Luminar Technologies - Earnings Call - Q1 2021
May 13, 2021
Transcript
Trey Campbell (VP of Investor Relations)
Update call. I'm Trey Campbell, Luminar's Vice President of Investor Relations. With me today are Austin Russell, Founder and Chief Executive Officer, and Tom Fennimore, Chief Financial Officer. As a quick reminder, this call is being recorded, and you can find the earnings release and slides that accompany this call at luminartech.com/quarterlyreview. In a moment, you'll hear brief remarks followed by Q&A. Before we begin, let me remind everyone that during the call, we may refer to GAAP and non-GAAP measures in our remarks. Today's discussions also contain forward-looking statements based on the environment as we currently see it, and as such, does include risks and uncertainties. Please refer to our press release and business update presentation for more information on the specific risk factors that could cause actual results to differ materially.
Before handing it over to Austin to dive into this quarter's business update, I'd like to share a video detailing the next major milestone for our company with our new manufacturing partners, Celestica and Fabrinet. Let's roll.
When we started the company, we recognized that manufacturing of the product was going to be as hard, if not harder, than the underlying architecture. Taking a sophisticated optoelectronic product like a LiDAR system and deploying it in a high-volume, high-quality, scaled, low-cost environment, Luminar made the decision on the front end that we needed to own that challenge. Simply throwing it over the wall to someone else that does not have the experience that we do ultimately would become a problem. From the very onset, we were investing in our advanced manufacturing capabilities alongside the product engineering capabilities, the ultimate goal of creating the most manufacturable LiDAR in the industry. That makes us unique in the industry. We have not seen any other LiDAR company really aggressively tackling owning the hard problem of manufacturability like Luminar has.
Here we are at Celestica in Monterrey, Mexico, where the first Iris units are coming off the assembly line. Luminar is super excited to have picked Celestica as our manufacturing partner based on the infrastructure they have here, based on their expertise in building complex products, and also the staff and the team members they have with the right skill levels for building Iris. Here we have our SMT line. This is where we build PCBAs. We have screen printers, solder paste inspection, pick-and-place equipment, reflow oven, end-of-line inspection. This line builds PCBAs to automotive quality standards, and that is just one component that goes into the Iris sensor, which gets integrated into our cleanroom in a different part of the factory. Here in the Celestica cleanroom, we execute all of the process steps to put together the final Iris sensor.
Those process steps were developed in our advanced manufacturing facility in Orlando, and we copied exactly those same process steps here at Celestica in Monterrey. As part of the setup here at Celestica in Mexico, we have equipment, we have infrastructure, but also very importantly, we have a skilled staff. Part of the process is training that staff.
Vamos a maquinar una lamparita para que después ponemos el vidrio encima. Ok, entonces otra vez.
We integrate a lot of different components in the sensor. Some of those key components we get from other partners that we work with. One of those partners is Fabrinet. Fabrinet's expertise is in optical, optoelectronics, microelectronics manufacturing. They manufacture key parts of our sensor, and those assemblies are then delivered here in Mexico for integration into the final product and the final Iris. The way this cleanroom is set up, we actually sequentially follow the number of different process steps that we've developed in our pilot line, and then we go up to calibration and test in our ATP room. As part of this qualification and calibration and validation room, we have a number of different stations that we're setting up. One of the interesting ones here is reflectance.
With the reflectance station, we actually calibrate our ability to see for the sensor to see different grayscale values. In this case, we have a sensor looking down the line. We have a number of different targets set up down the line that the sensor looks at, and we calibrate reflectance. On the other side of this room, we have our long-distance calibration. That's where we look at targets at 200 meters, 350 meters, different distances. Same thing, we calibrate the sensor's ability to look across those different distances. After all the processes in this room, all of the calibrations and validations that we do with the sensor, the sensor leaves this room off to the packout area where the sensors are packed out and then ready for shipping to our customers. As we achieve success in scaling our manufacturing in Mexico, this gives us the.
To a much larger part of the global automotive industry and really positions and solidifies Luminar's position in making autonomy both safe and ubiquitous.
Austin Russell (CEO)
Today is a defining moment for Luminar in the broader industry. We've launched the inaugural Iris off the line in Mexico with our newly unveiled series production manufacturing partners, Celestica and Fabrinet. There's a lot of implications here, and we'll speak more to this later. I wanted to take a quick moment for a thank you to all of our employees and partners in this heroic effort to get the facility tooled up and online as we continue to iterate. Zooming out, as a recap, last quarter we made the transition from a LiDAR company to a LiDAR-led autonomous vehicle company, combining our software with Volvo's autonomous software subsidiary, Zenseact, as well as partnering with the largest automaker in China, SAIC.
We've continued our win streak across the board and look forward to sharing more in key areas of business for this update call, including team, product, production, and commercial wins. Next, we will jump to our CFO, Tom, who will share some of the company-level annual milestones and where we stand on those from what we set forth at the beginning of the year. Let's start with the team. You can't overemphasize how critical this is. This is a technology, a product, and an industry that's never existed before and something that we've been having to pioneer at the tip of the spear. Because even if you have the perfect vision, technology, or product, you need a world-class team to be able to execute, scale, and go to market with commercial wins and build the critical infrastructure for the business.
