Aurora Innovation said Wednesday it will have enough money to continue to develop its autonomous vehicle technology until its commercial launch in mid-2024 — an effort to assuage shareholders amid a tightening capital market and a week after competitor Argo AI suddenly shut down.
The company said it closed the third quarter with about $1.2 billion in cash and short-term investments and plans to launch a commercial self-driving truck operation in late 2024.
Wall Street responded favorably to Aurora’s attempts to calm investors. The company’s stock was up 5.85% after market close.
The statements come at time of shifting priorities and economic uncertainty. Argo AI, an autonomous vehicle developer backed by Ford and VW, abruptly shut down after the two automakers decided to no longer fund the effort. Instead, the automakers are putting more resources to advanced driver assistance systems, technology that promises to deliver revenue in the near term.
A consolidating AV industry and a shift towards ADAS has been underway for nearly two years. Inflation and looming tightening credit as well as Mobileye’s successful IPO could accelerate that trend. Automakers once willing to invest billions into the development of AV tech — a frontier tech years away from revenue — are aiming for what is considered a safer bet.
Even with its cash on hand, Aurora will have to raise more funds, CFO Richard Tame said during the investor call. It’s unclear if that capital raise will occur prior to that mid-2024 deadline. The company wouldn’t clarify timing to TechCrunch.
However, in a memo leaked in September, CEO Chris Urmson wrote to Aurora’s board that there was value in finding a “path to raise $300 million in the next year to add around six months to our runway.” Given the current economic situation and Aurora’s cash burn history, the company might be able to make it to 2024 with the funds it currently has, but only just — and only if it keeps costs in line.
During the third quarter, Aurora’s loss from operations totaled $200 million, which is up from the $128 million reported during the same quarter of last year, but down from the nearly $1.2 billion in losses from the second quarter of 2022. If the startup were able to maintain a $200 million net loss starting in the fourth quarter until the first quarter of 2024, it wouldn’t need to raise more cash before commercial launch. But as a pre-revenue startup working on frontier technology, Aurora will incur tremendous costs in R&D to scale and bring its product to market. In addition, Aurora would need to somehow avoid being impacted by inflation and supply chain constraints. The upshot? Aurora will need to find efficiencies across the board.
The leaked memo also outlined an array of cost-cutting and cash-generating options to Aurora’s board, including a hiring freeze, potential layoffs, spinning out assets, going private and even selling itself to high-profile tech companies. Aurora didn’t mention any of these potential realities during its earnings call, but that doesn’t mean they’re off the table.
Aurora has prioritized commercializing autonomous freight through a series of pilot partnerships with FedEx, Paccar, Schneider, Werner and Xpress. But the company is also working with Toyota to eventually launch a subscription service for the ride-hailing market. Earlier this year, the company unveiled its test fleet of Toyota Siennas that were custom built for robotaxi operations. In the third quarter, Aurora recognized about $3 million in collaboration revenue from Toyota.