless operations without an observer. With this program, we have a strong line of sight to achieving our 2026 scaling goals. We expect this to establish a powerful foundation for 2027 when we plan to launch our Driver-as-a-Service business model.

Looking ahead to 2027, we've made exciting progress on our third-generation commercial hardware kit that will be manufactured by AUMOVIO. Together, we started testing initial units. Our engineering team is also working with AUMOVIO and NVIDIA to develop a first-of-its-kind Super Thor compute configuration an architecture that integrates 2 NVIDIA DRIVE for SoCs into a unified platform optimized to power the Aurora Driver at scale. This approach demonstrates our 3-way collaboration is setting the standard for industrializing autonomous technology.

In March, AUMOVIO broke ground on their -- the expansion of their new Brownfields, Texas facility where they will produce our third-generation hardware kit intended to supply tens of thousands of trucks. Construction of the plant's expansion is expected to be completed in the first quarter of 2027. With start of production for the hardware kits on track to begin in the second half of 2027. Volvo plans to build hundreds of the Volvo VNL autonomous trucks in 2027 and has already completed several Aurora Driver powered trucks on their pilot line.

For the program based on the International LT truck, our upfitter, Roush, will begin scale production later this year. We're initially establishing the capacity to produce 1,000 trucks per year with potential to increase that capacity. Concurrently, PACCAR and Aurora are jointly defining the path to scalable launch on the third-generation Aurora Driver commercial hardware kit integrated with PACCAR's future autonomy enabled platform. All of this work is forging the industrial engine that extends our leadership position and supports commercial deployment at significant scale.

At Aurora, we're building a safer, stronger and more resilient freight ecosystem with our technology for the people who power it. To back this vision, we recently announced Aurora Works. Our commitment to invest in workforce development by establishing educational partnerships and technical training for emerging roles in autonomous trucking. We're at the center of a new era of logistics that improves road safety, fuels economic growth and creates new high-skilled American jobs. Autonomous freight represents a step change for what is possible in global logistics.

The Aurora Driver moves the industry beyond traditional constraints toward a world of continuous high utilization delivery. With a clear road map, deep partnerships and an accelerating industrial engine, we are well positioned to lead this evolution. The future of freight is on the road and Aurora is setting the pace.

With that, I'll now pass it over to Dave, who will review our financial results.

Thank you, Chris. Now let's review our financial results for which we have provided a summary on Page 15 of the slide deck for reference. First quarter 2026 revenue totaled $1 million across driverless and vehicle operator supervised commercial loads. Despite leveraging our shared fleet for continued development of new routes and validation of our second-generation commercial hardware kit, the Aurora Driver achieved another record number of commercial miles during the quarter which drove a 10% sequential increase in revenue from the fourth quarter of 2025.

First quarter operating loss, including stock-based compensation, totaled $244 million, excluding stock-based compensation of $46 million, R&D totaled $159 million, SG&A was $34 million, and cost of revenue was $6 million. We used approximately $159 million in operating cash during the first quarter of 2026, and capital expenditures totaled $25 million. As planned, this cash spend was below our externally communicated quarterly average target. We expect the second quarter cash spend to be above the target range due to the timing of our cash bonus payout which, as we discussed last quarter, we plan to fund with our at-the-market program.

We ended the quarter with a very strong balance sheet, including liquidity of nearly $1.3 billion in cash and short-term and long-term investments. During the first quarter, we generated net proceeds of $14 million from the issuance of Class A common stock through our at-the-market program which we used to fund the tax liability associated with vesting of employee restricted stock units during the quarter. We continue to expect 2026 revenue of $14 million to $16 million up 400% year-over-year at the midpoint.

Revenue will be back-end loaded with the fourth quarter projected to contribute over half of full year revenue. as we scale driverless operations following the launch of our new fleet. We anticipate exiting the year with more than 200 driverless trucks in operation. which translates to approximately $80 million in revenue on a run rate basis for our Transportation-as-a-Service business. This establishes a powerful foundation for 2027 when we expect the core Driver-as-a-Service model to commence.

To support our scaling plan, we continue to expect quarterly cash use of approximately $190 million to $220 million on average throughout 2026. This includes approximately $150 million in anticipated full year capital expenditures, primarily attributed to our capacity plan. We continue to expect 2026 to represent peak capital spend and capital expenditures declining significantly in 2027 as we transition to our Driver-as-a-Service model and Hardware-as-a-Service structure with AUMOVIO. Our first quarter performance reflects the focused execution and disciplined transition that will define Aurora in 2026. We continue to balance prudent resource management with the strategic investments needed to support large-scale industrial deployment.

With that, we will now open the call to Q&A.

[Operator Instructions]. Our first question is from George Gianarikas with Canaccord Genuity.

So maybe first, in light of the growing commercial momentum that you're seeing, have you seen any meaningful acceleration in inbound interest from prospective fleet partners? And also as you're beginning to scale, how are you navigating price discovery? Has there been any resistance from customers regarding the per mile rate or is the value currently offsetting any cost concerns?

Yes. Thanks, George. I appreciate the question. We continue to have really exciting conversations with various customers. We've talked in the past about each time we got to check off progress. We see it become more real in the eyes of customers, and that leads to an increase in the conversations we have. We've got an exciting funnel and we'll share more as we can -- as we get through that. I don't think we can talk specifically about pricing on this. Obviously, there's a lot of competitive elements around that. But we have very fruitful conversations with folks. Of course, they want to pay nothing for it, and we'd like to charge them more for it. So every one of those conversations is, of course, the negotiation. I don't know, David, if you'd add more?

Yes. I think the customers themselves have been giving us really good and direct feedback. At the end of the day, the value proposition that we're discussing has still resonated quite well. You're going to argue a little bit about the fringes, but the growing cost drivers is undeniable, the indirect costs associated with it. And fuel costs are really high right now. We're providing a 15% reduction on that. That translates to real dollars, right? That's roughly $0.15, $0.16 per mile in today's marketplace. So the value proposition does resonate quite well, and we're confident that we're going to be able to grow the business and achieve our profit objectives.

And maybe as a follow-up, given your recent autonomous haul, are you encountering any technical bottlenecks as you transition from pilot to more of a consistent operational cadence? And how have your engineering teams mitigated any constraints that have been out there in the system?

Yes. There's nothing that we're seeing that's particularly surprising. It's stuff that's been in our road map for a while. So we're continuing to improve that. This new release that is going to land with the second-generation hardware really is about making sure that we have a robust platform that's reliable and meets customer needs, increasing the amount of rain we can handle dealing with more complicated construction that we need to deal with on freeways. That's the kind of thing that's going to set us up to be able to scale really well.

Our next question is from Scott Group with Wolfe Research.

So a couple of things. Relative to the target of 200 trucks by the end of the year, how many are in operation today? And then separately on the Hirschbach MOU. Just hoping for a little bit more color, like what needs to happen to convert this from an MOU to a committed contract? And do you have any color on how many of those 500 trucks you expect to deliver in '27? And how long do you think it takes to get to the full 500?

Yes. So on the 200 trucks, when we talk about 200 trucks, we're talking about driverless trucks operating by the end of the year. Today, we're running about a handful of them. Of the vehicles that will make up those 200 trucks that are operating driverlessly, I think we own 25 of them now, and they're in various stages of upfit and preparation. So that's kind of where we stand on getting to those 200 trucks over the course of the year.

We expect -- we're doing work in Q2 to prepare Roush to scale, and they'll really start scaling getting towards that 20 trucks per week production rate in Q3. With Hirschbach, I don't know there's a whole lot we can share there. We're really excited about there have been one of our longest-term partners and customers.

And to George's question earlier about the value customers see. You don't get a company like Hirschbach, signing up for an MOU unless they see real opportunity for it to complement the drivers they have in their fleet today. It's a 500 truck deal over 27 and 28 is our expectation. We expect it to turn into hundreds of millions of miles and hundreds of millions of dollars of revenue. So and we expect to get to closure on that this year.

Yes. And Scott, one other thing on the 200 trucks, just so there's no confusion. We already have commitment and order slots for the entire 200 trucks. So there is no question about the truck availability. It's just when we bring them into start the upfit process, and we build out our capacity plan.

Okay. Great. And then last couple of things, David, do you -- I think you talked about last quarter, if you get to the $80 million run rate of revenue, that will be gross profit breakeven. Is that still the case? And then on the California front, when do you expect to start operations there?

Well, relative to the gross profit breakeven, that is still our target for sure. The $80 million is one element of that. There are some things that we need to do on the cost side of that equation which are equally as important, which is part of our plan. And so we're still targeting it. It's not formal guidance, but we are targeting it, and we are going to be working really hard to be able to achieve that target. I'll let Chris talk a little bit about California.

For California, first, we're really excited that California has taken a step forward of this. We've been in conversation with them literally for years, and we're just excited to see kind of put out the regulations and give us certainty on how we can start to build our business there. We don't have set time for when we'll begin operating in California. We have to go through the permitting process with them to do that but the team is already working on that, and we'll share more when we can.

Our next question is from Ravi Shanker with Morgan Stanley.

Chris, you said in your letter that you and PACCAR are jointly defining the path to scalable launch on their assembly lines. Do you have an understanding? And if so, can you tell us kind of what this path looks like from a catalyst or a timing standpoint?

Yes. I can't share timing, of course. What I can share is that we're aligning around the third-generation platform that -- or hardware kit from Aurora that we're working with AUMOVIO on. We've shared in the past that we expect that to come into production in the back half of '27. And so we continue to have conversations with PACCAR. We continue to work with them closely and look forward to offering customers who'd like to have the Aurora Driver on a Peterbilt that option.

Okay. Understood. And maybe kind of on a different topic. Obviously, truck rates appear to be going up quite meaningfully. There are some who think we may be on the cusp of a generational upcycle here. Are you seeing any increased interest from customers or carriers who may be concerned about a driver shortage? And is this an opportunity for you to maybe revise your pricing strategy? Or are you just selling this as, hey, there's more savings for your customers if they switch to autonomous in the next few years?

Yes. So I'll say that first. I'm not savvy enough to predict exactly what will happen with the market here, but it does feel like there's a lot of factors that are contributing to what will be increased freight rates going forward. We're really focused on delivering value to our customers. We ultimately expect to get paid for that value. And so if we're contributing more value, we'll ultimately expect to be compensated for that. But right now, we're focused on making sure that the folks who've been with us as partners and customers and get an opportunity to benefit from that and build their business. So I don't know, Dave, anything you'd add?

No, I think that's right. I will say that the interest has been picking up a lot over the last 6 months, frankly. The number of inbounds that we're getting has been just increasing dramatically, Ravi. So we're very excited about that. Part of it is just we're out there and people can see and experience it more than they've ever had before. Part of it is the market is starting to have some positive signs that feel like they're more sustainable and that has people more interested in thinking about their long term.

I think from the pricing side, the one thing that I would say is we believe that the pricing at that $0.85 plus kind of range will enable us to be very successful. And it will support broad scale adoption for our customers. And I think we look at it not so much as how would we maximize that next quarter. And I think about it as how will we build the plan for the next several years. And we want to make sure that we have as equally as much of that long-term focus and support for customer adoption as we can.

Our next question is from Chris Pierce with Needham & Company.

I just want to -- if you guys could shed some light, if you talked about Hirschbach, what are they seeing -- are they seeing something different in terms of absolute number of miles driven? Or is it just a unique decision on their end that sort of has them pull the trigger to move from a trial to a truck order. And I guess, do you have other partners that you've been working with over time that are similar miles or that it just sort of come down to a unique decision on their end? I just kind of want to get a sense of what helped them over the -- get over the edge.

I think first, it's important to recognize that there's a distribution of customers, right? There's going to be folks who are first movers and there's going to be others who are fast followers. Hirschbach has had a lot of experience with us. The leadership team there. We've been able to build trust with over time. And so we're excited for them to pull the trigger. We do expect others will follow. And we'll just continue to demonstrate value. And frankly, right now, we're pretty supply constrained, and we look forward to unlocking that supply over the course of this year and certainly in '27 as we bring the AUMOVIO hardware kit online.

The other thing that I would add on Hirschbach, they have been with us for quite some time. And they don't look at this just as a business decision. They are really looking at this -- in their words, the quality of life investment for their people, right? This is to help support their people and get them to the routes in the working environment that will improve their quality of life while we handle the "less desirable", the longer haul routes that keep you away very far. So they've been very forward-leaning on thinking about their drivers, long-term quality of life. And so I think that's something that's very important to them. And certainly, they care a lot about their drivers.

Yes. Okay. And then just one for Dave. In your -- from the desk of the CFO. You talked about in the last time about peak CapEx. I just want to understand definitionally, I mean, I don't think of you guys as a heavy CapEx company. I think of you as a heavy R&D company. Are we saying that '27 is we're close to peak R&D and R&D comes down? I just want to make sure I'm understanding what line item on the model and what statement to look at?

No, I think we have said many times, we're a capital efficient or a capital-light business, right? And as a Transportation-as-a-Service business to start, you actually have a little bit more capital than what we believe is going to be our steady state long-term capital. So we do expect our CapEx to go down. Our R&D investments, certainly, that's a larger percentage of our overall expenditures. We are continuing to invest in our R&D to capitalize on the lead continue to build that advantage, make the Aurora Driver available everywhere. And so we kind of look at that as more of a steady state kind of number for the foreseeable quarters, whereas we think the CapEx will start to drop down substantially in 2027.

Our next question is from Colin Rusch with Oppenheimer & Company.

We've done a very judicious job of waiting to scale until you guys were ready. And now as you move into this next stage of the organization, I'm just curious about how you think about pacing of the scale-up because certainly, demand isn't going to be an issue, but maintaining quality as you move into these higher volumes is critical. So I just want to think about how you're managing that, how you're managing supply chain to meet those specs, and how you might end up diversifying some of the supply chain to enable a little bit more resilient supply as you go forward?

Yes. And that's really aligned with our long-term strategy that we've talked about for several years. So thanks for the question. as we went from the initial vehicles that we launched trials with last year, that was hardware that we had built in-house. We had sourced all in-house. As we move to the second generation of hardware, there we're leveraging Fabrinet, the experience they have, the quality process they have layering on top of that, our quality and sourcing support. So we feel good about that.

And then, of course, as we move to the back half of '27 when we expect the hardware kit that we're developing with AUMOVIO to come to life there, of course, we're leaning into AUMOVIO and the strength that they have in managing their supply chain and managing quality being a true scale automotive supplier. And so that's kind of -- as you think about the hardware side of it, that's how we're building that supply chain system.

When it comes to the software that operates on board, that's been a core part of how we've thought about this is how do we ensure that the software will generalize safely over time. It's what leads us to do as much work as we do in testing and validation. And it's why we've said from day 1 that safety has to be first. And so we've ingrained that into the organization over the better part of a decade at this point. and that leads to process that we think will scale and ultimately drive safe and reliable outcomes for our customers.

And then as you guys prioritize ODDs, I'm curious about how much input you're getting from your customers at this point? Or if you're at a place now where you're just really driving capabilities and then selling it to them, are there priorities that they have that can impact some of the sequencing and focus areas for you on an R&D perspective?

That's a great question. We continue to want to learn as much as we possibly can from our partners and understand what the source of demand is and where it's most useful for them. Dave talked about Hirschbach focus on supporting their employees and what does that translate into places that are useful for us to drive for them. So in terms of the capabilities of the driver, the Aurora Driver has to have -- we do learn some from our customers, but that we kind of infer ourselves, but where we need to go operate, which lanes we should be opening, that is very much almost purely driven by customer demand.

Our next question is from David Vernon with Bernstein.

The first question for you, Dave. I noticed the language around sufficient liquidity to get to positive free cash flow in 2028 that was in the 4Q letter, it's not in a 1Q letter. Is that -- was that purposeful? Was that just -- it's still on plan? Can you give a kind of comment what the status is on that cash flow breakeven by 2028?

Yes, it's still our plan. We believe that we have sufficient liquidity. Nothing has changed in that to get us to a positive free cash flow.

Okay. And then maybe the 4,000 miles per truck per week that you guys are quoting on the utilization that you're getting out of Werner. Is that the right number to use in terms of a run rate assumption to underpin the $80 million sort of half exit run rate? And then I guess the follow-on to that would be if that turns in to be the right sort of revenue per mile-ish range. How does the DAS thing compare? Is it half? Is it 3/4? Anything you can give us relatively on what we should be thinking about plugging into a model around on the DaaS or the DaaS rate would be helpful.

