At a recent conference, the CEO of Aurora Innovation (AUR), Chris Urmson, provided detailed information which shows that the company continues to make tremendous progress in critical technical areas. Also importantly, the CEO’s statements indicate that the maker of self-driving systems for trucks will be able to generate large amounts of revenue and move fairly quickly towards profitability.
Finally, Urmson noted that Aurora has begun to work with Washington on a homeland security project, suggesting that over the longer term, AUR may be able to generate significant amounts of money from the federal government.
Given Urmson’s extremely positive update and the relatively low valuation of AUR stock, growth investors should consider purchasing the shares.
Continued, Tremendous Technical Progress
Very importantly, Urmson asserted directly and with a great deal of certainty that the trucks currently utilizing Aurora’s system are driving completely autonomously, even though a human monitor is sitting in the vehicles. More specifically, he said “we are confident in the safe operation of our trucks today. We do have…observer (s) in the truck, but (they) just (sit) there.” And once Aurora receives trucks from Volvo, the observers will be eliminated, said the CEO, noting that those vehicles are expected to arrive later in 2025.
Further, the CEO stated that, in Aurora’s view, its ” proprietary LiDAR sensor” allows its trucks “to see further than…anyone else can.”
Finally, Urmson said that, by the end of this year, Aurora, which recently began driving its trucks at night, “intend(s) to be operating in rain.”
Signs of Strong Demand in the Long Term and Movement Towards Profits
Aurora’s system is expected to cost 65 cents to 85 cents per mile, versus human drivers’ cost of $1 per mile, and as Urmson pointed out, labor costs are expected to rise, while the American trucking sector’s shortage of drivers is slated to intensify going forward.
Also noteworthy is the fact that Aurora’s product will not be burdened by the mileage limitations that American regulators have placed on human truck drivers, while it’s expected to meaningfully lower their fuel and insurance costs. In light of these points, the demand for Aurora’s system is likely to be strong, and it’s unsurprising that Aurura’s partners are, according to Urmson, “super excited” about the offering and the “and the opportunity” it will provide for their business.
Meanwhile, the company is taking steps to lower the cost of the future version of its system. For example, Continental, one of its manufacturing partners is developing hardware, due out in 2027, that’s expected to be much cheaper than the hardware which is being used in the current system, Urmson said.
In terms of profitability, Urmson indicated that Continental’s offering would enable Aurora’s gross margin to turn positive, and he suggested that the company could enter the black if its autonomous trucks drive “200,000 to 250,000 miles a year.” The latter figure is quite attainable, the CEO explained.
A Homeland Security Project
At a U.S. “inland border patrol station,” Aurora has launched “a first-of-its-kind partnership with customs border patrol agencies,” Urmson reported. Since Congress recently appropriated a large amount of funds for border patrol, this project could generate significant amounts of revenue for AUR in the medium-to-long term.
Valuation and the Bottom Line on AUR Stock
Aurora appears to be one of the most advanced companies in the U.S. when it comes to autonomous driving, and many trucking companies are likely to be eager to utilize its system within the next few years. Consequently, the current $11.3 billion market capitalization of the shares meaningfully undervalues the firm’s medium-to-long term outlook.
*This article is intended to be informational only; it is not financial advice.
