Joshua Buchalter: Well, thank you for all the color there. And then for my follow-up, I know it’s been only about a week or a few days since the automatic emergency braking regulations were announced. But I think it’s been rumored for some time, and you guys have been talking about it potentially coming for a bit. I mean do you expect or have you seen potential customers preparing for this? Does it change any expectations for when you would get be able to you know bring things into your order book, and I guess big picture to qualify for the new regulations and hit it. When would a potential customer need to sign a deal to hit that 2029 time frame? Thank you.
Austin Russell: Yes, so I think it’s a great question on all that, and I think this definitely took a lot of the industry by surprise, in terms of the level that it was. I think there was a lot of anticipation that it was going to be, heavily watered down so to say in terms of the requirements. So for example in particular, the majority of the automakers have been part of actually an alliance that’s, been lobbying to be able to significantly reduce the requirements there. Such that it would not be mandated so to say to align with something that would have, this kind of level of capability on every. Because remember it’s not just high-end vehicles it’s literally even the lowest end possible like any like – every single vehicle that’s sold and they’ve said it will take up to $4,000 in additional hardware and software costs per vehicle, which is obviously great from a content value standpoint.
But the lobbying has been basically to try and reduce certain requirements such as for example, the sentiment was that you should be able to hit a pedestrian at up to 25 kilometers per hour, instead of stop for pedestrians fully has been the big push, which as you figure in some negotiations with NHTSA, NHTSA says no it should be zero they say 25 and they split the difference right in the middle at zero. So, they’re taking a hard line on this and we kind of laugh about it but it is very, very serious safety implications. And the reality is, that vehicles today should not let you run over pedestrians. They should not let you run into things in front of you and we’re talking about the most, simple basic, safety functionality on a vehicle and the current kinds of camera and radar technologies cannot enable this across the board in these required scenarios, for what’s needed to prevent the vast majority of accidents.
And we’ve shown what’s possible Swiss Re in particular at Luminar Day has shown what’s possible and we’ve also now starting to even see. Hi, what are the insurance implications this – if you actually, that was like one of the points of inspiration as well, for NHTSA is that, hi, as this happens, the insurance industry is going to be reformed to be able to, from a total cost of ownership perspective, reduce the cost. So there’s a lot of different factors at play, but I would say this is, that I think from a timing standpoint to answer that specific part of the question. I think there’s probably going to be a scramble over the next couple of years, to really start getting plans into place. The beautiful thing with this is that this aligns perfectly with the timing, for Halo.
Whereas, this would have been very difficult to try and fulfill and accomplish with Iris and Iris+, which are more meant for higher end vehicles. Halo is designed to be able to be mainstream. So this couldn’t have come in literally a more perfect time between, the Swiss Re report and the safety report for what they’ve put out, on the insurance implications of that. And most importantly, a Halo product that’s able to take advantage of this. So part of the whole concept is, if there was a concern around cost, hi, for something not in the thousands of dollars. But in the hundreds of dollars, you’re able to have a product that can fulfill all of these requirements. And not only that, in terms of meeting and exceeding it, as we’ve shown, and we have those, for example, specific examples in the requirements in that letter.
It’s also able to, enable via a software, upgrade additional software. So the same hardware, autonomous capabilities, and start to advance those as well, which by the way, we already know is already happening. The majority of automakers at this stage are now planning to have long range LiDAR, or Luminar in their roadmaps already by the end of the decade. So this wasn’t like a crazy thing. It’s just that the crazy part is the sheer scope of what this is. And the fact that this is not, hi, you need to do this to get a five star safety rating on your car, it’s you need to do this, to literally even make a car.
Joshua Buchalter: Thank you, Austin, appreciate the color?
Austin Russell: Or sell a car. Oh, sorry, to sell a car. And yes, I should say in the U.S. Obviously U.S. is hopefully it takes a leadership position, and kind of proliferates throughout.
Aileen Smith: Okay. We’re going to transition back to a few questions from our investors. Next question, how has the delay in the Volvo launch from last year, and the macroeconomic environment affected your capital situation? Will you have to raise an additional $1 billion in 2025 like certain estimates have stated? And what kind of dilution should your shareholders expect?