Two leadership hiring wins that you've probably seen, one of which kicked off the call, is Trey, who is now leading our investor relations as an executive coming from Intel, and Alan Prescott as our Chief Legal Officer, who is a safety engineer and legal industry leader who led that team and functioned at Tesla. What isn't as visible is what we've done in parallel across all of the teams to accelerate our ability to execute. So far this year, we've already hired nearly 100 additional top-notch hardware and software engineers, supply chain experts, employees, and contractors to execute the back half of product industrialization and preparation for series production. This includes everyone from the Chief Assistant Driving Engineer from a top tier one all the way to bringing on a top industry deal executive to lead our corporate development efforts. Next up, product. First off is with Iris.
We've continued to hit our key milestones and deliverables with now multiple key partners already running live with Iris as we optimize it for series production. We've also continued to quantitatively hit our key LiDAR performance metrics we promised, not just as numbers on a slide. Our target milestone for the end of the year remains delivering the first C-sample, which we remain on track for. Second, from a software standpoint with Sentinel, following its introduction for the last quarter, we've kicked off the next phase of our software development in partnership with Zenseact at full speed ahead, leading up to the alpha release before year-end. We've made two key achievements on this front already since the announcement a couple of months ago. One, we've successfully collected enough Iris LiDAR data to train and optimize the performance of our perception software, which we've since executed.
We have received the green light from Germany to proceed with Sentinel development and testing on public German roads where our Munich operation is based. This is all only reinforcing our transition to a system-level autonomous vehicle company and partner moving up and beyond the foundation of our LiDAR. Next up, production. This area is a key focus for the call with regards to supply chain execution and manufacturing execution on the path to series production. Today, we have achieved the most significant milestone we have had to date when it comes to advancement towards series production. Two leaders in advanced electronics and optics production have partnered with us to scale our product for us to deliver to leading OEMs and beyond. In fact, we have already been working closely together for months to get the initial line up and running in the Celestica facility in Monterrey, Mexico.
As was mentioned in the video, we pulled it off. Celestica is responsible for product-level assembly and fulfillment, while Fabrinet assembles some of the core optical components for us. They'll both continue to accelerate and de-risk our plans. Just as we pioneered this breakthrough technology as well as advanced manufacturing process, we've pioneered a new manufacturing business model that's the first of its kind. The norm is that OEMs only work directly with legacy tier ones as they've been working with for decades, and to have a shot, you have to license the technology to those tier ones. Early on, we knew that while that model was easy and appropriate for less complex technologies or products tier ones had experience with in a prior capacity, we knew that we needed to have ownership over the product, process, and customer end-to-end if this was going to be successful.
For the past five years, we've executed exactly to that, retaining 100% ownership over the product, manufacturing process, and of course, the economics and relationship with the automaker. Lastly, when it comes to a commercial standpoint and major commercial wins, we've been crushing it beyond what we could have imagined at the beginning of the year just a handful of months ago. In Q1, we announced a big leap forward with two major partnerships, first from a product standpoint with Zenseact and second from a commercial standpoint with SAIC. So far in Q2, we've continued to diversify beyond our core OEM business, working with leading players in verticals from aircraft to robotaxis.
The partnership with Airbus' UpNext division marked a significant milestone for Luminar as our first foray into aviation, a nearly $1 trillion industry on its own, and a step in the right direction for the broader automation economy. Earlier this week, we also announced another major commercial win with the largest autonomous car company in China, Pony AI. Since launching their pilot service not long ago, they've driven more than 5 million kilometers across a global operational coverage area in five major cities, providing more than 220,000 robotaxi rides. Our business in China is certainly off to an incredible start following our kickoff in the region with SAIC just a couple of months ago. In conclusion, at this stage in our company, execution is everything. As you can see, we remain diligently focused on delivering our goals and milestones and have been hitting them accordingly.
From a business and execution standpoint, I'm very proud in terms of what we've been able to pull off this past quarter and look forward to taking the industry a step closer to making safe autonomy a reality. Now, I'll hand it over to Tom to review our annual goals and milestones as well as current financials.
Tom Fennimore (CFO)
Thank you, Austin. Our focus for this year remains on achieving milestones that will deliver long-term shareholder value for Luminar in this emerging industry. At the beginning of the year, we introduced five critical milestones to help do exactly that and measure success for this year. Thanks to the great work of the team, our progression so far has us either on track or ahead of schedule to hit each of these milestones. Let's review them one by one. Our first milestone relates to the Iris industrialization and production plan. This is a multi-step plan, and as Austin outlined, we took a huge step forward with the process transfer to our contract manufacturing partners and bringing them online. The specific milestone is to reach the C-sample stage for Iris by the end of the year, which remains on track.
