Aurora Innovation (AUR) has made remarkable progress on developing its system that enables trucks to drive themselves, and the tech company’s future plans suggest that its offering, Aurora Drive, is continuing to perform well at this point.
Further, Aurora appears to have a significant first-mover advantage in the space, along with a strong roster of partners, and it can easily expand to multiple, very lucrative markets beyond self-driving trucks, including the defense sector. And finally, given the company’s huge opportunities, its valuation is quite low.
In light of all of these points, growth investors looking for exposure to the self-driving phenomenon should consider buying AUR stock.
Commendable Progress and a Bright Medium-Term Future
On May 1, the company stated that it had begun providing “commercial self-driving trucking service ” between Dallas and Houston, while “the Aurora Driver (had) completed over 1,200 miles without a driver.” And encouragingly, the tech start-up did not report that its trucks had experienced any negative incidents.
On May 16, however, AUR reportedly transferred the “observers” that had been riding in the backs of its trucks in Texas to the front of the vehicles. The move was requested by Paccar (PCAR), which manufactured the trucks that Aurora is using.
In a written statement, Aurora CEO Chris Urmson asserted that, “We are confident (a front-seat observer) is not required to operate the truck safely.”
Since the CEO opposed the change, it’s plausible that Paccar insisted on it for precautionary legal reasons, rather than any major technical problems with Aurora Driver.
In another indication that the software is performing well, on May 8, Aurora reported that it had extended the pilot program that it’s conducting with Werner Enterprises (WERN), a large trucking company. Specifically, trucks equipped with Aurora Drive began traveling between Phoenix and El Paso, versus their previous route between Fort Worth and El Paso. In the past, humans sat in the front seats of the trucks involved in all of Aurora’s pilot programs.
What’s more, in the second half of 2025, the company intends to begin testing Aurora Driver at night and “in adverse weather conditions, including rain and heavy wind.”
Based on all of these developments and future, I believe that the system is currently performing well, boding positively for the company’s medium-term outlook.
A First-Mover Advantage and Strong Partners
My research indicates that only one other company, Kodiak Robotics, has developed systems that are currently being utilized to enable trucks to be driven autonomously. And it sounds as though Kodiak’s trucks are being used to transport sand across relatively short distances to fracking sites in Texas. Nor did I see any indication that Kodiak plans to soon greatly expand the distance that its trucks travel in the medium term.
Consequently, I believe that AUR has a meaningful, first-mover advantage in the space and that it will have little competition as it looks to market Aurora Driver in the medium term.
Moreover, it has many partners to whom it can easily market its system. In addition to Werner, FedEx (FDX) and another large trucking company, Schneider, have extensively tested Aurora Driver. And even more impressively, Uber’s (UBER) Uber Freight, which says that it provides services to one-third of all Fortune 500 firms intends to offer “early access to over 1 billion of Aurora’s driverless miles to Uber Freight carriers through 2030.” Uber Freight interfaces between shippers and carriers. It also offers logistical products.
Since Uber owns about 20% of AUR stock, Uber has a great deal of incentive to effectively market the Aurora Driver.
Expansion to New, Lucrative Markets and a Low Valuation
Aurora can eventually bring Aurora Driver to cars, enabling them to become robotaxis. According to longtime professional investor Cathie Wood, the robotaxi market will reach $8 trillion to $10 trillion by 2030. Of course, if AUR can get even a tiny fraction of that market, its shares, which currently have a market valuation of just $10.2 billion, will zoom much higher.
Meanwhile, the U.S. Army reportedly wants to incorporate a significant number of autonomous ground vehicles into its fleet, but has largely been unable to do so. Since autonomous vehicles would save many soldiers’ lives by enabling them to avoid very dangerous situations, the Army’s aspirations certainly make sense. And autonomous vehicles, unlike human drivers, will not become tired or hungry. For all of these reasons, it’s likely that the branch and its peers in many other countries are likely to try to utilize many autonomous ground vehicles.
Aurora certainly seems well-positioned to help the U.S. Army and its peers in many other countries allied with the U.S. meet this goal. In this area, Aurora does not appear to have a first-mover advantage, as Carnegie Robotics, Neya Systems, and Robotic Research in January 2024 were tasked by the U.S. Army with developing autonomous transportation systems. Further, last September, Kodiak and Textron launched an “uncrewed robotic ground (military) vehicle.”
Still, given the success of the Aurora Driver and the fact that there are not yet well-established suppliers of autonomous vehicles to the Army, AUR would appear to have a significant chance of one day selling a high number of such vehicles to the branch and to the armies of other countries.
Aurora could potentially make many billions of dollars per year from the military market.
And given the advanced capabilities of the Aurora Driver and the huge potential of the trucking, robotaxi, and military markets, I believe that AUR stock is vastly undervalued at this point.
*This article is intended to be informational only; it is not financial advice.