Tom Fenimore: Yes, I’m not, look, I would say the $1 billion is nowhere near what we think we need additional capital we need to get to profitability. Now that we’re SOP, now that we’ve taken some of the restructuring actions that we’ve taken, we’re still, finalizing our analysis on what the additional capital needs going to be. And we’re looking at a variety of scenarios, including downside scenarios. And even in our extreme downside scenario, we get nowhere around $1 billion. The number that we’re sending around on is somewhere, around a couple hundred million dollars of incremental capital plus or minus. And when you kind of look at where our balance sheet is today, we have enough cash to get us to at least the end of 2025.
So we don’t have a gun to our head to do – anything soon. And we still, we believe have access to multiple forms of capital. So, we can go get that additional capital, when the timing and the situation is right. And look, we also would rather address the two balance sheet issues that we have sooner rather than later. The first being the additional capital, which I just talked about. And then the second is, when you kind of look at our convertible debt, that’s trading at a deep discount. And as I mentioned before, we’re kind of looking at, are there creative things that we can do given that dynamic? So now that we’ve reached SOP, now that we’ve taken the actions that we’ve done, we’re actively looking to fix those two balance sheet overhangs that we have, but we want to do it at the right time, minimize dilution, get the best terms that we can, but also address it sooner rather than later.
Austin Russell: No, it makes total sense. And I’ll say this is that obviously we’re very sensitive around all these things. And particularly, when a, you don’t have a lower share price there, you want to be really, really cautious for dilution. I’ll say that over the, what, eight years when we were private, I think in aggregate over all the financing to be raised for, hundreds of millions of dollars, we got it, we’re diluted the company, what on the order of like 50% over half a dozen different rounds, and going through that. That’s how, we have large ownership, positions in the company more generally. So, we take this super seriously, really thoughtful. Our own Board, is also taking it very seriously in terms of that aspect of it.
So but, we’re in a strong position here. We know exactly what needs to be done. And most importantly, we want to show and continue to prove out the aspects of the business that show how significant, this industry is and how much value we’re able to really produce to get that realization. And we’ve been in a stronger position than ever, with the fundamentals of our business from technology, product commercialization, and scaling now with being the first company at global scale to be able to go to SOP with us. So yes, that’s what we have ahead.
Aileen Smith: Great, next question. Will you provide more detailed financial guidance for 2024 now that you’ve kicked off production for Volvo cars?
Tom Fenimore: That’s something we’re going to do in the second half of the year. We’re getting more visibility into the Volvo ramp up. We’re getting more visibility into when we’re going to start to realize some of the cost-saving actions that we took both on the restructuring we did on Friday, as well as starting to aggressively attack the sensor cost. And so, once we get into the second half of the year, we’re going to provide more visibility on what our quarterly financial performance is going to be. The two things that we talked about during our last call that, we reiterate is we’re going to get to, a quarterly revenue run rate in the mid-30s by the end of the year, and that will end the year with $150 million plus of liquidity. Those are two things that we still remain confident in. I would say the path to getting from where we are today, to those points by the end of the year, it’s still going to be, have some bumps on the road, during that journey.
Austin Russell: And just for the context that the 35, call up per quarter, if you’re amortizing that, we’re talking what $140 million, run rate per year. So, on an annualized basis. So, I mean, pretty significant growth, I mean, you guys all know last year’s numbers and everything. It’s the key is that that all kicks in in the second half of the year. So when we talk about SOP for the revenue for this quarter and it’ll be next quarter. There’s been no series production revenue this quarter, small for next quarter, but that’s really where in the second half when you start to see that kicking in, and that exponential growth really taking off. And that’s where, what we highlighted is that, we have $3.8 billion, in our order book that’s now kicking off that conversion into revenue.
And that’s, what’s going to be the main driver behind all this exponential growth. Whereas historically it’s been, development systems that we’ve been working with automakers on, of course Volvo is the first, but that’s sort of kicking off a plethora of additional subsequent vehicle model launches. We’ve shown how we have, 25 of them that expands across combustion engine vehicles, electric vehicles, hybrid vehicles, all those kinds, which is, also unique to Luminar in terms of the diversity, of what kinds of vehicles we’re on. So excited to make that happen. And then, yes, as Tom was saying there, that economies of scale and value is going to be huge. The other thing is, is that the most significant thing really with Volvo getting out there, is also around data collection.