The next annual milestone relates to software and specifically the alpha release of Sentinel by year-end. We are continuing to build out perception, proactive safety, and highway autonomy functionality internally and with our partner Zenseact. We are on track for this milestone and actually plan to show off some of our capabilities before the end of the year. The third milestone was to win three major commercial programs this year. As Austin mentioned, we've been winning more deals from major players and at a greater pace than anticipated. We expect to increase this guidance during our next earnings call. The fourth milestone was to grow our forward-looking order book by 40% this year. Once again, we anticipate increasing this guidance on our next earnings call.
Our final milestone relates to maintaining a strong liquidity profile and cash position with the target to end 2021 with a greater cash balance than where we started the year. In the first quarter, we raised $154 million from redeeming our warrants and had a net cash burn of $29 million, putting us well on track to achieve this milestone. Executing on these five milestones is how we will measure success this year, and the team is off to a great start to achieve or beat each of them. Before we progress to Q&A, I'd like to share a few updates with regards to our Q1 financials. While our quarterly financials in the near term are not a good indicator of our longer-term profitability potential, we nevertheless continue to execute accordingly and have some good updates. Revenue for the first quarter was $5.3 million, up 120% from the prior quarter.
One thing worth noting is that while we reported a gross loss for the quarter, this is not reflective of our unit economics or long-term profitability as there are additional and one-time costs from the initial ramp-up of Iris production, absorption costs from Hydra production ramped down, and development-related expenses related to launching our initial series production program. We've maintained a strong liquidity at the end of the quarter with $610 million in cash and equivalents, and we had approximately 340 million shares outstanding at the end of the quarter. Lastly, we are on track to achieve our 2021 revenue balance of $25-$30 million. In closing, I'd love to reiterate my thanks once again for the entire team at Luminar doing a great job during this past quarter. We're off to a great start in 2021, and with that, we'll hand it over to Trey for Q&A.
Trey Campbell (VP of Investor Relations)
Our first question will be from Emmanuel Rosner with Deutsche Bank.
Emmanuel Rosner (Analyst)
Hi, good evening, everybody. Thanks for taking my question. It seems you've already got three new commercial programs this year between SAIC, Pony AI, and Airbus. Am I correct in my understanding this was the guide for the full year? You're saying it will get raised next quarter. How should we understand this? Are you expecting additional wins for the year? In particular, can you provide an update on your pipeline or funnel of opportunity? I think last quarter, you were saying you have maybe 14 program opportunities. Any update to this number?
Tom Fennimore (CFO)
Sure. First, with regards to your last question here, the pipeline still remains at 14. As we've kind of moved those two additional ones now into the win category, we've replenished them with two additional ones. Quite frankly, with just how much the team is focused on execution and the level of intensity that it takes with each of our customers to convert them from kind of that development category into the win category, I wouldn't expect us to make that number higher than 14 or materially higher in the near term here just based upon the level of resource constraints that we've had. The second thing I would say is, yes, you're right. So far this year, we've won three major wins.
A lot of them just happened recently, so we're taking a look at our current pipeline, having conversations with our customers not only about potential new business, but the business we've already won and the exact programs that they're going to include in them. We plan to provide updated guidance, higher guidance at our next quarterly earnings call.
Emmanuel Rosner (Analyst)
I guess as part of this, when would you expect traditional volume automakers to make sourcing decisions about LiDAR? It feels like so far, not specifically just for Luminar, but in general, a lot of the sourcing decisions seem to have been either the high-end automakers or robotaxi commercial vehicle. What's your view on timelines for traditional OEMs?
Austin Russell (CEO)
Yeah. When it comes to some of the traditional OEMs, the business has only continued to accelerate, as Tom mentioned, for the existing programs that we've been working on. When it comes to getting designed into the major platforms here, oftentimes it starts with kind of the lead luxury models and then can expand there on out. Those are the exact kinds of conversations, dialogue that we're having in terms of the scope of how the rest of this plays out and the timeline for the launch of the different models and programs. When it comes down to it, the OEM side of this, this is the core and the lifeblood of the business that's been driving this forward and sets the schedule for all of us at the end of the day.
There is no slowing down on that for both existing and for ultimately what we will have ahead. That is why all those things considered, as Tom mentioned, we would be increasing the guidance next quarter as we continue to get these new data points from our recent wins and things happening later this year.
Emmanuel Rosner (Analyst)
Great. Maybe just final one. You now have two major wins in China between SAIC and Pony AI. Can you describe the competitive dynamics over there, maybe relative to the U.S. and Europe? Are you mainly competing against local suppliers or against some of the U.S. ones? I do not know if you are able to comment on this, but for a program like Pony AI, would the pricing be higher given low volume or generally on robotaxis versus traditional automakers?
Austin Russell (CEO)
Yeah. I'll say generally, as kind of a rule of thumb for these programs, people come to us when they're really ready to be able to reach that series production phase and when they're starting to make that transition out of development. We generally avoid working with kind of earlier stage programs that may or may not materialize or have a lower likelihood of that. That's why we try to stick to the major players that have the resources to really be able to put behind it and see it through at the end of the day. Yeah, when you talk about leaders in their respective fields like SAIC and even Pony here, that's certainly the case for China and beyond.