Yes. I think for the mileage, I think that's really going to vary based on the customer use cases. But we're very confident in our ability to achieve double utilization, and it is really going to depend on which Roush they put them on and the load frequency that they have. But certainly, we think this 250,000-mile range is still a very good source. We've used that several years ago, and we still think that, that's a good target that any customer can achieve. So we think that's probably good there. In terms of the pricing dynamics, I can't get into too many specifics without kind of comparing individual customers. But what I can tell you is the information that we shared before, relative to anywhere from $1.50 to $2 a mile for TaaS plus fuel surcharge. And then on the Driver-as-a-Service, again, our indicative thing, pricing is about $0.85. So again, we think that, that's a pretty good mix. And so you can kind of do the math from there. Thanks, David.

Our next question is from [ John Sager ] with Evercore ISI.

I hate to continue to dig into the numbers a little bit. But to get to sort of $15 million of revenue, so you're charging somewhere around $2 per mile. And then if I'm backing into gross margin breakeven, that means that your cost is something like $1 per mile to operate. Is that a fair way of thinking about it? I'm just trying to figure out how to track your progress with that.

Yes, no problem. Like our cost of goods sold is the measurement that we're looking at for our gross margin. So you will see if revenue is about $2. That's our target for our cost of goods sold. It is about $2 a mile. That will obviously change when we go to the Driver-as-a-Service. You got to remember in our current Transportation-as-a-Service business model, it's not just the cost of being able to deploy the Aurora Driver. It's the cost of purchasing the trucks, financing the hardware and a lot of other fuel costs terminal. So I think you'll see us really targeting roughly that $2 a mile for a breakeven target.

Okay. Perfect. And then as we look out into 2027, at what point do you make that transition to the point where the customers own the trucks? And like when is -- can you give us any sense of timing on that? Is it does it all happen at once? Or is this sort of a customer by customer?

Yes. It's not a hard line. We will start the process in 2027 and then it will really be customer-by-customer specific. I would also point out that we will still have transportation as a service trucks operating for several years. even with customers who have signed up for additional Driver-as-a-Service contract. So we're going to continue to utilize a small fleet of Transportation-as-a-Service trucks for its life, and then we will kind of just build upon that going forward.

So we do expect, again, some general starting -- we will start in 2027. But there's no hard line of when it will exactly start. We're not making some fundamental shift. We will only do Driver-as-a-Service going forward. Again, it's important for our customers to support the adoption to be able to see and experience the Aurora Driver in a scenario where they don't have to make huge investments until they've seen the product work and provide value to them.

That is something that I think will evolve over time, right? Today, we're going to be the only provider, first provider of this technology in market. And so I think there's going to be more customer education and the Transportation-as-a-Service as Dave said, allows us to have this low friction way for them to get introduced, get used to it. But what we do see is that as customers get used to it, they believe in their -- the value they provide in owning, operating, maintaining using these trucks efficiently. And that's a confidence that we don't think that's core to Aurora. And so we see customers excited to take that on, and we look forward to it.

Our next question is from Mark Delaney with Goldman Sachs.

Nice to see the improved new rollouts to new locations. So thanks for all the updates on that. Chris, I was hoping to get your latest thoughts on AI technology and any new innovations that Aurora is looking at one thing that's had more discussion in the investment community and tech community recently has been world models, but curious whether it's that or other newer technologies that you're observing and anything that could be impactful for Aurora?

No. We continue to pay attention to what's happening outside. We're excited about the models that we're building at Aurora. We continue to be deep believers in verifiable AI. The idea that you would trust 1 of these giant trucks driving down the road with something where you just kind of hope the output is the right thing given the input. It just doesn't make sense. And so we continue to look for ways we can bring those ideas in and fuse them with our approach to ensuring that we can deliver a safe vehicle on the road.

Understood. My other question was around the planned start of operations without a driver this quarter. Maybe just speak a bit more, if you could please around what still needs to happen for that to materialize? Is it additional testing and validation or anything else that may still be left in order to meet that time line?

Yes. It's really imminent. We're excited about the progress we're making. It's predominantly testing a validation at this point. So we're continuing to look forward to having them on the road in Q2.

Our next question is from Ken Hoexter with Bank of America.

Great. Chris and Dave, earlier, you talked about some of the new routes going from Dallas to Laredo, Dallas, Oklahoma City. So for the 200 trucks by year-end, can you talk about how many total lanes would that encompass kind of what's the expansion target? And then how many different customers are part of that 200 trucks? Are you focused on the existing customers? You start talking about new stickers on the trucks.

Yes. So for the second question, first, we expect there to be many new stickers on the trucks by the end of the year. We continue to want to support and ensure that the folks who've been with us early on are able to benefit from it and grow their businesses. We appreciate the trust they put in us. But we aspire to have the Aurora Driver on every truck, ultimately. And so we're excited to have new customers come in and grow with them.

On the lanes front, it's really going to be driven by customer interest and demand and where it makes sense for those customers to have the trucks operating. We expect it to span across the Sunbelt, as we have said for some time, but the specific lanes and lane count will really be dictated by that. And that's what's great is that we're moving in the direction with our ability to unlock new lanes that it's a comparatively -- the complexity and difficulty of making that happen has come down dramatically. And so we can be much more responsive and reactive to where customers want us to operate.

Great. Makes a lot of sense. If I can get a follow-up then on the routes, right? So maybe talk about how much of that is, I don't know, end-to-end versus drop and hook yards or maybe just understanding the last mile at this point. And then on the production, if you're targeting 200 or 20 trucks a week at this point by year-end, how much can that scale into '27 on both the truck manufacturing and the AUMOVIO side?

Yes. Okay. So we continue -- and maybe let me make sure we mean by end-to-end. End-to-end means going from a customer side to a customer side, generally a distribution center or some kind to a customer distributions center or terminal. We're not talking about going to the Safeway or the restaurant. And so we expect by the end of the year that the miles that we drive are predominantly going between customer endpoints. That's our expectation. We think that is the right way to deliver the product. We think it's valuable to the customer. So we're looking forward to that. And as we mentioned, we're already doing the work with customers today with Werner, Hirschbach and others at Detmar, in particular, to open up their endpoints and operate those robustly. I feel like there's a second half of your question there that I lost somewhere. I apologize.

Just the second one is just back to the production, right? So you talked about 20 trucks a week and kind of thoughts on the scalability to '27.

Yes. So we're starting by setting Roush up with the bandwidth to be able to produce 1,000 trucks a year. As we go into '27, as we see the demand for that, we can increase that scale further. And we really see this as a complement to the other programs we're running with Volvo and Peterbilt, PACCAR. So it's a third option relative to those 2.

Thanks a lot. Thanks for the time.

Thank you. That is all the time we have for questions today. This concludes today's presentation. You may disconnect your lines at this time. We thank you again for your participation.

Hi, everyone. I'm George Gianarikas, one of Canaccord Genuity's sustainability analysts. Thank you for joining our second Annual Virtual Summit. We're incredibly excited to have with us from Aurora Innovation, Dave Maday, CFO. Dave, thanks so much for joining us.

Thanks, George. I appreciate it. It's always great to attend this conference and looking forward to the Q&A today. So let's get started.

So maybe first and foremost, broadly, there's been a surge in interest in the robotaxi market in the United States, internationally. But Aurora, for the most part, has stayed steadfast in their commitment to trucking. Why the commitment there, why do you think that's a more interesting market than robotaxis at least for now?

Yes. I think we have always been saying this, and I think it's all still true today. Trucking is the -- in our opinion is the best first market for AV deployment. When you look objectively at the market size, the economic impact, the demand perspective, and how we can help transform that industry. The proof points are pretty obvious. But let me just hit a couple of them, right?

Like so you think about the TAM, right? It's a $1 trillion market in trucking. The U.S. market for ride-hailing, I don't know, in the $60 billion, $70 billion. If you think about the unit economics truck drivers make 3x as much as gig economy workers, right? So there is a big difference.

The other thing is we can really provide an immediate benefit to the industry. It's not just the safety of it, and it's more about we can help deliver total cost of ownership benefits. And if you think about these carriers that have relatively thin margins, the ability to provide a better total cost of ownership, whether it be helping to curb some of the driver costs that are out there today or fuel efficiency where we're getting 15% more on our trucks that are operating driverless, no hours of service limitations and having a predictable supply, those are all immediate benefits.

And that's what technology is supposed to do, to transform an industry, right, is to create value throughout the entire ecosystem. Obviously, the self similarity of the trucking routes also is a clear advantage, in our opinion. If you think about we just launched in April, and we're already operating on 10 different routes. So our ability to take this and start to transform and operate in different areas is quite impressive.

We think there is a big need, right? The driver costs are escalating high. There are shortages, regardless of what the numbers claim. And the future everybody would agree, the average age of the driver is just getting higher and higher and higher, and we have to supplement that base.

That said, one of our missions is to deliver the benefits of self-driving technology safely, quickly, broadly. That's our mission. And part of that is into different use cases. For us, it's not about if we should go into trucking. I mean, into ride-hailing, it's when we should go into ride-hailing.

We have already demonstrated the transferability of our technology, right? This is not a challenge for us. In 2024, we were operating in Toyota Siennas between their headquarters and DFW Airport. We know our technology, the exact same software, the exact same hardware, operating on different use cases. So we know that we can do it. But for today and for now, trucking is the market, now is the time, and we're going to create tremendous momentum on that. And actually, when we do enter the ride-hailing market, we'll be at a really strong position from a cost perspective as well. So we're incredibly excited about the trucking market.

Can I ask you a question about the ride-hailing market because you did mention that there are still -- I mean when you originally came to market, there was a sort of dual path trucking and someday ride-hailing. It sounds like that's still maybe on the road map further out. When should we sort of expect maybe more news or a path to hear more about the path to ride-hailing from Aurora?

Yes. I don't know that we have anything to share today. We have always said we would go into ride-hailing at some point, and it's just a matter of when. I would say that one of the things we have to do is, the ride-hailing market, to be really successful, you have to help grow the market. To be able to do that, you have to have a competitive cost structure because you need to actually drive down the cost of ride-hailing, so that you're able to actually grow the market. And in our case, when we launch our third-generation hardware that we're co-developing and AUMOVIO is going to manufacture. At that point, we'll be building tens of thousands of kits. Our cost structure will be way lower on the hardware plus we'll be driving billions of miles and trucking.

And so we'll just have a -- we'll be in a much better position for scaling and realizing all the economies of scale that we need to, to then transfer into ride-hailing. So I don't have a date for you. I can tell you it will be some time when we launch the third gen and we haven't lost sight of the opportunity. I think the trucking opportunity is massive, and we're really excited to lead that space.

So maybe to refocus back on trucking. The estimate is around 200 billion miles driven per year in the United States. Maybe for the audience, discuss your SAM over the foreseeable future and maybe a little bit more around the geographic expansion that you plan to put in place over the next several years.

Yes. I think the easiest way to do it is -- and it is it's 200 billion-plus vehicle miles traveled. And what we do is we look at the areas that we're going to create the greatest value for autonomous driving. So the lane should be relatively long and they're predominantly highway, but there's also you have to go off-highway, you have to deliver to where customers are on their endpoints. The vast majority of these distribution centers and warehouses are within 5 miles of a highway. But generally, you kind of look at it that way.

For us, by the beginning of we expect to be operating in what we would call 50 billion SAM, right? So 50 billion vehicle miles traveled in the SAM. So this year, our focus is going to be on having a technology that can operate throughout the Sunbelt and then we'll start to head north and we'll continue to go from there. So we've always said like 50 billion is a really great number.

I mean, to be honest, that where we're operating today represents, I think, it's like 3.6 billion vehicle miles traveled just today on the lanes that we are operating on. So you can see how it really grows relatively quick, and we're really excited about the growth of that. And again, we create great value, especially on these long haul, over-the-road trips, and that's our predominant focus area.

Maybe to focus on the OEM partnerships. There was a while early days when those were deemed to be not as important. I think the industry has realized that they're incredibly important. So maybe just a little bit of an update around your relationships with PACCAR and Volvo and how those seem to be progressing.

Yes. And OEM partnerships has always been part of our strategy in our ecosystem from day 1, we have been talking about that, and we think it's important. We think it's important because it is the best path to scale to tens of thousands of trucks, right? When you can get a line-side installation of an Aurora Driver kit, into the vehicle assembly lines, then you're utilizing existing capacity, existing footprint, existing processes and you're building on top of that. And so it is the most efficient path. It's not the only path. It is the most efficient path.

For us, PACCAR and Volvo remain committed partners. They represent about 50% of the market. We've made a lot of progress, especially with Volvo this last year, right? We just started to have line-side installation of an Aurora Driver kit into their preproduction line to just really work out the processes so that we can be prepared for launch. So for them, there's not going to be any upfit. It's going to be basically right from the Aurora Driver kit that will be sent from Fabrinet right over to Volvo. It will become right off the line, and it will be a fully equipped truck.

PACCAR, we obviously -- our first generation of trucks that we're operating in driverless is with PACCAR trucks, Peterbilt trucks. They're a little bit further behind, to be honest, we expect them to be ready when our third-generation hardware kit comes into play, but I don't have specific timing on either of them.

I would say also what we looked at this last year, especially in the last half of the year is the technology was really advancing nicely. The customer demand was very high. We were really a little bit short on supply of trucks and so that is why we decided to introduce another fleet of trucks to our portfolio. So we're taking international stock trucks. We're putting an Aurora Driver hardware kit it on them as well as an overlay of a drive-by-wire system to have the necessary redundancies.

So we've worked on the design and engineering with folks, we are going to -- we're doing our first build right now of those trucks, and they're actually out driving around. We will shift the upfit capabilities over to a partner called ROUSH, very well recognized in the automotive industry for upfitting, and with this second fleet of vehicles, it will be the first time we've introduced our second-generation hardware kit. They'll be based on international trucks. They will be driverless. We expect to grow that fleet. As a matter of fact, in the third quarter, sometime ROUSH is going to be building 20 a week of these. And so that's what gives us a ton of confidence in our ability to actually grow our fleet this year.

So we've had the technical. The technical is always going to lead a little bit, right, because you always want to know where you can drive before you start contracting where you're going to drive. But it's been a really exciting opportunity for us.

I'm kind of disappointed by the partnership. I was expecting to see you the hard hat kind of screwing in some of the equipment, but I guess not.

Well, in fairness, you probably wouldn't want me doing it. But our team is actually building the first 25, and they're really great. And so they put all the instructions together and then they hand it over to ROUSH. So it's an exciting partnership.

One question that I get a lot is about Volvo. And when they launch their line-side manufactured trucks, will they be observerless when they get on the road.

Yes. There will be no need or request for a ride observer from Volvo. There's none from international. There won't be any from the PACCAR trucks that are built at their plants and those that aren't upfitted. The ride observer is a thing that just for this current fleet of trucks it's not an indictment on the Aurora Driver at all. It is a reflection of the fact that PACCAR has prototype parts, and they're very conservative and they would like to have that added value of safety in their mind, for us, the Aurora Driver has to handle everything as anticipated, and that's what it does. So the Aurora Driver behaves as anticipated.

In terms of time line, I can't share their time lines, but we're excited about the progress Volvo is making, and I kind of shared with you where I think they're going to slide in.

The industry has for a while now coalesce around this 2027 date when everyone seems to expect scale, right? You've said it, others have said it as well. What is it about that year specifically? How confident are you that that's the gear that's going to happen? And well, I guess we'll get into the hardware question in a second about the cost downs for Gen 3 hardware. But why 2027?

Well, I think '27 is going to be great. I actually think '26 is going to also be awesome. If you think about our crawl-walk-run process. We're now getting to the walk stage, right? We were in the crawl stage of the first year, the walk stage where we're going to start to have a meaningful number of trucks on the road. 2027 is the year though, that we are going to do a couple of things, right? Number one, we're going to be migrating over 200 driver as a Service business model which is the ultimate model that our customers want. It's the capital efficient model for us. The second thing is that we will be launching our third-generation hardware kit.

So again, our first-generation hardware kit, limited supply, hand built by Aurora, great, demonstrates the technology, but pretty expensive, not designed to 1 million miles.