Right now there’s been a very, I mean, we’re talking very, very small fleets of vehicles, on the order of hundreds, usually that are going out collecting data. When you talk about something with Volvo, when it’s tens of thousands of vehicles. Just even starting this year alone, scaling to hundreds of thousands of vehicles. And then, ultimately millions, like this is at a scale of data that no one in the industry has ever seen at a global level. And that allows the AI systems to really train on that data, to be able to understand the world. I mean, we’re talking about, creating a more accurate understanding of the world that has ever been seen before by this precise 3D data, more than what you have. The largest autonomous fleet out there today is, well it’s like way more like what, less than a couple thousand vehicles, some of that effect.
So, you take a look at that and the scope and scale of what we’re talking about and the fact that, every Volvo driver’s driving, we don’t pay them to drive, they drive themselves. So it’s going to be pretty transformational as all of this happens.
Aileen Smith: Okay. Let’s switch gears and go back to our sell-side Analyst community. Our next question is going to come from Itay Michaeli at Citibank.
Austin Russell: Hi, Itay.
Itay Michaeli: Hi, great, hi, everybody. Thanks for taking the question. Just I was hoping we could just remind us, and I know you’re, the number one focus now is the Volvo ramp. How should we think about subsequent ramps of the 25 plus programs that you have? Maybe if you could talk about roughly how many launches you’re expecting in 2025, that’d be helpful?
Austin Russell: The next big one that we have, which will be somewhere around the end of this year is going to be the Polestar 3. There may be one or two, smaller programs next year between, our current customers. And then I think the next big wave is really going to come around late ’25, early ’26 with Mercedes. And there’s multiple platforms that will probably then launch starting in ’26 over, the next two to three years. And so, this is, this is the big one. Polestar 3 is the next one, a couple other smaller ones, and then the wave of Mercedes starting.
Tom Fenimore: The only other thing I’d point out is that, there are also variants in particular that launch at different times and locations. And so, for example, this is the launch for the EX90 out of North America there. So, we’re shipping from Mexico, into North America. Luminar has a unique globally diversified, footprint here, which is special. And so, we’re talking about the launch there, then you talk about launches in China. There’s already been, they announced the EX90 Excellence as well as the EX90 China variant. There’s more opportunity and upside, beyond these things as well. Of course, we all know about the Polestar 3, but there’s also different model variants as well of some of these things that, can help further drive the growth of this.
But this is, so that’s why you’re going to see, it’s kind of like a flywheel effect, right, in terms of the compounding. So there’s an exponential curve in terms of the ramp, and the economies of scale for each one. And then when they sort of compound on top of each other, then you end up in this slide. Very good pile up of all these things. But it’s not so much, and this is where we’ve been smart about it. It’s the same thing of like, I think if we tried to launch with like five different OEMs all at the same time, we would be drowned, in that. So, it’s good. It’s like good methodical, spacing between the different OEMs and launches and everything. But it is definitely action-packed, that’s for sure. And the beautiful part is, it is the same hardware setup that, we have that’s able to launch.
Obviously, there’s certain kind of specific integration modes, and certain kinds of incremental customizations. By the large part, it’s, 95% the same thing.
Itay Michaeli: Terrific. As my follow-up, Austin, you mentioned data collection. I kind of want to go back to that a little bit here. How much data are you getting from the real world fleet of some of your customers? And will you be getting data from the Volvo fleet as you ramp? And as you’re getting this data back and iterating the software and AI, how much improvement are you seeing in safety and automated driving functionality such that, when maybe the RFQs come in for NHTSA-related awards for later in the decade, how much better do you think the system could be, by the time you get to that point?
Austin Russell: Yes, so a couple of things on that. Obviously the big step function from a product standpoint is with Halo. So that’s – what we’re very excited about. But I would just say from a data perspective, more generally, there’s two aspects. So one is from a customer standpoint, of where they need the data first and foremost, in terms of being able to build out the features, optimize them and do all the safety checks on it. And then ultimately, release the features. And that’s where you’re going to see, the LiDAR get more and more utilized, over time for these additional, starting with safety features, then ultimately autonomous driving features and other kinds of things that it can be able to enable, creating maps of the world, doing all those things.