When it comes down to it, that's where, again, there's a lot of different approaches that you can take when it comes to the development and testing, but that's the whole point of why we're here and what we're changing. Taking a holistic step back, yeah, I think we continue to certainly see that accelerate and, as I said, kind of pedal the metal. This is really the start of our operations in China.
Emmanuel Rosner (Analyst)
Great. Thank you.
Trey Campbell (VP of Investor Relations)
Question is from Dustin Skarinch with Baird, and he's on audio only.
Dustin Skarinch (Analyst)
Hey, guys. Thanks for taking my question. This is Dustin on the line for Tristan. I was wondering if you could talk a little bit more about Sentinel. You know you received the green light in Germany to develop and test on public roads. I was wondering first if this was a relatively easy process, and then what are the implications for testing and development in other countries? Do you think it will be easy to test elsewhere? I have a follow-up. Thank you.
Austin Russell (CEO)
Yeah. So when it comes to Sentinel, there's been a lot of work that we've done and put into place. I think just a second here. Sorry, just technical adjustment. When it comes to Sentinel, this is where we've continued to be able to focus on the core development of this. There's a lot of work that's left to be done to really be able to make this happen and bring this out into the broader industry. The whole point of what we've been doing in Germany and in Munich, we actually did an acqui-hire of this team from Samsung previously to be able to accelerate the development of this full-stack solution. Of course, recently partnered with Volvo's subsidiary Zenseact to be able to accelerate this. We have now really kicked off the actual testing and development on roads.
The approval from Germany was certainly an important step in that since a lot of the development that's happening there is really being realized and tested in Germany itself. That is where we are, of course, having a global scope of the overall deployment. Testing and validation is a critical part of all of these processes. Until it's actually production-ready, you need to be able to have permission to do that.
Dustin Skarinch (Analyst)
Got it. Okay. As a follow-up, I was wondering if you guys can talk a little bit more about Airbus UpNext and your partnership there in more detail. What vehicles do you think your LiDAR sensors will be placed on? What problems are they solving? Finally, given that solving the autonomy problem in cars and trucks already is hard enough, how feasible do you think LiDAR is in flight, given that they travel at similar speeds and completely undefined environments?
Austin Russell (CEO)
Yep, yep. In some ways, the autonomous flying problem is easier in the sense that there are a lot fewer obstacles that you'll necessarily encounter in flight. At the same time, it's more difficult in the sense that you need to have a critical level of reliability to be achieved to be able to make this safe and autonomous. That's really the whole point of what we're enabling, to be able to better enable autonomous flight on everything from starting out on helicopters and moving all the way to VTOLs and ultimately things like fixed-wing aircraft in terms of the kinds of capabilities it can have. What we're specifically designed into is their Vertex platform, as they call it, which is basically to be able to demonstrate and prove out and validate the safety improvements and capabilities they have on these flights.
They have, of course, a certain set of program milestones and everything that they have been delivering that on. Basically, we are designed into that platform and solution that can then branch off into the different areas. Of course, aviation is kind of its own world and has its own aspects to it that are a little bit different than the vehicle platform side. This is kind of the key first step. We could not think of and find a better player to be able to work with than the largest aviation company.
Emmanuel Rosner (Analyst)
Okay. Great. Thank you.
Trey Campbell (VP of Investor Relations)
Our next question is from Gus Richard with Northland.
Gus Richard (Analyst)
Yes. Thanks for taking the question. I was hoping you could give a little bit of an update on your work with Mobileye at this point.
Austin Russell (CEO)
Yep. That's certainly continuing, I think. When it comes down to it, one of the things that we mentioned is that we now have actually been deploying IRIS to multiple programs and customers at this stage. I'm going to be careful not to comment on anything related to customer confidentiality, but things are absolutely continuing full speed ahead with the programs. There's no otherwise significant update other than we're now deploying this in a more widespread capacity across the board with the key programs, the launch programs of customers, and are going to continue to deliver against the execution plan leading up to the start of production dates of our various programs that we've been designed into.
Gus Richard (Analyst)
Got it. In terms of production, you've got units coming off the line in Celestica in Mexico. Sort of what run rate are you at now? Are these considered B samples? Where are they in the maturation of the product?
Austin Russell (CEO)
Right, right. As of today, as we speak, it's literally we've actually just gotten things up and running with those guys and online. Part of what we're building out is for a capacity that would be capable of in the tens of thousands of units annually per line in terms of what we're building out in terms of that. Part of the advantage of working with folks like Celestica is that it's very scalable, so you can basically adjust the amount of lines that you need in a modular capacity to be able to fit the dynamic nature of what this industry is and how this scales. That's the plan that we've been executing to. This is really all leading up to the start of production before the end of next year.
That is where, with these programs, we're working hand in hand. They're coming in, auditing the facility, our process, and what we have to do in terms of this process transfer. We have had that well underway. We're off to a great start, and we've proven that it actually works and the model works.
Gus Richard (Analyst)
What has been the customer interest in Sentinel? How widespread is that? Is that half of the engagements? Can you give a little bit of a sense of how many customers are interested in just the sensor and how much want just perception and then the full stack?