The second-generation hardware kit, which is being designed by us but manufactured by Fabrinet. We'll be able to build over 1,000 of them, but we have -- still have a limited supply of how many you can build on the contract factory.

And then that third generation kit, which we'll launch in 2027, that's when you're starting to be able to build tens of thousands. If you're putting in the capacity to build tens of thousands, you need to make sure you have truck supply, customer demand as well to match that capability.

So for us, '27 is really a -- you guys might describe it as kind of going to more serial commercial production. For us, we think this is going to be a great year in '26. You're going to get another bump up in '27 and then '28, it's going to -- basically, everything is going to be feeling like serial production.

And what about bringing the costs down to -- in the Gen 3 hardware? How confident are you? What kind of line of sight do you have that that's going to happen? And particularly, and this is sort of the same question, you have your own lidar, right? And that's -- you see that as one of your competitive advantages. How confident are you that you can bring the costs down there to get to the gross margin targets that we -- that you've shared?

Yes. I think our confidence is based on the execution and track record that we're seeing on Gen 2 and the early work that we're seeing on Gen 3. So if you think about -- and I also think this is what separates us from any other AV trucking company out there, to be honest. We are the only company that I know that has a first-gen kit in operation getting ready to launch a second gen kit and also in development of a third gen kit, all with a different level of scalability.

Our second gen kit is appreciably cheaper than the trucks that we have on the road today. It also is designed to meet 1 million miles. And my degree of confidence on the ability to achieve both of those is sky high because we're -- we've already sourced all the parts. We're doing builds, we're getting ready to do our C builds that go on commercial trucks.

So at this point in time, all the commercial agreements are locked in, right? We're also in finalizing our testing and our testing supports our conclusion that these kits will be able to last 1 million miles. So I'm really confident today.

Now I'm building upon that into the third gen. And there's a couple of additional things we have. Now we've got engineering capabilities where we get to share the best of what Aurora is doing as well as what AUMOVIO is doing. We're able to have better manufacturing processes because contract manufacturing is still relatively labor-intensive.

Full production serial manufacturing is far more automated. So you're going to get far more automation out of the manufacturing side. We've got a lot of DFM work with the AUMOVIO folks and are experts in this, and then obviously scaling. There's a difference between buying 1,000 to 2,000 kits and buying 10,000 to 100,000 kits, right?

Like there's just a big stair step in each of these. And we've seen -- in our early work, we're already getting cost quotes in. We're already starting to do our early builds. And what we're seeing is that the cost is coming in roughly where we planned in some cases, better and in some cases, slightly worse, but overall, roughly to where our plan is.

And this includes FirstLight every iteration of FirstLight is more capable and less expensive. And part of the reason it becomes less expensive is just easier to manufacture, right? We're going to the small lidar on a chip, which is infinitely easier to build and manufacture than the current lidars that we have on the road today. So we are very confident in that. And the reason we're confident is the execution that we've had today. So it's not like we're just starting out. We've been working with AUMOVIO for 2 years.

Maybe to go back to the OEM partnerships, you have very good relationships with PACCAR or with Volvo. But there are others who are trying to get into these OEMs as well and become their autonomous provider of choice. How likely is it that we'll see some of these OEMs adopt second, third suppliers? How difficult is it to break in? And sort of where do you see the steady state of the market over the next couple of few years, 1, 2, 3 suppliers of autonomous solutions?

Yes. I think if you're a carrier, right, or a private fleet that's looking to adopt autonomous technology, you would always like to have choices. It's the same reason as carriers buy multiple truck brands, right? They would like to have choices for leverage and understanding.

In the case of AVs, it's a lot harder to have a really great product. So just the number -- just to have a choice, to have a choice isn't particularly useful, if you don't have the confidence in being able to avoid that technology. So I do think we have a kind of a multiyear lead in terms of building the trust with being kind of the technology of choice in the trucking. Others will come. I'm sure of that. I think it will be a small number of folks, to be honest. I think integrating into their systems is equally challenging, and you need to have a fair amount of respect and expertise and work to be able that you're integrating within each of these.

We expect that our continued progress, our integration with these teams, we're going to create such enormous value for our carriers and for our customers that, sure, they may have an opportunity to try out different things and they probably will, but I think they're going to choose us just because we are going to be the supplier of choice, right? Because we're creating value, we're driving fundamental improvements and changes in the industry, and we're kind of leading the way in this. And so for us, we're really focused in on that.

Will there be other players? Probably. Do we require exclusivity? No, not really. Do some people want exclusivity? Sure. But generally speaking, competitiveness breeds innovation and that's always useful for an industry that is, frankly, been a little light on innovation over the last 100 years.

So should we expect additional OEM partnerships from Aurora over time?

Well, I have nothing to share with you today. I think we've said many times that we believe that we will have the best system out there, the best engagement with our customers, the safest product out there. And we would expect to see the Aurora Driver on all truck brands. We now have added 1/3 with international, a slightly different approach on how we do it, but we've added 1/3. I would expect that we will continue to be the AV technology of choice and who knows what the future holds with other brands.

Fair enough. And could there be international, it's not the company, but just geographically international expansion over time?

For sure. I mean, I think some of the same challenges that exist across the globe exist here in terms of the need for the trucking industry. If you look at Japan as an example, it has a very similar challenge with aging driver for us, really high cost of labor, a lot of restrictions in terms of use and a lot of inefficiencies and low margin. So there -- every geographic area has an opportunity and a need. Our focus today is in the U.S. We think it's an enormous opportunity, and we would like to make sure that we do U.S. great. But I think global expansion is something you would expect.

Maybe in the last few minutes, we were talking offline about the regulatory environment. There was an announcement in a forum a few days ago, in which Aurora participated. Can you sort of talk about what you expect that framework to look like over the next few years? Right now, it's sort of a patchwork of federal and state regulators, but how should we expect that to evolve? And will it become easier for Aurora to deploy its trucks in other states over time?

Oh, boy, I don't know if I should be forecasting how the regulatory system is going to evolve and change over time. This is what I would say, we look at it predominantly from a state and federal level. There's obviously -- we work really well with local municipalities and agencies and things like that as well. But like the 2 fundamental frameworks are state and federal in terms of like trucking.

From a statewide perspective, as you know, majority of states allow this driving one of the big states that hasn't allowed it in the past is California. They're working on some trucking regulations right now that they would like to adopt for '26. We'll see where that goes. It's political season, so you're already starting to see some political stance associated with that. But they've been very productive discussions. We work with state regulators to try to demonstrate and talk about the benefits, both ourselves as a company and through our coalitions and partnerships like EMEA.

At the federal level, there's been a lot of positive momentum. If I was being honest, the prior administration, there wasn't a lot of forward momentum on this particular topic. The current administration, there's a lot more momentum. We've got the AMERICA DRIVES Act. We've got engagement with Secretary Duffy in the Department of Transportation. We are trying to play an active leadership role talking about the benefits and the capabilities and the responsible framework to roll out.

If a framework came out from the federal government, I think it would be beneficial to avoid some of the state-by-state fighting that goes on from time to time, but we'll see. The thing that's most encouraging to us is, at the federal level, it's the support for innovation and competitiveness and kind of this American leadership perspective. And we'd like to be a part of helping to develop that technology that gets us a leadership position. So we're positively optimistic and we'll see where it goes.

Great place to stop. Thank you, Dave, so much. Best of luck. Talk to you soon.

All right. Thanks, George.

Great. Maybe we can start. Thanks, everyone, for joining. I'm Ravi Shanker, Morgan Stanley's Freight Transportation, Airlines and autonomous trucking analyst. And we have literally saved the best for last. And we are very happy to have with us Aurora Innovation CEO, Chris Urmson. Chris, thank you for coming back to the TMT Conference.

Thanks for having me. Great to be here.

Before we start, as you pointed out, I have to tell you that for important disclosures, please see Morgan Stanley's research disclosure website at morganstanley.com/researchdisclosures. And please read these disclosures.

So Chris, it's probably been the most important and successful 12 months in Aurora history. You guys have cleared a lot of milestones over the last 12 months. So for those less familiar with the story, can you just give us a really quick recap of what's happened over the last year and what catalysts we can look forward to in '26?

Yes. It has been a heck of a year, and it's -- '26 is shaping up to be even better. So we focus on delivering the benefits of self-driving technology safely, quickly broadly in trucking. In '25, we launched the first driverless trucks operating daily in the U.S. We're the only company operating them regularly every day. It's exciting to have them on the road. Over the course of the year, we went from operating in daylight conditions on a particular route and good weather to now operating day and night across a variety of routes in the rain and more wind and that kind of thing. '26 is going to be even more exciting for us.

So at this point, we're running kind of a handful of trucks on a daily basis driverlessly. By the end of the year, we'll be running a couple of hundred trucks driverlessly. In Q2, we're going to launch our second-generation hardware on our newest truck platform from international and have that operating again driverlessly, nobody on board, serving customers. And we're going to grow across the Southern U.S. over the course of this year, demonstrating our ability to take this generalizable, verifiably AI technology that we have and apply it in ways that really meet customer need. So it's going to be very exciting on that front.

Those couple of hundred trucks, we expect to end the year using those to generate $80 million revenue run rate, which is going to be a nice step forward for us on the revenue front. And then we continue to make great progress with our partners. With Volvo at the end of last year, we had the first trucks come off the assembly line where they had taken our hardware, integrated it in the factory and had it roll out. It is a big step because we're not just working on the technology and making the technology talk to each other, but actually working with their manufacturing teams so that they can actually produce these things at scale.

We've put in place a capability to upfit trucks with by wire and the Aurora Driver that's going to allow us in the back half of this year to be producing 20 trucks a week, allowing us really to grow aggressively to meet that customer demand. And then Aumovio, our partner for our third-generation hardware continues to make strong progress so that we'll be in place with the capability to build tens of thousands of trucks coming in 2027. So really just going to be a whole lot of fun this year.

Got it. Maybe just to take a step back here, there's a lot of focus. When people talk about autonomous, they think of robotaxi, not as much on the trucking side. But it almost feels like trucking is a better use case, a better application for autonomous maybe to begin with, and that is why you guys chose trucking over robotaxi, which you will eventually plan to get into. So can you just walk us through your vision of how autonomous trucking rolls out? How does that impact the economics of trucking? And what share of the market do you think Aurora can ultimately capture?

Yes. So -- you're right. We think of trucking as the right first market. It's a very hard market. Actually operating these 70,000 pound things on the freeway at 70 miles an hour is extremely challenging and make sure you can do that with conviction and the safety and safe operation of the vehicle. The great news is we've cracked that. We expect over the course of the next several years, to basically get to the point for customers where they're not operating our system, they're really not going to be competitive. The economic opportunity for them is really profound. We can take the asset, the truck that's one of the biggest parts of their cost structure and double the utilization of that, moving from 11 hours a day, which is what you limited to with a person driving a vehicle to approaching 24 hours a day.

Similarly, one of the big challenges that operators have is a combination of high turnover in the driver pool and the fact that over the next decade, we expect to need 1 million more drivers, and we just don't know where they're going to come from. Aurora Driver will provide a way to complement the people they have driving trucks today, that's basically a safe, scalable pool of drivers.

On the economic side, on the bottom line, we expect to have some huge benefits to customers. Today, the cost of a person driving truck is about $0.995 per mile, plus another $0.15 to $0.20 of indirect costs. We expect to price at $0.85-plus per mile. So that in and of itself is a significant economic benefit. You add to that the fuel economy benefits. So we expect between 40% and 34% improvement in fuel economy, which is huge when you think of fuel as one of the big 3 costs for these drivers -- for these companies.

And then, of course, the safety benefit of this is real. You won't talk to a trucking company who doesn't lead with safety is the most important element and the combination of the Aurora Driver's superhuman capability that is paying attention 360 degrees to be able to see further at night than a person can, be able to react without ever being distracted, it's just going to be profound.

Got it. Understood. Just looking at the autonomous trucking space, like you said you guys are leaders, kind of you're the only ones doing what we're doing right now. There are a few -- a handful of other companies who are trying to attack similar or adjacent parts of the business. Can you just talk about what makes Aurora unique? Is it a tech stack? Is it OEM relationships? Is it you and your genius, kind of what really sets the company...

Let's not be the last one.

Highest multiple.

That will be a short shortfall. So I think these are like all of what you mentioned, except for the -- but the fact that we have verifiable AI, the fact we're the only company running this stuff for real on the road today that our verifiable approach -- verifiable AI approach is just critical when you think about we're the tip of the spear for this physical AI revolution that's happening, making sure that we don't just have a thing that we think works, but that we know works and have conviction in that.

When we talk about the OEM partnerships, the fact that we work with 3 of the 4 OEMs in the U.S. today, no one else can say that, right? And obviously, you can't have a driverless truck without there being a truck. When we look at our hardware supply chain, our second-generation hardware will be produced by Fabrinet and now it takes us up to about 1,500 units. But then the partnership we have with Aumovio is a huge competitive advantage. As we look from the hardware we have in vehicles today to our second-generation hardware, we expect the cost of those components to drop in half and the durability of those components to triple.

As we move to the Aumovio hardware, we expect that cost to come down by another -- or the cost to come down by another factor of 2. At that point, we really can not just scale because we have the quantity, but scale because we actually can have the price performance that we want the cost of goods sold to build a hell of a business. And then the relationships we've been building with customers are deep. These folks have been with us for several years. I'm a big believer that they care about safety. They care about that this will help them build their business. Once we start working with these customers, once we are able to have a strong partnership and build value with them, it's going to be very hard for someone else to come in and play, right? Do you really want to put the safety and risk your business when you have something that's working well with somebody who might come in late with some other offering.

Got it. Understood. Just one follow-up there. Kind of you mentioned AI, obviously, a huge theme of this conference for the last 3 days. It's come up a couple of times. But can you just talk about your view of how AI plays in the development of this technology? Because you guys have been around since 2017. You've been one of the first -- the first time I heard of simulation and saw what you can do and kind of blew my mind kind of several years ago. At the same time, you also have had actual rubber on road and are testing in the real world as well. What is the right balance between simulation and real-world testing in your view?

You need to use the right tool for the right job, right? So we -- first and foremost, simulation is great, but actually a simulated test is actually what you want. You need to not just be able to kind of make the world move forward in some simulated way. You need to know whether it was good or not. And that actually turns out to be quite hard and another step beyond just simulation. For us, it's also important that, that simulation is not just pretty pictures, but it's actually grounded in reality. So when you get a return back from an object in the world from your LiDAR simulator, is it actually coming back at the right probability? Does it have the right intensity, right?

These are things that if you don't put attention to, you get something that looks pretty, maybe looks to the human eye as representative, but has a meaningful difference in the statistics of it that are going to cause problems when you actually see -- compare the performance relative to what you see online. So for us, we've been a believer from day 1 that it is less about the quantity of data, it's about the quality of data that you have. And so we target collections where we need to. We have a variety of test tracks we'll go out to gather data, but then we can amplify that data, we can create scenarios that we wouldn't otherwise be able to safely generate in the real world through simulation.

Got it. And just to close the loop on the tech side, not everyone is using the same tech stack in the industry as you would expect.

I hope not [indiscernible] stuff.

Fair enough. Do you think it's kind of there's going to be one singular approach to this? Or do you think there's going to be 4 or 5 different players with 4 or 5 different technology solutions kind of -- but all of them really work. I think the biggest -- I won't say controversy in the industry, but kind of the question mark is around the need for etchy maps or not. So what's your answer to the mapping question? What's your answer to LiDAR versus vision only? Or do you think all of them work?

I guess my answer is that we need to deliver a safe system and we deliver it quickly, right? And that's kind of the start of our mission statement. And so when I think about maps, what are computers really good at? They're really good at storing and recalling information. We should lean into that. It turns out it's a hard engineering problem, but done well, you can actually leverage it.

I also think that when I drive near my home, I'm a much better driver than when I drive in some other part of the country, not because I lose my skills in another place, but because I have less understanding about the world, and I'm reacting in real time rather than be able to kind of have a cash model of what's there, I'll be able to use that and exploit that and make my decisions.

So it seems fairly obvious that be able to know what's coming in the future rather than having to figure it out instantaneously is the right answer, assuming you can do the engineering to make that happen. It turns out we've been able to do that. And our ability to build maps is now really an operational problem. It's not a technology problem. And when I say problem, it's just -- it's a thing we have to do. We know how to do it. We're not at all concerned about the ability to scale those maps.

