Tom Fenimore: The final test is, I would say, at a higher rate, which kind of reflects the, I would say, Phase II of where they want us to be able to produce at and it has more strict standards in measuring the quality and the yield that comes off of. And so I think we’re going to have the results of that test very soon and based upon the work that the team has achieved to-date, we are very confident that the results of that test are going to be positive, but when we have official results then we will share more broadly, but that’s not something we are losing a lot of sleep at night. Basically, the final green light for launch over the coming months here, so, yes. Aileen, are we good?
Aileen Smith: Okay. We will take up a few questions from the SAFE platform from institutional investors. A question for Austin, it seems like there are examples of LiDAR being used in agricultural, industrial, and military segments. Is Luminar actively targeting these businesses?
Austin Russell: Yes, no, it’s a good question, and I think to the point the answer is that, yes, we are providing technology and product into those kinds of respective industries. The important part here, though, and this goes back to being more conservative on like investment spend is what we’re not doing at this stage is like investing incremental resources that would be required to pursue like…
Tom Fenimore: Those aggressively…
Austin Russell: …or like product modifications, anything. I think there are certain programs that it’s like, okay, these are literally costing like $10 million $20 million, $30 million. Like, it adds up. You have to value respectively, like, what’s the opportunity on the other end? And the reality is that we’re not going to spend a bunch of time on that when we have the $4 billion to prove for ourselves that people are discounting to nothingness today. So it’s like, okay, we got to adapt to the environment. But that said, I don’t want to discount like that there are very much real applications outside of just the core automotive business that we are already starting to realize, and not just with the lidar even literally going down to the semiconductor level.
So the same kinds of breakthrough LiDAR semiconductor chips that we’ve developed, we’ve actually already been able to start selling into other industries as well. And this is where that’s a contributor to that double-digit percentage revenue that was mentioned earlier.
Tom Fenimore: This is going to be a key initiative for us in 2024, particularly as we’ve industrialized Iris and we have got the manufacturing plant up and running. That is going to give us the supply to sell more into this market. We had our business development team spend more of their time in this segment, and so well, it’s nowhere near as big of a volume as there is in the passenger vehicle space. You can actually get better pricing in this segment, which helps the margins. But now that we kind of industrialized the product, this is going to be more of a focus area for us. But the priority by far is still going to be on the passenger vehicle side. And that’s where we’re going to know our team spend the incremental portion of their time on.
Aileen Smith: And another question for, or a question for Tom. When are we expecting Luminar to be profitable?
Tom Fenimore: Yes, look, right now we’re focused on getting to the Volvo SOP. And as we’re getting there, we’re going to start aggressively attacking our unit economics, costs, and streamlining the business. I want to see how that plays out call it over the next couple of quarters before giving an updated guidance on when exactly that’s going to be.
Aileen Smith: Okay. And a follow-up to that. Will Luminar need to sell more stock to fund operations?
Tom Fenimore: Yes, look, I think a similar question there. We have $340 million of pro-formula liquidity, as we mentioned earlier. What we want to do is, again, get to that Volvo SOP, assess what that ramp-up is going to look like, assess how we can kind of streamline our unit economics as well as our operations, and then look at the balance sheet and figure out what, if any, actions we want to make. Getting to Volvo SOP is step one. And then from there, we’ll figure out what, if anything, we need to do to address the balance sheet.
Aileen Smith: Great. We’re going to take a few remaining questions from the analyst community. Our next question is going to come from Winnie.
Austin Russell: I’d also say just generally there, too, we’re, of course, always thinking about, and we do understand the importance and not lost on us when it comes to operational efficiency overall. And that’s where I think that whole wartime mentality comes into play when it comes to like a cost standpoint and realizing the economy at scale and realizing that billion-dollar investment and we’ve obviously always had great interest when it comes to, from a private side back in those days, you know. And now, obviously, as a public business, it’s a different world. But I think our mentality is definitely shifting around that balance. And that’s where you start to see, like I said, with the cost downs from this quarter, and that’s where we’re going to spend more time on that but. Going to get approved. Step one, you got to prove you can make them scale.
Tom Fenimore: Step two is then you aggressively attack the cost to make them as profitably as possible.
Austin Russell: Exactly. Exactly.
Tom Fenimore: And we’re now transitioning to step two.
Austin Russell: Yes.
Aileen Smith: Okay. Our next question from the analyst community is going to come from Winnie Dong at Deutsche Bank.
Tom Fenimore: Hey, Winnie.
Winnie Dong: Hello. Thanks so much for taking my questions. I was wondering if you can provide an update on the competitive landscape during RFQs, maybe an update on your win rate, in particular, in U.S. and China. And then also on the order book update. I just wanted to clarify if that’s something that you will no longer profile in the beginning of the year as you had in the past couple of years.