Austin Russell (CEO)
Yep, yep. I'll say this: when it comes to the full stack, I would say 80% of the broader automotive ecosystem has to have either Sentinel or some equivalent of this if they actually want to be successful in deploying passenger vehicle autonomy and these kind of proactive safety capabilities. Because when it comes down to it, there really isn't—most of them don't actually have the internal development capabilities and expertise and know-how to be able to really make this happen in the first place. That was part of the inspiration. We've been continuing through the development process and engaging in a number of conversations with all of these guys, some of which we've already seen start to be adopted. It's not actually an all-for-one either.
Some automakers have certain software components that they've developed in-house and then are taking it in a more à la carte offering. Our ultimate goal is to be able to ensure widespread penetration of Iris. Of course, there's also great economics with the software as well. Yeah, I would say for some components, at least some components of Sentinel, the majority of customers do have interest in this. That's where this is going to be leading up to our alpha release at the end of the year.
Gus Richard (Analyst)
Got it. Okay. Thank you so much.
Trey Campbell (VP of Investor Relations)
Our next question is from Eileen Smith with Bank of America.
Eileen Smith (Analyst)
Good afternoon, guys. I wanted to dig in a little bit on some of the recent series production wins, particularly with Airbus. At the time of Hong Kong public, you guys were pretty focused on your product and your addressable market opportunity being at level 3.4, highway autonomy, less so on the level 4.5 robotaxi market, and then even less so on non-automotive end markets like aerospace and defense and industrial. What have your discussions with new and potential customers over the past few months informed you about future product direction and the relevancy of LiDAR and really where you want to focus? Is the emphasis still on level 3+ systems for production vehicles, or are the recent wins in any way indicative of the planned traction for highway autonomy being pushed out a little bit?
Austin Russell (CEO)
Yep. When it comes to our core capabilities and what we're enabling, nothing has changed there. We're 100% focused on delivering highway autonomy, delivering proactive safety capabilities into these core passenger vehicle production OEM programs. That hasn't been slowing down. What has been accelerating as an opportunity for us to leverage is actually some of these other companies in addition to the major OEMs that we see as major players that opportunistically can come up that we can be able to work with to leverage the exact same products and all of the hundreds of millions of investment we've put into this technology and this business for our OEMs, but for these other industries as well.
I think the expectation is still absolutely the same that the way that you can build your business, you have to have series production OEMs that are going to be driving that volume curve along with this. It is really icing on the cake for these other programs in terms of what we have and what we are winning. For the right opportunity, though, we are certainly not going to say no to it. Vice versa, we are actually going to work with these companies to be able to ensure that it is seen through. We would maintain that the time horizon for each of these different areas is different. I still actually firmly believe the passenger vehicle OEM market is actually going to be realizing the volume a lot more significantly and sooner than the robotaxi market that is had there.
The nice thing is that it is still an additional opportunity. I do not want to make this sound like there is no potential for robotaxis over the long term. I actually am still bullish on that for just less over the next handful of years in terms of volumes. We think it is going to ramp up more towards the end of the decade and really through the 2030s. One other thing, and I realize I want to make sure I address one other part also that also relates to a previous question, is that the question is, if something is lower volume, do you get higher ASPs? The answer is yes. There is a price volume curve associated with each of these things. It does make a difference.
Eileen Smith (Analyst)
Great. That's very helpful. I wanted to understand a bit better the outsourcing strategy and the announcement around Celestica and Fabrinet. For the automotive layperson, can you describe for us what each of those partners are really bringing to the table? So we understand it correctly, and apologies if this is a rudimentary question, is the manufacturing process separated at all between the two, or is it rather a setup of dual sourcing as would be pretty standard in the automotive industry?
Austin Russell (CEO)
Yep. When it comes down to this, I mean, the reality is this is an incredibly intensive process that we have to be able to streamline as much as possible. We have been building out and focused on building out the supply chain for this newly developed product. This is not a commodity. This is not something that has existed for some time. Our whole plan has been to work with the best possible players in each of these respective areas in terms of what they can focus on. For example, with Fabrinet, these guys are historically known for building complex optical assemblies and doing so with precision optics incredibly well and doing so, taking it from low volume into high volume, helping with manufacturability and working hand in hand with that. That has been great.
They've been working with and collaborating with our team in Orlando from an advanced manufacturing perspective. Equivalently with Celestica, they're actually in charge of the overall assembly of the LiDAR and the device, final assembly, pack out, and ship. That's what we've been able to leverage and outsource with those guys. It all kind of fits to the broader picture and puzzle. Could we take an approach where, for example, we also build it ourselves? Part of the plan in terms of what we have internally is we're actually defining the process, the capability, all the stuff that's really, really unique and stuff that relates to us. What we don't plan to do is also build the full system and everything internally.
Actually, these partners exist for a reason, and have partnered with us and do a great job out of this in a very cost-effective capacity. It just makes the most sense. It is very modular. It is scalable. They already have a lot of the CapEx there too. It is all about working with the right folks, getting the right arrangements in place, and setting up the supply chain right. That is exactly what we have done.