When it comes to the sensor suite, we are strong believers in multimodal sensing. We believe that because they have different failure modes and benefits, cameras have higher resolution, but don't see depth directly, can get obscured by things. Radar will punch through things, but it's lower resolution and doesn't see color. Our FirstLight LiDAR can see further than anyone else can and allows us to get geometry at a range that you wouldn't otherwise be able to.

So we see that complementary set of capabilities is really important. We see that play out in practice when we're driving through weather, when we're driving through dust doors, we're driving at night. And so the question really is not -- is why wouldn't you use these things, industrialize them, bring them to a point where they don't impact the cost negatively and make it work. If you ask anyone working in AI, would they like more data or less data? They're going to save more. And this gives us this complementary set of data. So yes, we're big believers in multimodal sensing.

Got it. So maybe a follow-on question is we were discussing this before the start of this session that when I speak with investors on your story the goalposts keep moving, which is a very good thing because it shows that you guys are moving to the goalpost. And I think the most recent one or where we are right now is it's gone from does this work? People are now convinced about to can this scale, right?

And one of the questions we're getting is, does the need for mapping constrain your ability to scale, right? So can you address your confidence in scaling, both in '26 and as well as when you start commercial production next year from the perspective of routes and operations and kind of where the truck can work and then also scaling from a volume perspective and kind of getting up to 200 trucks and then 1,000...

Yes. so on the map scaling side, literally no concerns, right? That this is a thing where we have built the technology. We know how to roll it out. We were able to open up 10 lanes, go from 1 lane to 4 lanes to now 10 lanes very quickly. It's really going to be driven by customer demand and scale of vehicles. It turns out if you have a handful of vehicles that you can operate driverlessly, opening up 20 lanes is not useful because you don't have any trucks to put on them. So for us, there -- we'll continue to advance and improve the efficiency of that process, but this will not be a limiter for us as we scale and build the business this year.

We've also unlocked the ability to get a couple of hundred trucks on the road. So we now have a partnership with Roche, where we'll be taking these international trucks. They'll taking our by-wire overlay. We'll be taking our Aurora Driver second-generation hardware kit and installing them. It turns out upfitting is a very common practice in trucking. So we'll be using this as an upfit facility. And then these trucks will be deployed into market, like I said, in the back half of this year at 20 trucks a week. So far, we're getting very positive signal from customers. They're excited for this as we start to unlock these long lanes like Fort Worth to Phoenix, which is 1,000 miles, no human can drive that in a day, at least not legally, right? And so the fact that we can start to unlock real value for customers over the course of this year is going to be a big way that we see this kind of supply that we will now have get absorbed.

Got it. And just to clarify to the audience kind of when you say scaling up to get to commercial production, like eventually in '27 when you have the full launch, you're not actually going to make anything. So there's no CapEx cliff kind of there's no...

No, we don't see a CapEx cliff, right? So we work in partnership with others. So the hardware that we're putting in the vehicles this year is our Gen 2 hardware. Next year, as we -- as the Aumovio hardware is produced, we have this phenomenal partnership with Aumovio. It's an incredible team, incredible company. We're working together to deliver that third-generation hardware. The Aumovio folks have invested and they're investing roughly $350 million to allow us to do the engineering work together to put in place the manufacturing, and ultimately, they finance the hardware, and we pay them based on the utilization of that hardware. And this is actually one of the most lovely bits of partner alignment that you can imagine. Our customers get paid more, the more their truck drives. We get paid more, the more that customer drives the truck and Aumovio gets paid more, the more that we drive that truck for a customer. And so through the stack, we have this complete incentive alignment of we want that truck out there operating effectively and serving ultimately our customers, the shippers.

Got it. Just to close the loop on the topic of scaling. You guys did your first Driver Out run on a public road end of April. You just crossed 250,000 miles with just a few trucks in your fleet. So that was a pretty good scaling right there. Obviously, no reported incidents or any issues there. So what have your biggest learnings been? Like has this been like exactly as you expected? Like what have been the biggest surprises, positive or negative?

Yes. It rains a lot in Texas. You can look at the weather and you can see like here's the rain. It turns out somewhere around 40% of the days this last year, we weren't able to operate because of various weather conditions. And so that was -- as we -- as kind of entertaining, but it is what it is. We now have the ability to operate in rain and we'll continue to enhance the kind of the level of rain that we can operate and the level of environmental conditions we can operate over the course of this year.

So taking that off of -- out of play is a big deal for serving customers. You don't want to be Hirschbach and say, sorry, the berries can't get to the store today because it's raining out. So that's a big step for us. I think the other -- like there's this thing that you have to have belief when you're building a company, building technology that you're going to get there and you're like, yes, we're doing the things. I believe we're doing the things. This is going to work. And then there's a moment where you actually did it and you see how it played out.

And I think in terms of the process we use for releasing and how we've made that repeatable, we can push new releases on a regular basis, the fact that the performance fee on the road for the most part, aligns up with what we expect, right? Like that's actually been a big deal because it gives us continued confidence that we're kind of on the right path. And this will scale, right? If we kind of test one hypothesis and that succeeds, then kind of the extension of that hypothesis becomes more likely to succeed. And that's what kind of this place we're in right now.

Got it. Maybe switching gears a bit and talk about a few numbers. You referenced the $80 million revenue run rate for 2026. Can you just talk about the big moving parts there and kind of what will get you up to that level, obviously, scaling up the fleet, but also give us a few more details on the Detmar partnership that you guys announced.

Wonderful. Yes. So we get paid on a utilization basis. So we drive for customers. Today, we own and operate the trucks. We effectively operate like a trucking company, but we do it under the flag of our partners. And so that's reflective of miles we expect to drive heavily weighted in the back half of the year.

The Detmar partnership is one of these really wonderful ones where we were not thinking about this as an application. This customer saw the progress we're making. They've seen some of the press about what we were doing. They reached out and said, "Hey, we're moving sand between this mine and this distribution center. We need to drive on freeways. Nobody else seems to be able to do it and you.

And so of course, we looked into it. They basically want to create a virtual -- not treadmill, basically virtual conveyor belt with trucks. So the more the trucks drive, the more sand they can move, the happier they are because their customer has basically an insatiable demand for this. So this has been one of those places where just by -- somewhat by happenstance, customer reached out to us, and this will become an incredibly interesting bit of business, and we expect to be able to grow that dramatically.

Got it. So just a follow-on from there. What have the customer conversations been like? Because this is historically viewed as a fairly conservative industry where people are somewhat skeptical about technology. But at the same time, if you can give them technology that will actually save them money, improve their productivity, people are all in on it because math is the only thing that matters in this industry, right? So have the customer conversations ramped up after you've past these gaps and these goalposts? Or are people waiting for a final launch to kind of fully roll out?

So I'd say, first, there's a distribution of customers, right? There's no one kind of persona. There's different flavors of risk and appetite. What we have seen is that ability to move from the hypothetical of what this could mean to your business to the practical of, no, this is real. It's operating driverlessly. It's about to start scaling out to places you care about, really has changed the tenor of conversation. At this point, we effectively have more demand than we can possibly supply in the next little while here. And so that's just a very exciting place to be as a business.

And what's been even more exciting is that the -- the conversations have changed, particularly with folks who've been with us for a while from I'd like to get access to, to I'd like to get access to and ensure that I have priority on this. I don't want someone else to come in, right? And they ask, we get exclusivity? The answer, of course, is no. But for folks who've been with us for years, we want to reward them. We want to say, like, thank you for making the bet with us. We'll help you grow and build your business. And then we'll expand from there as well.

Got it. So maybe moving through some of the capabilities of the truck itself. Obviously, you referenced that you can drive through rain and fog as well, kind of you noted how often it rains in Texas. Obviously snow has been always kind of big question mark that people have had. Just talk about the kind of capability of the truck and when do you get to a point where you can cover the entire country. And to what extent does that unlock more of the market for you?

Yes. So obviously, being able to drive more places just intrinsically unlocks more market, right? if you can't go the place the goods need to go, it's not helpful. What we expect is over the course of '26 is we'll unlock the Sunbelt and then we'll start to push north from there. I expect this will just -- this will actually move very quickly. Today, like as you said, we operate in a certain set of weather and environmental conditions. But we're already doing the work to start pushing towards snow, that doesn't sow in the summer. So we've got trucks out gathering data in the Rockies right now and chasing snow to make sure we've got data sets that we need. We look at this, and we don't really see this as like there's a thing made of it, but it's not really a big thing, right? Like people talk about it because early on, we want to get something on the road. It's useful to be places and then we'll kind of add capabilities in. At some point, we'll get snow in there. I think we're planning to do light snow certainly by the end of this year.

Got it. Sounds good. I'll open it up to see if any questions in the audience. If not, we can keep going. So kind of...

I know it's a smaller private. Can you speak to Gatik as a competitor and how they are going to market versus you?

Yes. I don't know a whole lot about Gatik. They have been working on box trucks. It's hard to tell exactly what's happening. First and foremost, though, I look at this space, and it is gigantic. We believe we have a multiyear lead on folks. We welcome competition. We'll continue to execute, but I don't have any particular insight into that company.

Come back in a second. You referenced the way you're building up revenues over the course of the year. The margin trajectory, I think, is mostly tied to the second generation, eventually a third generation of the kit. How much visibility do you guys have into the math there and that cost reduction?

Yes. On the cost of the hardware, we have very good visibility into that. The hardware that we're building for Gen 2, we're manufacturing that today. We understand what the cost is. We have the supply agreements in place. So we know what that cost is. We feel confident in that cost structure. When we talk about the Gen 3, if anything, I'm more confident in that. One of the reasons you work with a company like Aumovio is their superpower is the process of manufacturing and the supply chain management. And so on a weekly basis, we're looking at the bill of materials costs. We understand the assembly cost, but we understand what the full kit cost is. So we feel very confident about where we expect to end with those components.

Got it. And any particular concerns around supply chain or other issues, like -- because LiDAR was a huge thing for a while and can you source them as such.

Yes. We continue to pay attention given that we're building something as advanced as we are, there are certain kind of single source risks that we have in the supply chain. I think most of the companies at this conference probably have some kind of supply chain risk with NVIDIA as a single source. And of course, we use their Thor SoCs. We're one of the lead customers for that. But no, we look at this. And again, part of the advantage you have with working with an Aumovio is that's what they do, right? They make sure they have a core team that we would never be able to hire that handles supply chain management and make sure the suppliers are credible and have alternatives lined up where it can be.

Got it. So 2026 will be when you launch the Volvo program, you'll take the observer out of the PACCAR truck and you have the upfit on the international program as well. So...

We haven't said any of that.

Maybe that was a pretty clear overview there. I tried -- sorry. But if all of these happens, right? So when do we get to a point where a driverless truck is the only Aurora truck that's running on road kind of at what point does that happen?

So we will be running trucks with operators on board indefinitely because we will always be developing and improving the system, but that will become a very small minority of trucks. By the end of '26, my expectation is we are already at a small minority of the trucks that are on the road, right? As we think about just scaling to hundreds of trucks out there, we can't have 500, 700 drivers sat by hoping -- or hoping they don't need to go drive that day. So our expectation is later this year, the vast majority of trucks that are operating [indiscernible].

Got it. Sounds good. And just on that point, right? So again, you guys have been hitting all of your catalysts and your key milestones, some of them ahead of schedule. But it still seems like there is some level of conservatism on the OEM side, kind of going back to the need for an observer kind of after you pull the driver out. So what is the risk that you guys do everything you have to, but maybe some of the OEM side or maybe the carrier side move slower than you would like in terms of adopting this technology?

Yes. There's risk in everything. If any company here tells you there's no risk in their business, I wouldn't buy that stock. But what we can do to mitigate this, one is we continue to have good strong working relationships with them. With the partnership we have or the relationship we have with international, where we're buying stock trucks, upfitting them, we've basically taken that kind of schedule risk from the OEM and taking that as one that we can control on our side of the ledger. And so we think that's an important way to kind of help mitigate that risk.

But I think the biggest thing, though, is getting these trucks in the hands of customers at scale. There's nothing that motivates a company more than their customers saying, if I can't get the thing I need from you, I'm going to go buy it from your competitor. And so while we have enthusiastic partners, they're working well. I think as the reality of this is in the market, people are using it, they're demanding it becomes a thing. I think that will just help provide a virtual feedback -- a virtuous feedback loop through our partners.

Got it. That's good. Last call, if any questions from the audience? Maybe there's a couple -- a few minutes left here. So kind of just to hit on numbers again. So you're targeting breakeven gross margin on a run rate basis exiting 2026 and positive free cash flow in 2028. Can you just talk about the balance sheet and kind of the cash used and liquidity until you kind of ramp up?

Yes. We feel like we're in a very good place. At the end of the year, we had $1.5 billion in the bank. So that's a really enviable position to be in. As we look at how we expect the business to roll out over the next couple of years, we think that will carry us through to that run rate free cash flow or free cash flow on a run rate basis. The provisos on that are that we will use our ATM to fund the tax obligation and our RSUs, and we'll likely use it to cover the cost of our [indiscernible] but modular that, we feel good about the capital we Have.

At some point, we're going to want to make sure that we have a responsible amount of capital on the balance sheet. We'll find the right time when -- basically when the catalysts have been reflected in the stock and find the right time to put a little more capital on the balance sheet. But we feel very good about that. It's a great position to be in where it's like, yes, we just execute. This is all going to work.

Got it. Speaking of medium to long term, kind of you guys obviously have the partnership. Uber kind of has a historical stake in the company. And you initially started at us doing both commercial trucking and robotaxi ride-hailing. So when do you think -- I know you guys are going full speed ahead on launching commercial truck, but what's the time horizon for ride-hailing and maybe kind of local delivery as well?

Yes. I think this is a really important idea. So the capability we're building is not just an ability to drive trucks, but it's a generalized driving capability. And even more broadly than that, we're developing the process and tools that allow you to launch a safety critical physical AI system, right? Something where if you do it wrong, people get hurt, and we want to make sure that we do it right. That travels. And so today, if you ask me if I could spend another dollar anywhere, I would spend it on our trucking business because the lead we have is profound, the opportunity is great.

Just -- the more we can get that to happen, the better. But within the next couple of years, that business is going to be going, right? And we're going to be -- there's going to be execution to perform, but it will be off and running and folks will start to recognize that that's kind of on escape velocity, that's the point where I want to start looking, okay, where is the next best opportunity, the greatest ROI for us to take the competence we have and point at it. And today, it's not clear to me whether that is other elements of the logistics space and stay in that vertical or whether it's to start to look at ride-hailing and start to enter that competition in personal mobility, do that fighting downhill though, because we will already have scale in the system, which will help us drive the cost out of the Aurora Driver, allow us to go enter that market in a more competitive way, which is great.

But there's also agriculture and mining, drones. There's lots of places where we can take that competence that we have, that physical intelligence, that verifiable AI approach and deploy it. And so it's going to get really fun. It's going to be a hell of a lot of fun building this truck business. But then as we start to send kind of green shoots out to go after some of these other adjacent areas, it's going to be very, very exciting.

Can you just expand on that a little bit because if you go back 10 years, the early days of autonomous driving, there was some skepticism that you could take a system off of a car and burn in a truck or vice versa. Does AI now let you do that kind of much easier than it could have been before?

I wouldn't say it's AI, but what I would say is it's the architecture and design of the system. So up until a couple of years ago -- maybe even 2 years ago, we were running our Aurora Driver on both Toyota mini vans and big trucks. So we have thought hard about how do we architect the system so that it can be applied. Frankly, when we go from moving a big box truck down the road to driving a little passenger car, it's easier.

And so then when we think about, again, moving from Class 8 tractor trailers to Class 6 box trucks, like -- that's just going to go, right? And so it will -- we're very excited about going to take on those markets to serve customers in those markets to deliver the value there. But again, every dollar I can spend now on trucking is going to have a higher ROI than any of that. So let's go do that first.

Got it. I think one of the most common questions we still get in the space is on the regulatory side, and it feels like there has been a lot of positive traction in that area. Can you just go over how you see that as you kind of on the cusp of launching commercial operations?