Tom Fenimore: Let me just clarify here. We’re going to continue to give order book updates at the end of the year. Right now we’re focused on getting to Volvo SOP and getting better clarity on when some of the decisions or conversations with customers when those are formally going to be decided but we’re going to continue to update our order book at the end of the year. We just haven’t given any guidance yet in terms of how much we expect it to grow this year. But it will grow and we are confident that it’s going to grow significantly. Look on the competitive landscape. We’re starting to see the rationalization come. You’re starting to see some of the startups, just, some of that rationalization start to take place. I think it’s going to accelerate here as balance sheets start to get tighter and tighter and tighter and the fundraising environment gets tougher, tougher and tougher.
We’ve also seen some of the big companies, whether they’re tier ones or other technology companies who’ve been in the LiDAR space, look to exit like you guys can go over the list of tier-one suppliers that either had LiDAR partners or tried to do it on their own that are no longer trying it. We start off the call with a question about Mobileye and Intel and it looks like they’re stopped work together on LiDAR. This is tough, right? Industrializing this very complicated technology. We’ve learned this over the last three years now we’ve come out successfully on the other end and we’ve learned a lot and we’re going to apply those learnings to make Luminar leaner and meaner going forward. But the level of competition that we’re seeing in these RFQs is declining and there’s really only a handful of LiDAR companies, if that, that we think the automakers are seriously considering to deploy on their vehicles in the coming future.
Austin Russell: Absolutely. And I think you look at it, what, five years ago, six years ago, I think we counted a little of around 200 different initiatives for LiDAR in terms of different companies and tier ones and automakers and technology companies. I think now in the, I mean, I can count on one hand how many are left over and viable. Of course, when it comes to. Just want to be super clear, though, when it comes to a product performance perspective and the capabilities it can enable, that’s really the thing that Luminar has always been uncompromising on. There are ways to take shortcuts. There are ways to develop lesser capabilities using off-the-shelf components. There are ways to do all of these things like the whole point is that to be able to operate safely and at highway speed like that’s the thing where if you want to be able to do you need to implement Luminar.
If you want to go for a different product scope then you can talk about a different kind of in theory, it’s possible to integrate a different solution, but nevertheless, I think in any scenario, regardless of all of that, this is the first time, of course, in the case of Volvo, where we actually start to see this launch at global scale and be able to actually get into the hands of consumers, much less standardized on a production vehicle like that and so, and showing off those kinds of capabilities.
Tom Fenimore: Aileen, I think we have time for one more question, and we’re coming up to the top of the hour here.
Aileen Smith: Yes. Our last question is going to come from Jaime Perez at RF Lafferty.
Jaime Perez: Hey, everybody. Thanks for taking my question. Hey, Austin. I know we have Volvo coming up. Who else is in the lineup, I mean we’ve talked about Polestar and also the announcement of Geely owning Lotus technology. I mean, Geely’s in, you know, you have a partnership with Geely. So who’s next in the lineup?
Tom Fenimore: Yes, look, I don’t think we’ve announced anything publicly with, like, Lotus or Geely. So I just wanted to correct that. But Volvo EX90 is coming after that will be Polestar 3. After that will be Mercedes Benz, and after that will be some other stuff we’ll talk about at the right time. But as we’ve talked about with our order book, we have 21 — in excess now of 25 awarded vehicle lines and major programs and I would say most of them, vast majority of them are going to be launching really over the next 36 months. The most difficult one by far is the first one, which we’re more or less there on. You know we’re very proud of the fact, like, look, Volvo said publicly they’re going to be launching the EX90 in Q2. If you look at what IHS forecast is for Q2, they are anticipating several thousand production units of the EX90.
So we’re more or less there. That’s the first one. The next 24 plus should be nowhere near the level of difficulty as we just have gone through. And we’ve learned a lot and we’re going to be doing things better and more efficient. But in the next 36 months, we’re going to be very busy launching our products on new vehicle lines and getting more vehicles out on the road with our technology. This summer, I think you’re probably going to start to see vehicles. The Volvo is on the road with our technology on it. Very excited about it.
Jaime Perez: Yes, it seems like you have a deep lineup.
Tom Fenimore: We do. We got a lot of work in front of us.
Jaime Perez: All right.
Tom Fenimore: But I think the tough part is behind us, right? Doing it the first time is the toughest and I would say most of those vehicle lines are using the same product, you know. So it’s not like launching a new product is tough taking the same product and putting on a new vehicle line. There’s incremental work there’s incremental cost, but nowhere near what it is of launching it the first time.
Jaime Perez: Like Elon says, prototype is easy, production is hard.
Tom Fenimore: Oh, believe me, we’ve learned that the hard way over the last few years, and we’ve learned a lot, and we’re going to become a better company as a result of that.
Jaime Perez: All right. Thanks for taking my questions. Have a great night.
Tom Fenimore: All right. Thank you.
Austin Russell: Thank you.
Tom Fenimore: All right, Aileen, I think that.
Aileen Smith: That must be the end of the analyst queue. I’d like to thank everybody for sticking around and participating in the call. For the analysts that asked questions and for the investors and other folks who sent in questions and joined us, we look forward to talking with you next quarter.
Tom Fenimore: Thanks, everyone.
Austin Russell: All right. Thanks, guys. See you at Luminar Day.