Eileen Smith (Analyst)
Great. One last question, if I may. You touched upon this a little bit in terms of the hiring efforts of the company over the past few months. As you make the shift from a LiDAR hardware supplier to a LiDAR-led autonomous company by your definition, are there any technology gaps that you see within the business that you would look to augment through acquisition? How much of the talent and engineers that you've been hiring would you estimate are more responsible for industrialization and commercialization of your existing products versus responsible for new technology and product development?
Austin Russell (CEO)
Yep, yep. I think we'll probably have more developments to speak to next quarter when it comes to all of those things. I think you asked a very good question on that. The answer is yes, there are other aspects that are not maybe as obvious when it comes to the full stack solution in terms of things that we may decide we may not want to specifically do every part of it in-house. I mean, part of what we've done, for example, for the strategy and working with folks like Zenseact is that they are actually building a core module when it comes to the planning controls, actuation, everything associated with that part of the full stack solution and working with folks like that that can spec out the designs of also certain hardware components as well that go along with the holistic solution.
We are continuing to onboard a significant number and folks with engineering talent, as you noted, not just from a hardware standpoint, but also significantly from a software standpoint as well. That is really driving this solution. Yeah, we are going to be making our own set for certain aspects of it of make versus buy decisions, so to say, when it comes to this. The important part is you start with the actual foundation that can enable all of these guys. Again, part of the whole point of this and kind of as it relates to earlier question is that we are doing this to help enable automakers that do not have a path forward, that do not have a solution unless they can actually source something more holistically. We are really the only ones that can actually do that at this point.
That's the focus to make sure that they can get enabled as well and not get left behind in the autonomy race.
Eileen Smith (Analyst)
Great. That's very helpful. Thanks for taking the questions.
Trey Campbell (VP of Investor Relations)
Our next question is from Etsy McHaley with Citi.
Etsy McHaley (Analyst)
Great. Thanks. Good afternoon. I just had four questions on the Airbus agreement. First, can you talk about the number of LiDARs per aircraft that you expect? Second, maybe talk about the competitive set and whether your architecture at 1550 maybe is more suitable for aviation applications. Is there any software component with that? Should we expect perhaps more R&D to support these types of programs?
Austin Russell (CEO)
Yeah. A few things there that are packed into it. The first one, when it comes down to it for a number of LiDARs, it really depends on the actual vehicle and everything. Is it a helicopter where you're trying to be able to enable safe landing? Is it a VTOL where you're trying to be able to get 360 surroundings for urban air mobility? Is it a fixed-wing aircraft? You can see scenarios anywhere from one to four sensor configurations for each of those different modes of air transport, depending on forward-facing versus 360. When it comes down to it, I think from a technology standpoint, the answer is yes, this is well-suited to things that require high-performance systems. There are going to be a lot of different adjacent market applications that can benefit from lower-performance LiDAR systems and other things that are there.
I mean, part of the whole point of what we've done is we've built to this incredibly stringent specification of what's needed for automotive in all of these different key areas that you have to get simultaneously. I mean, the obvious ones that some of the people will talk about is range and resolution, but there's like 10 other things that you have to do, and you have to do them all very well simultaneously. That's where we've kind of built our claim to fame. That's why we've seen such adoption with the major OEMs and for series production programs. Those benefits do apply into other industries. Folks like aviation require the utmost level of performance and safety, and that's exactly why it's well-suited. 1550 is certainly a significant part of that and kind of going back to the core architecture.
The same principle applies to cars, of course, as well. Yes. Lastly, from a software standpoint in addressing that question, the answer is yes. Some of our software is portable into other industries. The full scope and set of software is not necessarily relevant. For example, at least not yet, there are not highways in the sky. It is really just kind of more general autonomy. The most important things are like takeoff and landing. You do need actually some level of perception on that too. You can actually have applicability of the perception part of Sentinel when it comes to that. I would say the software, more than anything, is focused on enabling OEMs, the majority of which do not actually otherwise have a solution. Kind of thinking a number of moves ahead in this overall game.
I mean, there's the guys that have set things up that need a LiDAR today with this, but then there's the guys that don't actually have a plan, and that's what we're trying to optimize for.
Etsy McHaley (Analyst)
Perfect. That is very helpful. Just as a follow-up, going back to Sentinel, and you might have actually covered this, are proactive safety and highway autonomy kind of two separate offerings? I mean, can an OEM just go with one? Maybe talk about the progress on both and maybe even the cost range of how you see proactive versus highway autonomy.
Austin Russell (CEO)
Yeah, yeah. There are two different offerings that are had there. When it comes to the proactive safety capability, this is the kind of capability that we can see that can be in what automakers are asking from us, that they'd want to ultimately have a vision of standardizing it across the vehicles they make, of enabling a completely different level and capability from a safety standard perspective such that we can go from starting to try and mitigating accidents and how they happen to actually just be preventing them in the first place. This is a capability that we can offer at very low cost as well to be able to make a standardization even more capable.