Yes. We do not see regulations as a barrier for us to build a business today, period. If you look across the United States, the vast majority of the states today, you can operate driverless vehicles in them, driverless trucks, certainly across the whole Southern corridor. We expect what we've unlocked in '27 to be roughly a $50 billion SAM or 50 billion mile SAM. So lots of opportunity there. We continue to have very positive support at state levels. We're starting to have conversations in more states just to kind of broaden that in preparation for us to start expanding out of the southern corridor.

At a federal level, we continue to see support, the regulations that we have, both from FMCSA and NHTSA support the technology we're deploying, the product we're deploying, and we continue to have strong relations there. And we are seeing this administration, at least so far, communicate very positively about the importance to the American economy and American competitiveness of automated vehicles. And that's from the Vice President through to the Secretary of Transportation and various others in the administration.

Got it. So Chris, take us home by telling us what you're most excited about in '26 and what we can look forward to in terms of catalysts.

Yes. I am just jazzed, right? This is going to be a year where we get a new truck on the road, second-generation hardware. We're going to be able to do that at scale. And it's going to be -- like I've been working in this field for 20-something years at this point. And we made a big step forward last year where we could put trucks on the road and nobody in them. But by the end of this year, if you were taking a road trip across the Southern U.S., you can't help see our truck, right? They're going to be out there serving customers, and it's just the first step to what will be an even more exciting '27. So getting to that point where we get to see this really take off and really go, it's going to be a lot of fun.

Great. We're very excited to see how that develops as well. So Chris, thanks so much for joining us.

Thank you.

My name is Glenn [ Chell ]. I work with Josh Beck on the Internet and Autonomous Research. Today, we have David Maday here, CFO and SVP of Aurora Innovation. And we're excited to listen to his company presentation. And from there, we're just going to go down into Cordova 5 for a breakout. So with that, David?

Awesome. Thanks. I appreciate you guys having me here today. I will try to keep it lively. I know we're getting towards the end of three long days. So let's have a little fun. For those again who don't know me, my name is Dave Maday. I am Aurora's Chief Financial Officer.

I'm super excited to be here today to talk about the progress that we're making as a company. And again, the picture kind of tells it all for us. Again, we are the only self-driving trucking company operating driverless on public roads today. We're going to tell a little bit about the progress we made in '25 and why we're so excited about '26. So with that, let me get us started.

But before we go too far, this is to keep me out of trouble, keep my lawyers happy. If you can just take a quick glance at the forward-looking statements, we will talk about some things that are projections into the future. Okay. With that, let's -- let me just -- there's probably some of you who haven't heard of or don't know the Aurora story very well, which is surprising.

We have 80,000 pound tractor trailers driving on the roads down in the South. So you should get down there and take a look. But let me give you a little bit about the company. Aurora is a mission-driven company. Our mission is to deliver the benefits of self-driving technology safely, quickly, broadly.

It guides everything that we do. Okay. As I mentioned, we are operating commercially driverless operations on public roads today. And we couldn't be more excited about the progress we've made this year. From the start of the year when we launched in April until today, we're now operating in Texas, New Mexico and Arizona. We started out in day. We've added night, rain and fog to our driving capabilities. We operate for multiple customers.

And since April through January, we've already traveled more than 250,000 driverless miles without any incidents. So we're excited about the progress. But I think a little bit of what makes us maybe even more excited is if you think about our technology and the enhancements of our technology, this is what really, I think, excites us about the future.

And really, we think that each of these technology advancements, I'll talk about a little of them are very impressive. combined together, it is really what we hope is the dawn of super human freight transportation. And with the Aurora Driver, what are we doing? We're focusing on driving a system that has perception and awareness that is unmatched.

We can see everywhere in every direction instantaneously. We operate with amazing stamina. We never get fatigued. We operate -- we can operate 24/7 and never get tired. We're not restricted by the clock, and we can make life-saving decisions in milliseconds, right? And each of these, again, in isolation is impressive. Collectively together, we really think this is going to help redefine safety in the logistics area. Let me talk a little bit about our product, just to catch a couple of people up.

Our core product is the Aurora Driver. It is a combination of cutting-edge technology hardware, our verifiable AI software and associated data services. We built this -- our company started a little over eight years ago. We built this as a common core platform, so we could deploy it across multiple vehicle platforms and multiple use cases.

Trucking is our first market that we're going to operate in. And I'll talk a little bit more about that element. But first, let me just talk a little bit of kind of we feel a responsibility, a leadership responsibility, and we feel we're in the pole position when it comes to leading autonomous technology.

Why do I say that, right? Again, we've launched driverless operations. We've been building that since April of 2025. Our first market is trucking. That's where our focus is. It's a massive market that can unlock tremendous value. I'll talk a little bit more about that.

We have an unmatched partner ecosystem. We were not established to get that first driverless run. We've already done that. We are a company that's focused on our mission, and that is to commercialize at scale, right? We had a solid financial position. We exited the end of last year with roughly $1.5 billion in liquidity.

That will extend our runway until we reach a point of positive free cash flow, which we expect in 2028. We have a Driver-as-a-Service business model, which is both capital efficient and also leverages the best of total cost of ownership for our customers, which will create long-term shareholder value for both us and our customers. And from a competitive landscape perspective, like we believe we are the leader, we are investing to build upon that competitive moat.

I mentioned the ecosystem, and I'll just briefly touch on a couple of these. Obviously, to scale a business, you are going to need partners to scale it to tens of thousands of trucks operating billions of miles each year, you need partners. We have several OEM partners, including PACCAR and Volvo, who are building autonomously enabled platforms that will take line side integration of the Aurora Driver.

Those represent about 50% of the market. We're also partnering with international, where we upfit their base trucks to be deployed driverlessly, and that launch will actually happen in the second quarter of this year. We have a partnership with Aumovio. You might have referred those are -- that's Continental after the split.

They are Conti without the tire business essentially. And we have a first-of-a-kind partnership, which we call Hardware-as-a-Service partnership with them, where they will collectively together, we will co-develop the hardware. They will then manufacture and service that hardware kit through its life.

And this partnership where we have the ability to scale to tens of thousands of trucks in our hardware kit is a key enabler and a key differentiator relative to everybody else to actually commercialize at scale. We have partnerships with NVIDIA. We have a 3-way partnership with them and Aumovio, where we're leveraging NVIDIA's DRIVE Thor system on a chip that will be used for our computes as part of our compute system.

And then we have some of the biggest and best customers in the business. I mentioned trucking. -- why trucking first? It's massive, right? It's $1 trillion or more in the U.S. alone, not to mention the global opportunities. It traverses more than 200 billion vehicle miles today. And the Aurora Driver can deliver tremendous value, and that's the focus where you're matching up the total cost of ownership values that we can provide along with the market opportunity, and that will support mass adoption.

Today, we have more than tripled our driverless network even from the last quarter. We are now operating on 10 lanes or routes, and that's an addressable market of 3.6 billion vehicle miles traveled today. And we operate across Texas, New Mexico and Arizona. And the intent is that we will expand to the Sunbelt this year, right? And that's a really important factor for us.

So if you think about the start of the year, we operated on one route, Dallas to Houston in daytime sunny conditions. Now we operate in all weather conditions, day and night, rain, fog, et cetera, and we're now operating everywhere. And we're going to take that same approach, those same driving skills that we've developed for this past year, and we're able to apply them throughout the Sunbelt, given the self-similarity of the driving requirements across the Sunbelt.

You combine that with our approach to mapping, which we think is both important from a safety perspective, but from an efficiency perspective for the Aurora Driver. And when I say safety, I say it is the Aurora Driver drives better when it knows the world around it and where it's intending to go. Just like you and I, when we get in the car and we go somewhere that we're unfamiliar with, drive better if we know where we're going.

And again, we believe that Aurora Driver now is sufficiently generalized for us to operate throughout the Sunbelt in 2026. We also think it's important to start the pivot. Like 2025 was a lot about demonstrating the technology promise, making sure we could operate in the vast majority of weather and environmental conditions that are required to provide a reliable service.

We also need to go where our customers want us to go. So when we launched, we operated between two Aurora terminals. In 2026, our primary mode of operation for where we're going to deliver goods is going to be between customer endpoints. And we've started to do autonomous freight delivery. Right now, it's supervised. It will be driverless shortly when we launch our second-generation fleet, we'll start to roll those out driverlessly.

But we are delivering for three examples as Detmar between their facilities or frac sand, [indiscernible] Hirschbach between Dallas and Laredo to support berry deliveries. And then one of the leading U.S. carriers we're delivering to their endpoint. This will be the mode going forward. We go to where the customers need us. It creates the most value for our customers.

Okay. Just really quickly, we also have what I think is a compelling business model. Our long-term business model is a Driver as a Service business model. So what does that mean from a compelling standpoint? First off, it's the desired end state. It's what customers want to do. What that means is that customers buy trucks equipped with the Aurora Driver. They then operate those trucks driverless by subscribing to the Aurora Driver.

It's a subscription-based model. We pay a per mile -- that we're paid a per mile fee, and then we basically perform the role of a driver, okay? And this is highly capital efficient. It's the desired end state for our customers, and it will create better shareholder value, again, by the capital efficiency, but also by just the fact that we can scale much faster because we don't need a lot of expenses to scale into new markets.

Let me just dig a little bit deeper, the finance guys, so let me dig a little bit deeper into the numbers as well, right? If you think about the opportunity that's in front of us today, if we look at the news ATRI and they publish the cost of transport every year, the average cost was [ $2.26 ] and that was a human driver plus base plus benefits was roughly a $1 per mile.

That's how it equates to on average. I know every individual trucker -- trucking carrier will say, that's not me. But on average, it is actually everybody. So some people are a little bit higher, some people are a little bit more, but it's $1 per mile. And that's the opportunity that we are replacing with our Driver as a Service business model.

Why is this compelling, right? If you think about driver costs and you look back over the last 10, 12 years, the cost of driving by the human driver is going up substantially, right? And we've already reached roughly $1 per mile, and this is cost plus benefits. And so the trend is heading to the right and higher, okay? If you look at where we plan on operating, indicatively, we're going to price at about $0.85 a mile.

You say, why would we do that? We believe that we can do two things. Number one, we can -- at $0.85 or so plus a mile, we will have really attractive margins and an attractive business. Additionally, we will create a total cost of ownership benefit for our customers, right? And that will support really aggressive adoption overall. And so we're really excited about the opportunity.

But it's not just that. If you think about the total cost of ownership. There's the direct cost plus benefits of a human driver, but there's also the indirect cost. We think this is another $0.15. You don't have to source. You don't have turnover costs. You reduce costs associated with workers' compensation, you reduce your training costs, et cetera.

So we think there's about another $0.15 here that's built into that framework for total cost of ownership. So those two things combined create very significant cost of ownership. If you think about -- trucking is a hard business. I have a lot of respect for carriers. It's an incredibly hard business. And for them to squeeze margins is really hard. Technologies like the Aurora Driver are things that can unlock this major opportunity to reshape the industry and the margins that you have available to them.

So I don't think there's been anything like it that I can recall in my lifetime that has a substantial to reduce the cost so substantially as what we're going to offer with the Aurora Driver. It's not just those costs. There's other things on here that we do as well. Obviously, there's the variable and specific cost of the driver, but we have the ability to unlock massive incremental utilization per truck, revenue per truck per day, per week because we are not limited by hours of service limitations. I think the industry averages between 100,000 and 125,000 miles per year if you're efficient.

These trucks can operate 250,000 miles plus a year, right? There are no hours of service limitations, and we can do it safely, right? We have improved fuel efficiency. The trucks that we operate on today, driverless are already yielding 15% fuel efficiency, right? Working with OEMs, there's a potential to increase that to 30%. Those are meaningful cost of ownership differences for our carriers. And so we're really excited about that.

Also with reduced frequency and severity of incidents, by definition, you will reduce your overall insurance cost. So we're really excited about what we can provide from a total cost of ownership benefit. This is an interesting chart, which just basically throws it all together and maybe I should have started with this. Basically, if you took Fort Worth to Phoenix, that's roughly a 1,000-mile route today. If you look at the revenue that you can get by a human driver, who has hours of service limitations versus the Aurora Driver, the Aurora Driver is substantially more.

And then if you just factor in a very nominal cost difference between the two, and I think we have way more opportunity than just that, the margin that they receive is exponentially higher. So we think this is a great opportunity to deliver value for our customers. All right. With that, what I would tell you is we are very excited about where we're headed. 2025, again, was about proving the technology promise.

Can we do -- can the Aurora Driver do what we said we think it can do to be a reliable product for our customers. 2026 is going to be a hell of a year. It's going to be about unlocking the commercial value. In the second quarter of this year, we will introduce our second fleet -- commercial fleet. This one will be international-based trucks that we've upfitted with our drive-by-wire system. They will be driverless with no need for a ride observer, and we will scale that business, okay?

We expect to end the year with over 200 trucks operating throughout the Sunbelt. So next year, if you haven't seen one of our trucks and you've been down on the Sunbelt, I'm going to have to take a poll or something because I'm going to be really surprised. What does this translate to? This is a year of remember, commercial progress, the promise. This unlocks $80 million of aggregate run rate just on those 200-plus trucks, okay?

And then the opportunity is endless for us. We have all the enablers in place to scale a commercial business. And this is going to be a great year for us, and we're really excited. And we like to say the era of the super human logistics and Aurora driving it is here and really excited about our future. I look forward to seeing all of you guys in the Q&A as well. With that, thank you very much for your time.

Thank you, David. We are just going to wrap it up here. I touched early and just go straight to the breakout. So that's going to be in Cordova 5, and we hope to see all of you down there. Thank you.

Greetings, and welcome to the Aurora Fourth Quarter 2025 Business Review Conference Call and Webcast. [Operator Instructions] As a reminder, this conference is being recorded. [Operator Instructions] It's now my pleasure to turn the call over to Stacy Feit, Vice President, Investor Relations. Please go ahead, Stacy.

Thanks, Kevin. Good afternoon, everyone, and welcome to our fourth quarter 2025 business review call. We announced our results earlier this afternoon. Our shareholder letter and a presentation to accompany this call are available on our Investor Relations website at ir.aurora.tech. The shareholder letter was also furnished with our Form 8-K filed today with the SEC. On the call with me today are Chris Urmson, Co-Founder and CEO; and David Maday, CFO.

Chris will provide an update on the progress we have made across the key pillars of our business, and David will recap our fourth quarter financial results. We will then open the call to Q&A. A recording of this conference call will be available on our Investor Relations website at ir.aurora.tech shortly after this call has ended.

I'd like to take this opportunity to remind you that during the call, we will be making forward-looking statements. These statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed, projected or implied during this call. In particular, those described in our risk factors included in our annual report on Form 10-K for the year ended December 31, 2024, and other documents filed with the SEC as well as the current uncertainty and unpredictability in our business, markets and economy.

Additional information will also be set forth in our annual report on Form 10-K for the year ended December 31, 2025. You should not rely on our forward-looking statements as predictions of future events. All forward-looking statements that we make on this call are based on assumptions and beliefs as of the date hereof, and Aurora disclaims any obligation to update any forward-looking statements, except as required by law.

Our discussion today may include non-GAAP financial measures. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results. Information regarding our non-GAAP financial results, including a reconciliation of our historical GAAP to non-GAAP results, may be found in our shareholder letter, which was furnished with our Form 8-K filed today with the SEC and may also be found on our Investor Relations website. Our discussion today may also include reference to forward-looking free cash flow, a non-GAAP financial measure. To the extent that this forward-looking financial measure is provided, it's presented on a non-GAAP basis without a reconciliation due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation.

With that, I'll now turn the call over to Chris.

Thank you, Stacy. 2025 was a defining year for Aurora and the future of logistics, marked by our launch of the first driverless commercial trucking operations on U.S. public roads. In just a few quarters, we proved the promise of our technology and further extended our first-mover advantage. What began as steady progress has accelerated into compelling growth. In January, the Aurora Driver passed 250,000 driverless miles, nearly tripled the cumulative miles achieved through early October.

We've expanded the driverless capabilities and will nearly triple our current addressable market to over 3.6 billion vehicle miles traveled with the opening of 7 additional driverless lanes. Crucially, we achieved this acceleration while maintaining 100% on-time performance and a perfect driverless safety record with zero Aurora Driver-attributed collisions. The Aurora Driver is now capable of driverless operations in inclement weather, including rain, fog and heavy wind.

We also started supervised autonomous freight delivery to support multiple customer sites. With our latest software release, we believe the Aurora Driver is now sufficiently generalized for us to begin expanding across the Sunbelt in 2026. The launch of our second-generation hardware kit on a new fleet of trucks expected in the next few months will enable driverless operations without a partner requested observer. This new fleet will support our objective to exit 2026 with more than 200 driverless trucks in operation as we prepare for industrialized scaling in 2027 and beyond.

We expect this expansion to drive a multifold increase in revenue in 2026 with an exit rate that will generate significant financial momentum heading into 2027. We're seizing the opportunity to fundamentally improve safety and restructure the economics of one of the most critical industries in the world. We see a near future in which tens of thousands of Aurora Driver-powered trucks deliver freight across the U.S. and ultimately globally.

With our latest software release, we unlocked a critical expansion of our operating domain with the validation of driverless operations in multiple forms of inclement weather, including rain, fog and heavy wind. During 2025, inclement weather of all types constrained our driverless operations in Texas roughly 40% of the time. Our latest software release drives a step change in potential availability and utilization across the Sunbelt, a core component of our value proposition.

As planned, our latest software release also expands driverless operations to multiple lanes, including El Paso to Fort Worth and bidirectional travel between El Paso and Phoenix. The resulting 1,000-mile multistate lane between Fort Worth and Phoenix far exceeds hours of service limitations for a traditional driver, thereby enabling superhuman asset utilization for our customers. With the additional driverless capabilities unlocked in our latest software release, we believe the Aurora Driver is now sufficiently generalized for us to begin expanding across the Sunbelt in 2026, aligned with customer demand. This is a massive growth lever for Aurora.

We leveraged this generalized ability to launch supervised autonomy operations this month on the bidirectional lanes between Dallas and Laredo and are targeting driverless validation this quarter. This 400-plus mile route expands the Aurora Driver's operational domain through the San Antonio, Austin and Waco metros. This route is the nation's largest international trade gateway and a critical freight artery between the U.S. and Mexico. Executing this expansion near simultaneously with Phoenix demonstrates our ability to rapidly open new lanes. This validates our core thesis that the Aurora Driver can scale rapidly.

Lane expansion requires 2 core components. First, the driving skills to operate safely in an expanding operating domain; and second, the mapping necessary to traverse the U.S. highway system and the surface streets to reach customers' facilities. The Aurora Driver now has generalizable skills. And we've made meaningful progress automating the creation of new content for the Aurora Atlas, our proprietary high-definition map technology that enhances the safety and computational efficiency of the Aurora Driver.

By leveraging our Verifiable AI systems, our cloud-based algorithms are able to generate semantic components of the Aurora Atlas from collected data automatically building portions of the map with little or no human assistance. This drastically accelerates the production of Atlas content, and we expect the pace of map expansion to continue to increase as we further optimize automation in our cloud mapping software.

This mapping improvement enables us to efficiently support driverless deployment directly between customer endpoints at scale. And we've now begun supervised autonomous operations to support multiple customer facilities. Starting with Hirschbach, we're setting up endpoint operations in Laredo to support Driscoll's. We're also running along I-20 for Detmar between their facility in Midland, Texas and Capital Sand's mining sites as well as for one of the leading carriers in the U.S. from their Phoenix facility.

With all of its capabilities, the Aurora Driver offers an unmatched value proposition. It can navigate the complexities of diverse road types, maintaining 24/7 operating schedules while providing endurance far beyond hours of service limits and delivered directly to customer endpoints. Our execution in 2026 will further reinforce this leadership position while showcasing the Aurora Driver's inherent scalability to support the transition to a Driver-as-a-Service business model.

We've already committed our capacity through the third quarter of 2026, and we'll finalize contracts for the fourth quarter once we confirm our year-end truck supply. As we turn to Driver-as-a-Service in 2027 and beyond, customer interest already supports the pipeline of thousands of trucks. We're continuing to expand with our current driverless customers and recently announced a new opportunistic agreement with Detmar Logistics, a leading provider of dry bulk and frac sand solutions.

Detmar selected Aurora to support the growth of their business, given we are the only company with driverless Class A commercial trucking operations on public highways and roads in the U.S. This customer agreement demonstrates the flexibility of the Aurora Driver to deliver value in a multitude of use cases, enabling us to meet customers where they are to support their growth and efficiency.

In 2026, Aurora Driver-powered trucks will continuously haul frac sand for over 20 hours a day across a 60-mile route with 80% of the miles on I-20. This will enable Detmar to achieve nearly 24/7 superhuman asset utilization and effectively double their capacity to move sand for one of the world's largest multinational oil and gas companies. Supervised autonomous operations have begun and hauls for Detmar will transition to driverless when we deploy our second fleet of driverless trucks expected in the second quarter of 2026.

With a successful deployment, we expect this customer relationship to meaningfully expand in 2027 and beyond with the transition to our DaaS model. Our vehicle-agnostic technology enables a multi-OEM strategy to provide truck supply for our growing customer base. This approach is anchored in our foundational partnerships with Volvo and PACCAR. Our partnership with Volvo recently entered the industrialization phase. The first group of Volvo VNL Autonomous trucks equipped with the Aurora Driver have come off the pilot line at their new River Valley, Virginia manufacturing facility following line side integration of our second-generation commercial hardware kit. This milestone establishes the manufacturing foundation necessary to produce autonomous trucks at large commercial scale.

Take a look at the video on Page 13 of our presentation to learn more about the work, the Aurora and Volvo teams are doing together as well as to get a firsthand look at this line side integration in action. Once Volvo completes validation of the vehicle level firmware necessary for driverless operations, we will integrate these trucks into our driverless fleet. We're also advancing our new program based on the International LT truck. These trucks targeted to launch in the second quarter of 2026, fortify our near-term capacity and will enable driverless operations without a partner requested observer.

We're currently track testing our second-generation hardware kit in preparation for on-road driverless operations. And we also recently selected Roush as the upfitter to leverage their manufacturing footprint, which we are initially equipping to produce 20 trucks per week later this year. Looking further ahead, we continue to make great progress on our third-generation commercial hardware kit with AUMOVIO, which is intended to supply tens of thousands of trucks. We welcome AUMOVIO's recent selection of Amazon Web Services as their preferred cloud provider to support their development of an industrialized fallback system for the Aurora Driver.

Amazon Web Services has been a long-standing infrastructure partner of Aurora. As we execute our disciplined crawl, walk, run strategy, we are decisively advancing into the walk phase of operations while positioning to run by the end of the year. Just as the last 2 years brought robotaxis into the mainstream, we expect 2026 to mark the inflection point where the market recognizes that self-driving trucks have arrived and are quickly becoming a permanent fixture in our transportation landscape.

If you're in the Sunbelt in 2026, you won't just read about the Aurora Driver, you'll see it every day. This represents more than a technological achievement. It is the dawn of a superhuman future for freight. With the Aurora Driver, we're deploying a system that sees in every direction simultaneously, operates with stamina that never stops the clock and makes life-saving decisions in milliseconds without ever getting distracted. The era of superhuman logistics arrived, and Aurora is driving.

With that, I'm going to hand it over to Dave, who will review our financial results.

Thank you, Chris. Now let's review our financial results for which we have provided a summary on Page 16 of the slide deck for reference. Fourth quarter 2025 revenue totaled $1 million across driverless and vehicle operator supervised commercial loads for Hirschbach, Uber Freight, Werner, FedEx, Schneider, and Volvo Autonomous Solutions, among others. The Aurora Driver achieved another record number of commercial miles driven during the quarter, which drove a 25% sequential increase in revenue from the third quarter. We recognized revenue of $3 million in fiscal year 2025.

Total year adjusted revenue, inclusive of pilot revenue earned in the first quarter of 2025, before we began recognizing revenue with our commercial launch in the second quarter of 2025 was $4 million. Fourth quarter operating loss, including stock-based comp, totaled $238 million. Excluding stock-based comp of $48 million, R&D totaled $155 million, SG&A was $30 million and the cost of revenue was $6 million. We used approximately $146 million and $581 million, respectively, in operating cash during the fourth quarter and fiscal 2025.

Capital expenditures totaled $8 million and $31 million, respectively, during the fourth quarter and fiscal 2025. This cash spend was meaningfully below our externally communicated target, reflecting continued strong fiscal discipline. We ended the year with a very strong balance sheet, including a liquidity of nearly $1.5 billion in cash and short-term and long-term investments.

During the fourth quarter, we generated net proceeds of $15 million from the issuance of Class A common stock through our at-the-market program, which we used to fund the tax liability associated with vesting of employee restricted stock units during the quarter. In 2026, we expect revenue of $14 million to $16 million, up 400% year-over-year at the midpoint. Revenue will be back-end loaded with the fourth quarter projected to contribute over half of full year revenue as we scale driverless operations without a partner requested observer following the launch of our new fleet.

We anticipate exiting the year with more than 200 driverless trucks in operation, which translates to approximately $80 million in revenue on a run rate basis for our Transportation as a Service business in which we own and operate the trucks. This establishes a powerful foundation for 2027 when we expect the DaaS model to commence. We expect our second-generation commercial kit to drive a 50% plus reduction in our hardware costs. With this and other planned cost reductions, we are targeting breakeven gross margin on a run rate basis exiting 2026.

To support our 2026 scaling plan, we expect quarterly cash use of approximately $190 million to $220 million on average. We believe we have sufficient liquidity to achieve positive free cash flow in 2028. We plan to utilize the ATM to fund our ongoing RSU tax liabilities and cash bonus payments through 2027. We also expect to strategically leverage the ATM and/or other mechanisms to solidify our balance sheet with an appropriate minimum cash balance to support our longer-term operations.

Building on the momentum of our landmark commercial launch, we are now focused on the execution and strategic investments necessary to scale. As we roll out our second-generation commercial hardware kit on our new truck fleet and accelerate driverless operations, we will further extend our leadership position in autonomous trucking, which we believe will deliver sustained long-term value for our shareholders.

With that, we'll now open the call to Q&A.

[Operator Instructions] Our first question today is coming from Ravi Shanker from Morgan Stanley.

This is Nancy on for Ravi. Thank you so much for all the 2026 guidance, but it would be helpful to kind of square away the end of year truck guidance with the revenue expectations. Is there something that I should be thinking about with utilization there? Or is that ramp-up to over 200 really reserved for the near end of 2026.

Yes. When we think about the guidance, again, we believe that we're going to have an outstanding position in the second half. But we are launching the fleet in the second quarter. And so there's going to be a sequential growth associated with that. So our revenue is going to be back-end loaded really to the third and predominantly the fourth quarters. But we do expect to be operating more than 200 trucks at the end of the year, and we would expect that to translate to roughly $80 million in revenue that's leading into 2027.

Okay. Got it. And then it would be also helpful to hear a bit more on your expected time line within 2027 for the start of serial commercial production.

Yes. It's a good question, Nancy. I think serial production is kind of -- it's going to mean different things to different people. I expect -- we would describe it more along the ways of how are we continuing to grow the driverless miles that we're operating and the revenue. We will be building upon our fleet of trucks that we launched this year, the international-based trucks, where we're going to have over 200 and you're going to get steady growth, and that's going to accelerate into 2027.

In addition, we expect that we'll be adding on other platforms. Those OEMs haven't announced their final timing, but we expect that in '27. We'll start to see incremental volume appear from that. Serial production is really mostly from how you would describe serial production, I think once we bring in our third-generation hardware kit with the AUMOVIO, we then have the ability to start building tens of thousands of trucks, and that's like kind of the trigger for more of a serial production that you would think of in the automotive industry.

Next question today is coming from Andres Sheppard from Cantor Fitzgerald.

Congrats on all the great progress and all that guidance, very, very helpful. Chris, David, maybe just a quick question on the target for the more than 200 trucks by year-end. Hoping to get maybe a bit more color there, if possible. That should probably correlate with the revenue ramp-up. So most of it backloaded, maybe most of it Q4. And then how are you thinking about kind of piloted versus fully driverless? Just to be clear, are these going to be eventually fully driverless? Or how are you thinking about the pilot or the observer there?

Yes. So when we talk about that fleet of 200-plus trucks, that is no observer, driverless, no one behind the wheel, right? That's exactly where we're heading, and that's really a critical enabler of scaling. We have the trucks on order. We expect to see them delivered, and we put in place the partnership with Roush to assemble and upfit these. So we're very excited about that. As Dave said, Q2 is when we expect the first of these to hit the road. And then we kick in the manufacturing kind of to scale this in Q3 at full rate, where we expect to be producing 20 trucks a week.

Yes. And just one other thing. I just -- it's important to mention like we talk about driverless -- the miles that we report today, these are driverless miles. We do have a ride observer who does not operate and does not have the responsibility to operate the vehicle. This is merely removing the requested partner ride observer requirement. So in future, you'll see the operations the same as before. We just won't have a ride observer, and that's an element for us to scale our business.

Going to be a hell of a year.

Looking forward to it. That's super helpful. Really appreciate the color there. Maybe one quick one for us. A number that resonated with us is the 50% improvement in the driver hardware cost of the new gen. Can you maybe help us understand that a bit better? Is that a result of the scale and the volume, but also some synergies on the cost side? Just hoping you can maybe give us a bit more granularity there.

Yes, there's a collection of things. So the first-generation hardware, as we said in the past, we built in-house. We tested it thoroughly. We did all of the work necessary to have conviction in the safety of it. But in parallel with that, we were working to produce a moderate-scale industrialized product as well, and that's the second-generation hardware. There, we've been able to take another cut at the design for manufacturability, the design for cost, and we've taken material cost out of that kit. Part of that comes from computation where we've saved some expenditure there as well.

And then, of course, advancements in things like our FirstLight Lidar, where, again, we've been able to take a design for manufacturability and design-for-cost [indiscernible] was appropriate. What's even more exciting is as that third-generation hardware kit comes out with AUMOVIO, there's another whole level of that, that again comes with their experience in designing cost-effective parts for the automotive industry and their ability to tap into even larger scale supply chains, which further drive down the cost of this. So it's -- as I said '26 is going to be a healthy year and '27 is going to be spectacular.

Next question is coming from Colin Rusch from Oppenheimer.

With some of the incremental functionality that you guys are talking about here, can you talk a little bit about the inbound interest you're getting from incremental customers and how quickly you're able to move them through a sales process to get them on board here?

Yes. I'd look at Detmar as a prime example of this. So we've talked for a long time about the value to customers of long hauls and being able to drive utilization of the assets up. Frankly, it didn't really occur to us to think about a situation like Detmar where the truck is not actually going that far. It's a 60-mile each way trip. But asset utilization is absolutely critical to the business.

I guess they saw our launch, saw the announcement came out and reached out to us and they came to us because we're the only people who can do what they need, you know, be able to drive both on the surface roads, go to their mine site and drive on the freeway. And so that's an example of us being able to take this generalizable capability we have and then respond to customer demand. We continue to see other examples of folks who are excited about what this can mean for their business, and we'll share more as we move along here.

Great. And then in terms of some of the incremental functionality that you're talking about this year, I guess I'm trying to get a sense of cycle time with some of the learning processes. You guys have obviously done a great job with the simulation technology and validating things online. But I'm curious about how we can track the cadence of incremental operating domains and environments from a weather perspective throughout the year. It looks like we've got a pretty clear line of sight in the charts that you're providing, but I just want to see how we should track that on a go-forward basis?

So I think what's exciting is we're near the end of the point where you're probably going to care about that. As I talked about, there's these 2 elements to expanding where the vehicle operates. The first is having the generalizable set of skills that allow you to operate there. And then the second is actually rolling out the map so that the vehicle has that extra kind of knowledge and prior understanding of what to expect where it's driving.

On the first part of that, we are most of the way there to having all of the capabilities that you might imagine needing. And any new lane gets less and less likely diminishing to de minimis kind of things that we have to learn and add to the capabilities of the driver. So as we pointed out, going from operating between Fort Worth and Phoenix and operating between Dallas and Laredo very, very light lift, and we expect an even lighter lift as we open up new lanes as well.