At the same time, we do not want to give up on the margin for highway autonomy capability of why we have, for example, these dynamic pricing models and other things that are set up to enable those kinds of things and effectively as upgrade options to the consumer. That is really the vision in terms of what we put forth. What we think proactive safety is going to be the thing when talking about by 2030 or even 2040 of seeing this ultimately be a requirement for vehicles and actually changing when we did the modeling, can change the safety factor of the vehicle. People fight for single-digit % changes in safety, but this can be up to 7X in terms of those kinds of capabilities. That is why we are really focused on it.
It's a really overlooked area of the overall autonomy landscape, and it's something that really nobody has been doing or paying attention to. It's just the legacy ADAS suppliers that do camera radar stuff, but that's where we have to take it to the next level. That's also an important aspect of it. The same hardware that enables proactive safety is the same stuff that enables highway autonomy. You can do over-the-air upgrades, even after the fact, after you buy the car, to have those kinds of capabilities. You already see folks like obviously different set of assisted driving capabilities, but you see the folks like the Teslas of this world that are already starting to do certain things like that, which is smart. I'll let Tom comment on some of the economics and how we're seeing that in terms of the bigger picture.
Tom Fennimore (CFO)
Sure. What we have said historically, when you actually look at the content per vehicle, to borrow a word from the auto supply landscape for highway autonomy, and this is both the hardware and software, we think it is going to be on the order of magnitude of about $2,500 per vehicle for the passenger vehicle space. For proactive safety, probably somewhere on the order of magnitude of about $1,000 per vehicle. From that perspective, that is how we see the pricing opportunity between the hardware and software. Clearly, as you move into the commercial truck as well as into the robotaxi space, there you are talking about multiple sensors per vehicle. On the passenger vehicle side, initially, we are seeing one sensor per vehicle.
Etsy McHaley (Analyst)
That's all very helpful. Thank you.
Austin Russell (CEO)
Yeah. Still leaves some good room for profit for the OEM too.
Etsy McHaley (Analyst)
Absolutely. Thank you.
Trey Campbell (VP of Investor Relations)
Our next question is from Richard Shannon with Craig-Hallum.
Richard Shannon (Analyst)
Sorry, I'm going to take off mute. Thanks for taking my questions, guys. I want to follow up on one, Austin. I'm not sure if I understood your response on the Fabrinet and Celestica dynamics here, whether they're doing exactly the same things or they're passing one off to the other or subset. If you could just describe that more specifically, I just want to make sure I understand that.
Austin Russell (CEO)
Yeah, absolutely. We'll dive into that next layer of detail. FabriNet, they're basically doing the transceiver assembly. Basically, some of the core optical components that go into it, particular focus on the receiver. They basically take the ASIC, the chip that we make, combine that with our Indium Gallium Arsenide photodiode, package that in an automotive-grade and certified process and capacity. That is shipped off to Celestica in Mexico, where that is integrated as part of the overall final assembly of the device and then ultimately shipped off to the end OEM customer. It is all part of the value stream that kind of fits into play. There is ultimately more than Celestica and FabriNet, but those are kind of the two central players, with Celestica being the company that actually does the final assembly.
We worked with them to be able to set up a test process, qualification, validation procedures for the actual LiDAR as it comes off the line. That is part of what you saw in the video there too, with some of the different targets being set up, calibration modes, and all those other things to be able to do so in an automated capacity. Does that make sense or kind of what you're looking for?
Richard Shannon (Analyst)
It does. I got a little bit late, so I missed the video early on, so it's probably what I was missing there. Thanks for that. My second question was regarding the comments about increasing the order book as you get into the next call. Is this specifically related to your two most recent deals, SAIC and Pony, and not sure what that adds to it? That takes a little bit of time to understand it. Is this also maybe some deals that might be announced between now and the next call, or even customers and partnerships that have been announced even before those two that have just been announced this year?
Tom Fennimore (CFO)
Yes. Specifically, what we are going to be planning to do at our next earnings call is to update the guidance not only on the forward-looking order book that you just mentioned, but also the number of major commercial wins that we expect for the year. The latter drives the former. We have had, as we mentioned earlier during the prepared remarks, a better pace of winning than we were expecting. Some of those wins have just happened recently. We are going to develop a sit-down and look at what we expect to happen between now and the rest of the year, not only in terms of how many additional wins we expect, but what that translates into with regards to the order book growth, and we will provide that updated guidance at our next quarterly call.
I think it encompasses a lot of what you just referenced.
Richard Shannon (Analyst)
Okay. Thanks for those specifics. Maybe one last question for me, Austin. These kind of big picture long-term, kind of talked about two or three different markets here, passenger cars, trucking, and then robotaxis. Kind of made a comment earlier to someone's question about the dynamics within robotaxis, but just kind of broadly speaking, in the last quarter since your last update, I guess about two months ago, what dynamics are you seeing here in terms of either acceleration or slowdown in the passenger car and trucking space, particularly those things that are outside of your control, outside of the perception stack? Are you seeing them pulled forward, pushed out? And if so, can you comment on those drivers?