On the mapping front, this is a place where the approaches we've taken with AI to be able to detect and understand the road structure to be able to gather data and then feed that back to the mothership are paying huge dividends because we can take that online system, run it offline, verify, validate it and then create the road data product. At this point, the vast majority of the miles that we generate are automatically generated. So we expect that to accelerate. What's really going to be driving the rate at which we expand over the next year is going to be the customer demand, right? Because we can be responsive, this decision of which lane to open next goes from being a strategic, oh my gosh, let's ponder this for months to, okay, let's go now and serve that customer as quickly as possible.

And then we'll just continue on the development side, it will just be continuing to chip away at the places where we see incremental value for customers and increasing the uptime and availability of the vehicle.

[Operator Instructions] Our next question is coming from Chris Pierce from Needham & Company.

You guys had positive free cash flow in [ 2020 ], I believe you first mentioned that at the Analyst Day in '24. But sorry if I missed it, but I don't see anything about revenues or gross margin guidance in [indiscernible]. I guess I just -- how should investors read into that as maybe things are -- the revenue ramp is flatter, but maybe you have more OpEx leverage as you lean into AI and on mapping? Or I guess, just how should we put the pieces together there?

Yes. Chris, great question. I appreciate it. So I think there's a couple of things. When we did the guidance back in the Analyst Day, we had some expectations about where we thought we were going to be for free cash flow positive. And actually, those expectations overall still look remarkably similar in terms of kind of the revenue projections and our gross margin projections over time. What we have been able to do is really look at our spending. And over the last 1.5 years, 2 years, we've consistently been a little bit under what we've actually guided to in terms of total cash burn, and that's given us confidence to say that with the money that we raised this past year, which has been remarkable, we've had tremendous support from investors, right? We ended the year again with 1.5 -- roughly $1.5 billion in liquidity.

And if we look at our model and kind of look at the long term out, we believe that is sufficient to get us to free cash flow positive. Again, we'll utilize the ATM for our tax liabilities and for potential bonus payments that would be made in cash. And we'll obviously want to have some sort of minimum balance on a go-forward basis like any good prudent company would. But like the cash necessary to get us to there, we felt like we have sufficient cash in hand to be able to do that, and we felt that was appropriate to describe. We aren't going to guide beyond '26 on some of the other spending items right now. But I think we will end up having another Analyst Investor Day this year, and we'll probably provide an outlook into the future beyond '26 where we can talk about some of those longer-term targets.

Okay. Perfect. And then I guess you hear about this momentum with Waymo and Tesla momentum or not. But I guess this is the first time you guys have talked about capacity and being sold out through x amount of time and going forward. Are you hearing like are customers getting enthusiastic about autonomy again? Or is this something that you already knew this, this is the first time you're sharing this sort of supply versus demand imbalance in the near term with investors?

Yes. Let me take a shot and then maybe Chris can add into this. I think customer interest has been strong for years. Customer demand has continued to increase as people have gotten to experience the products. And we had always said our first driverless customers, we were going to have to earn like that right to get to that higher level of demand signal. I think that was one element.

So I think the demand has continued to kind of lead the way in the customer interest, and it helps guide where we want to go. Like as an example, the reason we're going to Laredo is there's really strong customer interest to be able to do that. And with our generalized AI approach right now, it doesn't take a tremendous amount of effort to take advantage of that next lane. And so our customer demand is really driving where we're going to be going next. I think one of the things that we've been a little bit apprehensive of overstating and kind of this is lessons learned relative to other AV companies is, we really wanted to have solidified a firm plan relative to our truck supply to be able to be confident in the contracted amounts of volume that we were going to deliver for customers.

So it's -- there's a difference between interest and truly contracted demand. We felt like this was a good time that we can give you guys the confidence that we not only have a ton of interest, but we really have contracted demand. That is predicated on the fact that we have confidence in the exact timing of the -- well, the roughly exact timing of the availability of the trucks that we're going to have in the market.

I'd just add a couple of things to Dave's point. I think if you go to any truck company and you say, we're going to make your trucks safer, more efficient and increase their utilization, everyone is going to say yes. And what's happened over the last -- since April of last year is we've been able to go from the academic conversation of wouldn't it be nice if to, hey, it's here. We've got it, come see it, come touch it, come experience it. And I think that's moved the kind of the academic interest into the practical interest.

And as they said, we've tried to be consistent in not overhyping things. And in the past, we've seen competitors talk about numbers of commitments and sales that felt more smoke and mirrors than real. And so we've tried very hard to be just direct and honest with like, no, these are real actual contracts and commitments that we have. And that's why we feel confident at this point starting to share a little more of those numbers.

[Operator Instructions] Our next question is coming from Leanne Hayden from Canaccord Genuity.

To the extent that you're able to comment, curious how you expect the observer launch on international trucks in the next few months to impact OEM partners, specifically in terms of comfortability around removing the safety observer or launching immediately without an observer.

Yes. I think that continued demonstration of the product on the road and continued demand and engagement from customers will only supercharge what is already a really positive and enthusiastic engagement that we have with these OEM partners. So yes, there's nothing like seeing and nothing like experiencing real. And so yes, I don't foresee any problems moving forward with this.

Yes. Maybe let me just add one additional thing on hearing. I think each OEM and their path with us is a little bit different. Volvo, whether we had launched this international fleet or not launched this international fleet, we have a plan with them. They're executing towards that plan and what makes them feel comfortable. We have a path with PACCAR. They were a little bit uncomfortable because they have prototype parts on their base components. And so that's why we had the right observer to begin with, and they wanted to have comfort with the fact that they've fully validated their process.

With the international fleet, we are producing a truck, it's a base truck that has all the required redundancies at a very sufficient level. So these are not prototype parts. These are fully validated parts that we validated with the rest of our system. And so each of them is a little bit different and nuanced. And hopefully, this is going to continue to build momentum overall for the market and everybody's excitement about having an opportunity to deploy trucks that operate driverless.

Got it. Yes, that totally makes sense. I'll just ask one more quick one. Curious whether or not Aurora trucks kind of came to interact with any sort of winter weather conditions in Texas as a result of the recent storm fern? And if so, how it performed?

Yes. We certainly did some development operations in the conditions, but those will be run with a safety operator in the vehicle because that's out of scope for the current driverless capability. What I'll tell you is that the conditions in Texas were bad enough that everybody was off the road for the majority of the time.

Next question is coming from Mark Delaney from Goldman Sachs.

Nice to see the expanded operating demand, both with respect to the lanes as well as the expanded weather conditions. First question was on how you see the composition of the trucks evolving this year. And for the incremental trucks to get to the 200 in total, do you expect some of that to come from Volvo given the progress you spoke about with VNL? Or will the incremental truck volumes this year effectively come all from that international relationship?

Yes. I guess I can't share Volvo's launch time line. That's one of the things that we leave with our OEM partners. What I can tell you is we are extremely confident in the supply of vehicles we have to achieve that 200-plus objective by the end of the year.

Okay. Understood. And then my other question was on the 2027 outlook and lineside integration. I'm hoping to get more details on where you stand and if you think there may be some risk of delay. And I ask because I think in order to do that lineside integration next year, you would need the truck OEMs to have redundant platforms ready, AUMOVIO to be prepared to integrate on site and then the third-gen hardware kit needs to be available. So I know a lot of things you're working on and the partners are working on. So if you can speak a bit more on kind of where you stand on those various things and your visibility into achieving that 2027 plan, that would be helpful?

Yes. Well, let's just take Volvo as a concrete example. Part of the reason why we're so excited about the first trucks coming off of the pilot line with Volvo is that's a critical step in both Aurora and Volvo understanding how to do this integration and really paves the way for that lineside production. When it comes to AUMOVIO, the third-generation hardware and AUMOVIO, that's really one thing. And that partnership is spectacular. We continue to have an amazing working relationship with them. We've talked in the past about how that deal and that partnership is aligned incentives near perfectly. And we're seeing that play out in reality. And both Aurora and AUMOVIO are committed to achieving our start of production of that in 2027. So we're very excited for that.

And then, of course, we augment the lineside installation with our OEM partners with the infrastructure we're putting in place with Roush to allow us to upfit and even scale up the production we're talking about this year to be able to produce significant volumes on the international OT platform as well. So like I said, 2027 is going to be a heck of a lot of fun.

Your next question today is coming from Itay Michaeli from TD Cowen and Company.

Just wanted to go back to the customer interest into 2027 with a pipeline of thousands of trucks. Hoping you could talk a bit more about that? And how much visibility do you have in terms of the number of lanes you might need to support that level of demand?

Yes. So maybe I'll take a start at that, Dave, and I'll hand it to you. So in terms of the lineside of this, as we model this and we look at the Southern U.S. freight corridor that we're talking about being operating on by the end of this year, we think that can absorb an immense amount of traffic and will still be a very small fraction of the vehicle fleet that's out there today. And of course, we won't be static in 2027 with that. Given that ability and accelerated ability to build map content and the generalized nature of the Aurora Driver, unlocking new lanes is not going to be a complicated activity for us, it will just be a course of action and operational exercise that we do relatively rapidly.

And so I'm not really worried about the constraint, I guess not really is understanding it, sorry, that's my Canadian coming through. I am not worried about our ability to roll out new lanes in '27 and to be able to kind of absorb that volume. But Dave, do you want to add?

Yes. I think there's a couple of things that we're really kind of demonstrating, and these are true in '26, not even in '27. It's our ability to go where the customer wants us to go and add lanes and add the lanes at where they are high volume and they generate value for our customers. So it's not just the lanes, but it's going to customer endpoints. We're doing both of those things right now, right? We've just added the Dallas to Laredo. That's a new thing we haven't talked about before, and we're going to have it rolling out yet this quarter yet.

So again, I think our ability to go to where the customers want is the key enabler to actually deploy thousands of trucks. Now thousands of trucks, if you just look at some of the lane rolls that we've showed before, which we have no concerns over being able to drive in all those areas, those represent 50 billion to 60 billion vehicle miles traveled. So to deploy thousands of trucks in a market size that big with the sheer volume of trucks that are out there and the mileage that is driven feels very attainable to us. The reason why we have such conviction in this is that some of our customers, both our existing customers and even new customers, when they talk about interest in deploying autonomy, they're talking about large quantities of volume. So like some customers have huge fleets, big package delivery. And for them, unless we can do thousands of trucks, it's not worthwhile for them, right, like because it just ends up being -- just such a small percentage of thing.

So when we're able to deliver more trucks, the customer demand for those larger customers that want to deploy at higher volume just become more evident for them. So we're really excited about where we're headed, and we think we have the building blocks in place to get there.

Terrific. Very helpful. As a quick follow-up, I'm just curious on the second-generation commercial hardware kit on the new fleet with international. How locked in are the costs at this stage? Kind of how should we think about the ramp and ultimately kind of leading to sort of like what can go right and wrong in the target to a breakeven gross margin by the end of the year?

Maybe to start with the first part of this. So at this point, we well understand the cost. There is some exposure to variation in tariffs, let's go with, depending on the policy of the current administration that obviously we can't predict. But beyond that, we're locked and loaded there. And between the engagement we have with Fabrinet and the process work we've been running through with them and now the committed partnership we have with Roush and the facilities we're turning online there. That part, we understand the cost structure.

The rest of the cost structure is really about the remote support and recovery rates that are associated with this. And those, we feel good about the glide path we're on to achieving the rates that we need to reach gross margin.

Yes. And just maybe one additional thing, and Chris did a great job. And just talking about the hardware kit for a second. Like there's 3 elements of the hardware kit that -- from a financial perspective that you think about between the first gen and the second gen. It's the BOM, it's the scale and it's the expertise.

So if I look at it, we have done remarkably well in the BOM where we've designed lower cost solutions. We've reduced the mass of the compute as an example. We've made incredible improvements on FirstLight. So we've designed. We did engineering challenges to design that. Scale, we have the hardware kits today that can operate roughly about 300,000 miles. These hardware kits are going to last to 1 million miles. So you just get the benefit of them lasting longer, which reduces your per mile cost.

And then the manufacturing expertise, we're going to somebody that knows how to build in high volumes with Fabrinet and higher volumes, whereas we're just not set up that way. We're more of kind of a prototype build. In terms of like the confidence in that, we have contracted with suppliers all the part costs already. The FX exposure, we've taken a conservative approach and use the latest assumptions for like the 2 biggest areas, which are China and Thailand.

So I think we've built in the right elements to be confident in that. And again, I think with the remote assistant and the on-site support, we're going to be able to demonstrate that very well once we have sufficient number of trucks operating on the roads where we can actually start to report out some of those numbers.

Thank you. We reached the end of our question-and-answer session. And ladies and gentlemen, that does conclude today's teleconference and webcast. You may disconnect your lines at this time, and have a wonderful day. We thank you for your participation today.

Greetings, and welcome to the Aurora's Third Quarter 2025 Business Review Call. [Operator Instructions]. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Stacy Feit, Vice President, Investor Relations. Thank you, Stacy. You may begin.

Thank you, Alicia. Good afternoon, everyone, and welcome to our third quarter 2025 business review call. We announced our results earlier this afternoon. Our shareholder letter and a presentation to accompany this call are available on our Investor Relations website at ir.aroya.tech. The shareholder letter was also furnished with our Form 8-K filed today with the SEC. On the call with me today are Chris Urmson, Co-Founder and CEO; and David Maday, CFO. Chris will provide an update on our progress we have made across the key pillars of our business, and David will recap our third quarter financial results.

We will then open the call to Q&A. A recording of this conference call will be available on our Investor Relations website at ir.arora.tech shortly after this call has ended. I'd like to take this opportunity to remind you that during the call, we will be making forward-looking statements. These statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed, projected or implied during the call. In particular, those described in our risk factors, including in our annual report on Form 10-K for the year ended December 31, 2024, and other documents filed with the SEC as well as the current uncertainty and unpredictability in our business, the markets and economy.

Additional information will also be set forth in our quarterly report on Form 10-Q for the quarter ended September 30, 2025. You should not rely on our forward-looking statements as predictions of future events. All forward-looking statements that we make on this call are based on assumptions and beliefs as of the date hereof, and Aurora disclaims any obligation to update any forward-looking statements, except as required by law. Our discussion today may include non-GAAP financial measures.

These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results. Information regarding our non-GAAP financial results, including a reconciliation of our historical GAAP to non-GAAP results, may be found in a shareholder letter, which was furnished with our Form 8-K filed today with the SEC and may also be found on our Investor Relations website.

Our discussion today may also include reference to forward-looking free cash flow, a non-GAAP financial measure. To the extent that this forward-looking financial measures provided, it's presented on a non-GAAP basis without a reconciliation due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation. With that, I will now turn the call over to Chris.

Thanks, Stacy. In the third quarter and early October, Aurora achieved several more driverless trucking industry first, rapidly advancing our path to scale and further extending our leadership position. The crack we set in motion with commercial launch is now accelerating, delivering compounding returns across our technology, operations and customer adoption. Earlier this month, the Euro driver surpassed 100,000 driverless miles in public roads. Importantly, we've maintained 100% on-time performance, while upholding our perfect driverless safety record.

Last week, we launched driverless commercial operations on the West bound 600-mile lane from Fort Worth to El Paso, setting a new benchmark for autonomous trucking. This expansion accomplished 6 months after our driverless launch is faster than any other self-driving company has scaled to a second U.S. market. The driver unlocks substantial value on this lane, and we're thrilled to add multiple customers, including 1 of the leading carriers in the U.S. to our driverless cohort for this route.

To meet expected customer demand in the second quarter of 2026, we plan to launch our second-generation commercial hardware kit on a new fleet of trucks that will enable driverless operation without a partner requested observer. This third vehicle fleet fortifies our near-term capacity plan and supports our scaling objectives for 2026.

Let's dig into what we've been up to. Following earlier than anticipated validation of night driverless operations in July, we're already seeing the utilization potential of our self-driving trucks. Our highest mileage driverless truck logged nearly 18,000 miles in a single month. This demonstrates the confidence we have to operate trucks at an annual run rate that doubles the industry average. Our team's focus has since turned to driverless lane expansion and validation in more challenging weather conditions to further increase the value of the Aurora driver for our customers.

Our second driverless commercial lane from Fort Worth to El Paso directly addresses critical customer pain points. This route is notoriously hard to staff and challenging for traditional drivers to compete -- complete within a single day. Launching driverless operations on this lane demonstrates the significant efficiency and value potential the Aurora driver brings to the freight ecosystem by enabling nearly continuous operations.

We're now nearing completion of driverless validation for the return trip as well as the Phoenix extension with our software release planned for January 2026. The Phoenix expansion will add another 400 miles to establish a continuous 1,000-mile plus mile multistate route between Fort Worth and Phoenix, which far exceeds hours of service limitations for a traditional driver. We're also working with multiple customers to identify locations along the I-20 corridor and in the Phoenix area for the first customer end points we plan to support with driverless operations in early 2026.

As you can see in the case study on Page 16 of the presentation, on these long-haul lanes, the Aurora Driver has the potential to more than double revenue and deliver several fold higher profit per truck for our customers. Looking ahead to 2026, we expect to rapidly unlock lanes across the Sunbelt. Of future planned expansions include lanes between Dallas and Laredo, a critical route for 1 of our key customers and between Dallas and Atlanta which will extend the driverless IT i20 corridor to approximately 2,000 miles. Launching driverless operations from Fort Worth to El Paso and soon the Phoenix extension required us to validate behavior against the storms, which are prevalent in some parts of Texas and Arizona. These fast-moving storms can quickly reduce highway visibility.

If such conditions are present when the euro driver power trucks are on the road, the Aurora driver is designed to slow its speed and if significant perception degradation is detected, autonomously execute the safest behavior, pulling over or exiting the highway when possible. This advanced capability is powered by our multimodal sensor suite, including LIDAR, camera and RADAR. As you can see on Page 10 of the presentation, in a dust storm on the Fort Worth El Paso lane just outside of Midland, Texas, -- our perception system leveraged RADAR and our proprietary first light LIDAR, which we're able to see through the dense dust at twice the range of cameras alone.

This provided the crucial data needed to make safe decisions long before visibility was completely compromised. These advanced capabilities will also benefit our upcoming Phoenix lane and other routes where similar weather events occur. We also continue to make progress validating driverless operations in rain and heavy wind conditions, which will also be part of our January 2026 software release. This will support high availability potential for ore driver powered trucks across the Sunbelt, a meaningful component of the value proposition. Along with expanding the Aurora Drivers operating domain, we've also validated additional trailer types, including those with super single tires and increased our driverless fleet.

These expansions have contributed to a material acceleration of our driverless mileage with the Aurora driver earlier this month surpassing 100,000 driverless miles on public roads, that's double the cumulative driverless miles we achieved just 5 weeks prior in early September. We now have 5 driverless trucks regularly scheduled between Dallas and Houston and from Fort Worth to El Paso. To provide a window into this progress, we're continuing to showcase the Aurora Driver in action during this initial phase of our operations via Aurora Driver Live. You can access the live stream via the link on Page 4 of our presentation or the live tab on our YouTube channel at Aurora Driver.

You can see our driverless trucks traversing the route between Dallas and Houston and now Fort Worth to El Paso, demonstrating the safety, reliability and growing maturity of the Aurora Driver. In addition to the opportunity to see our technology live on the road, we've received positive feedback from customers and investors about our willingness to provide this level of transparency. It's a strong signal we stand behind what we're building with over 6,000 hours of watch time to date, this special series offers industry-leading transparency into autonomous driving performance and the future of freight. Our driverless mileage growth is poised to further accelerate as additional customers integrate the Aurora Driver into their operations to capitalize on its exceptional value proposition.

We firmly believe the Aurora Driver will fundamentally redefine the freight ecosystem with its potential to set new standards for safety, efficiency and sustainability, thereby driving both revenue growth and margin expansion for our customers. A member of Werner's safety team and 1 of their most seasoned drivers recently came down of Texas to assess the Aurora Drivers' performance. Their reactions spoke volumes about the Aurora Drivers core advantages. Superior perception, unwavering focus and the ability to safely navigate long monotonous lanes, which are particularly difficult to staff and have hours of service constraints for traditional drivers.

I'm inspired when I hear industry veterans affirm the transformational role our technology will play in the freight industry. You can hear firsthand from the Werner representatives in the video on Page 5 of our presentation. With our Fort Worth -- El Paso driverless launch, we've expanded driverless operations for Hirschbach, one of our earliest adopters and valued partners and added 2 additional carriers to our growing driverless customer cohort.

Launching driverless on this lane is a major inflection point on our journey with customers and the expansion of our driveless cohort validates our technology, rigorous safety approach and the value we deliver. Now that we've proven the promise of the Euro driver and are rapidly increasing its value for customers, we're expanding our sales funnel to include mid-market customers who offer shorter approval cycles. To efficiently target this new segment, we recently announced a strategic partnership with McLeod Software, a premier provider of transportation management solutions for over 1,200 carriers in private fleets.

This partnership will deliver seamless integration from our cloud customers, which we expect to accelerate new customer adoption of the Aurora driver. Just 1 month after announcing the partnership, we executed an agreement with McLeod customer Russell Transport for driverless hauls on the Fort Worth, El Paso lane. In parallel, we continue to advance our second and third generation commercial hardware programs as well as our vehicle programs that underpin our path to scale and self-funding.

Designed to deliver customer value for 1 million miles, we expect our second-generation commercial kit to drive a 50% plus reduction in our hardware costs. And we're also seeing some meaningful performance gains, particularly with the next generation of our proprietary long-range FMCW, LIDAR. First Light is now detecting objects at 1,000 meters away, which is double the distance of our current generation as well as the closest FMCW, LIDAR competitor. For our truck traveling and highway speeds, this equates to more than 34 seconds of planning horizon. This will further enhance the Aurora Drivers' performance and set a new standard for safety in the industry.

We plan to increase driverless operations without a partner requested observer in the second quarter of 2026 with a new fleet of trucks equipped with this second-generation commercial hardware kits. This fleet will be based on the International LT Series truck with Aurora performing all necessary upfit required for driverless operations. These trucks will undergo rigorous testing and validation, just like any platform we would take to driverless operation. This third truck fleet fortifies our near-term capacity plan and will support our target to exit 2026 with hundreds of driverless trucks in operation. While this program is underway, we achieved an industry-first partnership manufacturing milestone with Volvo as they began the line sight integration of the second-generation Aurora Driver commercial hardware kit into the Volvo VNL autonomous on the pilot line at their New River Valley Virginia manufacturing facility.

Once Volvo completes validation of the vehicle-level firmware necessary for driverless operations, we will integrate these trucks into our driverless fleet. In addition, PACCAR continues to advance the prototype testing of their scalable autonomy enabled truck platform at their facilities. Looking further ahead, we continue to progress our third-generation commercial hardware kit that we believe will unlock scale on the order of tens of thousands of trucks. In September, Continental completed the spin-off of their automotive business, Aumovio. Ide honored keynote their Supplier Day, which highlighted our flagship program which has a planned start of production in 2027. We're excited to see Aumovio continue to make significant manufacturing investments here in the U.S. to support the scaling of the Aurora driver. Earlier this month, they announced a $110 million investment to significantly expand their new [ Bonfils ] Texas manufacturing facility where the Aurora driver hardware kit will be produced.

The project, which includes a 65,000 square foot addition and a state-of-the-art automated warehouse is expected to create new well-paying jobs in the coming years. The expansion will more than double the existing production floor space and is expected to fully -- to be fully operational by August 2027. We have now received and begun testing computer samples from Aumovio, which include NVIDIA's DRIVE Thor system on a chip. Complete prototypes of this hardware kit are on track for delivery by the end of the year to begin engineering validation testing. As we accelerate our path to deployment at scale, favorable regulatory momentum continues to build across the U.S. Earlier this month, we received approval from the U.S. Department of Transportation to begin using cab Mount warning beacons as an alternative to reflective triangles.

The cap mounted flashing lights indicate when a vehicle has stopped on the side of the road to warn other road users, which is similar to systems used by emergency construction vehicles and is a step forward for road safety. And on the legislative front, the America Drives Act, a landmark build to establish a federal framework specifically for self-driving trucks continues to gain traction with co-sponsorship from U.S. representative Jay Obernolte of California. In closing, we've made unprecedented progress since commercial launch and continue to be the only company with driverless trucks on public roads in the U.S. We've proven that the technology works and are now channeling our momentum to support lasting customer value and our path to scale.

Insights from our real-world travelers miles reinforce there are no shortcuts to safety, trust and scale in autonomous trucking. Our strategic investments have built powerful flywheels that are now accelerating, driving us forward with increasing efficiency. Our industry-leading technology, coupled with a world-class ecosystem of partners, customers and shareholders uniquely positions Aurora to set the standard for autonomous trucking.

Thank you for your partnership as we continue to build the future of transportation. With that, I'll now pass it over to Dave, who will review our financial results.

Thank you, Chris. Let's discuss our financial results for which we have provided the summary on Page 17 of the slide deck for reference. Third quarter 2025 revenue totaled $1 million across driverless and vehicle operator super buys commercial loads for Hirschbach, Uber Freight, Werner, FedEx, Schneider and Mobile Autonomous Solutions, among others. The Aurora Driver achieved another record number of commercial miles driven during the quarter, which drove a 12% sequential increase in revenue from the second quarter. Third quarter operating losses, including stock-based comp, totaled $222 million, excluding stock-based comp of $51 million, R&D totaled $138 million, SG&A was $28 million, and the cost of revenue was $6 million. We used approximately $149 million in operating cash during the third quarter, and capital expenditures totaled $8 million.

This cash spend was meaningfully below our externally communicated target, reflecting continued strong fiscal discipline. We expect cash use of $175 million to $185 million during the fourth quarter of 2025. During the third quarter, we issued 80 million shares of Class A common stock through our at-the-market program for net proceeds of $460 million. We used $21 million of the net proceeds to fund the tax liability associated with the vesting of our employees' restricted stock units during the third quarter.

In turn, we ended the third quarter with a very strong balance sheet, including increase liquidity of $1.6 billion in cash in short-term and long-term investments. We expect this list -- we expect this liquidity to fund our operations into the second half of 2027. We will be providing 2026 financial objectives in the fourth quarter 2025 business review in February. For the remainder of the year, we will continue to focus on expanding driverless operations and advancing our program to support our 2026 scaling objectives to accelerate our first-mover advantage to reinforce our leadership position.

With that, we'll now open the call to Q&A.

[Operator Instructions] Our next question comes from the line of George Gianarikas with Canaccord Genuity.

Maybe first, I'd like to ask if you could sort of give us form and shape to your plans from moving from a terminal to endpoint-to-endpoint shipments.

Yes. Thanks, George. Great to take questions from you. I think one of the misconceptions that we hear is that this is kind of a big deal. And it really is -- so today, for example, when we're operating -- getting to our Houston terminal, we drive for about 5 miles through various industrial park surface streets to get to our terminal. So we have a system that's capable and able to deliver this -- like it works well.

So for us, it's just a matter of timing and sequencing when the volumes are sufficient that it's relevant for our customers. And so we intend to be rolling that out to customers through the next year. Dave?

Yes. And I would say maybe 2 other things. One of them is on the misconception piece, right? Like if you think about end points, customer end points, roughly 80% of those endpoints are within a 5-mile range from a highway. So this is not a difficult technical challenge at all.

I think the other thing, it's important to point out that we started out, and everything kind of relates to our technology rollout and our crawlrun, right? So we started out operating a small fleet of trucks that we're continuing to build up. But it's important to understand that we need to be able to drive in all weather conditions, right? We already opened up nighttime earlier. We're expanding lanes, but we also want to be able to operate in rain and heavy wind.

And when we're able to operate in all these conditions, then when we go to customer endpoints, we're able to operate a larger number of vehicles between their specific end points. So the 1 thing that's really important is to make sure that we've got a really robust product that is operating between the endpoints. So I would say that this is a very deliberate plan that we're executing upon.

Yes. And maybe as a follow-up in 2 parts.

So in your press release, you say that you want to deploy hundreds of trucks next year. That feels like a little bit of an acceleration. Is that true? And the second part of the question is, is that being enabled by your partnership with international, which I think is new. Did you have a partnership with International before this?

Yes. So this is, I think, in line with what we've been saying for a while now, we've been saying we want to get 10 plus tens of trucks this year, and we want to get hundreds next year. And so I think it's aiming to accomplish what we set out to do. In terms of -- with international, this is a new relationship. So we are purchasing trucks from international, and we're doing the upfit ourselves. We continue to work with Volvo and Makar and continue to be excited about the plan for with them. But a way for us to take timing into our own hands, ensure that we can deliver this and support and fortify our volumes for next year as a response to the customer interest that we're seeing today. Thank you.

Thank you. Our next question comes from the line of Ravi Shanker with Morgan Stanley.

If I can just continue a line discussion on international -- just wanted to confirm, so are you just buying the trucks off a lot and kind of rolling that out of a third fleet? Or is this an actual OEM relationship like you have with PACCAR and Volvo and in which case, kind of is there a time to commercial launch of that as well?

So Ravi, it's Dave. So we are buying stock trucks. We're not actually buying necessarily at the lot we are ordering them through international, but there is no co-development partnership associated with those. So it's important to understand that we've got a tremendous experience in how to integrate out of the Aurora driver into platforms. We've done it on like roughly 8 platforms. So we understand all the necessary capabilities to launch a safe product.

And in this particular case, we've got 2 partnerships with co-developments already. We felt this was a great opportunity for us to continue to meet customer demand. and work and offer the Aurora Driver on a third platform.

And answer the second half of your question, Ravi. We expect to have the international truck on the road driverless in Q2 of '26, so we're excited to add that to our growing fleet.

Understood. That's helpful. And maybe as a follow-up, as you guys get closer to launching Gen 2 and specking the Gen 3 hardware. When do you get a sense of the bill of materials and the cost of the system involved. And maybe also like when do you expect to have conversations with OEM partners and maybe launch actual pricing of the truck and the system for your customers?

Yes. So I think on the bill of materials for the Aurora Driver, we have very good insight into that today. We track it as part of our development process. We know what that bill of material cost is. And it's important to understand again that as we look at that cost, that doesn't get borne upfront as part of the purchase of a truck, that is paid through the subscription that customers will pay for the Aurora driver. This driver as a service model. And we factored that into the cost and into the revenue stream and profitability of the business going forward.

Our next question comes from the line of Colin Rusch with Oppenheimer.

You've talked a lot about the simulation expertise that you have. Can you talk a little bit about any sort of acceleration that you're seeing or any sort of transitions that may see hiccups as you move to the new hardware?

Yes. Well, first, yes, we think simulation is an important tool. It's something we've invested and I appreciate you recognizing that. No, we don't really see any hiccups. Like one of the things that we -- that I think a lot of folks don't really understand is that the automated driving system is a complicated difficult thing to build. But the tools and process and rigor you have to put in place to have conviction that the thing is safe to put out in the road and operate at 70 miles an hour down the freeway is at least as hard, if not harder.

And so as we've been building our processes for validation and release, we've designed them with an eye toward this needs to scale. This needs to allow us to accelerate our release process over time and meet the needs for that second generation, third generation hardware.

And so it's kind of moving along as we'd hoped. So yes, I hope that -- I'm not sure if I answered your question, but we're feeling pretty good about this.

Okay. Yes. I'll follow up offline. The second one is really on customer comfort with the technology. Now that you're accumulating a fair amount of experience on the road without the driver. How quickly are customers getting comfortable with taking a safety driver out of the cab and thinking about actually starting to deploy with you guys out of the gate without a driver?

Yes. I think that, [ Juan, ] it's dangerous to characterize all customers in 1 bucket. And so there's obviously a spectrum of them. But what we're seeing is enthusiasm, right, that the conversations moved from, hey, maybe this will happen, to, oh, it's happening. I can see why this will benefit my business. I would like to have access to that. And so we mentioned Russell Transport -- that's a customer that just signed up with us and signed up with us on day one to operate gridlessly. And we expect that to be the flavor of many of the customer relationships that we're going to put in place going forward.

Our next question comes from the line of Andres Sheppard with Cantor Fitzgerald.

Congrats on all the great progress. I think some of our questions have been asked. But Chris, I'm hoping maybe if you can help us maybe give us some granularity as to how we should think about the truck deployments for Q4 and maybe early next year to I guess -- so you have 5 in operational as of now. So to get to more than 10, presumably, that means deploying 6 additional trucks before year-end. So I mean how should we think about Q4 deployments and maybe ASPs. Any granularity you might be able to give us there. I know we'll get more color on Q4 for next year, but anything helpful there?