Austin Russell (CEO)
Yep, yep. When it comes down to it, I think this is where each OEM, of course, has their own program timeline. Generally, there is a lot of time in terms of the lead-up to the actual start of production with each of these guys. I do not think we have seen any kind of monumental wave or shift there. When it comes to a couple of months, it absolutely stands by the plans. What we are seeing is the OEMs becoming even more and more invested into seeing this through and potentially actually expanding it to more models of vehicles than even they were initially thinking, beyond just some of the immediate top-of-the-line luxury vehicles. That is kind of where we are in active review with all of these guys. When it comes down to it, I think still bullish on autonomous trucking as well.
I think that's where the highway autonomy capability and having that constrained use case is really important. Of course, various players are at different stages, and I'd say the overall autonomous trucking space is actually a little bit behind the pass car space when it comes to just overall readiness to really get into production. That is going to be a bit of a different timeline there. I think over the long term, that's bullish. Over a little bit of a longer time horizon as well, like I said, I just want to make sure that we're realistic on it so that it's not a surprise. I'm talking just at the industry level, not just as it relates to us a few years from now when our robotaxi overlords are not driving around everywhere, taking everybody between every city.
is going to take time for this to proliferate. Again, it is one of those incredibly valuable spaces that does make a lot of sense. When it comes to software adoption and everything, that is only accelerated for us. Ever since we announced Sentinel, we have seen a huge amount of interest. As was mentioned, not just from both our customers, but also, again, engaging folks that are not our customers that can now become our customers because we have this holistic offering. That is where we are continuing to do that, even before the full software suite is ready.
Richard Shannon (Analyst)
Okay. Appreciate those thoughts. That's all from me, Tom and Austin. Thanks.
Trey Campbell (VP of Investor Relations)
Our last caller is David Kelley from Jefferies.
David Kelley (Analyst)
Hey, good afternoon, guys. Thanks for squeezing me in here. Just a couple from my end, and maybe starting with your recent announcements, SAIC, Pony AI. Just hoping to get your thoughts on the China autonomous opportunity, maybe even high level as a region. I guess from our vantage point, it feels like the market is perhaps more focused on streamlining autonomous rollout. Curious as to how you think about adoption timelines in China versus the U.S. and Europe. If the regional opportunity there and your strategy there has changed at all in the last few months, that'd be great.
Austin Russell (CEO)
Yeah. Our strategy has definitely gotten more aggressive over the past few months. I mean, we knew that we wanted to be able to launch big and bold, and that was really to kick off with SAIC in terms of what we were able to do and pull off there. I think working with some of the key leading players in China is going to be key. I think at the same time, what's tough is that just as with a lot of opportunity, there's a lot of noise. I think there's actually a surprising amount of noise, even within China. We'll see how the rest of that landscape plays out over the next couple of years there. I think people are moving very quickly, which is great. This stuff takes time for development, though. There really are no shortcuts.
I think the important part is taking the high road and not trying to cut corners when it comes to performance, when it comes to safety, when it comes to all of these things. That is really what a lot of the top players are doing. That is the whole point of why they have tapped us to work with them to solve exactly that, just like in Europe and the U.S. here. That is continuing. We are building out the Shanghai office, and that is something that is really just starting here. All this has kind of come together in the past few months. We are having all this play out in real time, but this is as good of a kickoff as we could hope for for our operations in China.
David Kelley (Analyst)
Okay. Got it. That's super helpful. Thank you. Maybe just as a last one here, Austin, you mentioned the recent employee additions. I think you might have mentioned 100-plus or so, a number of roles there. Just hoping you could maybe frame that for us, how that's tracking versus your prior expectations. If we have some visibility to the order book ramping here, could we expect some more aggressive uptake here in the future?
Austin Russell (CEO)
Yeah. We are absolutely aggressively investing into the overall team, into these programs. Of course, each additional program you take on provides huge opportunity, huge growth, huge everything. It does take kind of incremental resources, of course, that you invest into it to be able to see that through. When it comes down to it with all of our team, I think if you ask anyone within Luminar, you'll probably get an answer of it's kind of a miracle how we've pulled this off so efficiently in terms of going through the execution path. This is where everyone's been cranking day in, day out with a relentless approach and this maniacal focus at delivery and execution and all these different milestones that we have to hit for our core product and the customer milestones associated with each of this. That's been good.
The 100 folks is plus or minus in terms of according to the plan. We remain on track with regards to the overall net spend over the course of the year. More than anything, and the team will always reiterate this, I'm always a huge fan. I really, I've been fortunate enough to learn this earlier on of just the quality of people and quality of leadership is just so much more important than the absolute quantity in terms of what you can do. Now, of course, you still need that to be able to drive. If you want to build an auto-grade product that actually meets all these specifications, even in a perfect world, it's still like $500,000,000 to $1,000,000,000 worth of investment in years to actually do this and execute.
If you want to actually have a shot of seeing it through, you need to have those right team members in place. It really makes all the difference with us. We did a recent highlight. We actually have a couple of the folks here in the room today with Alan as our Chief Legal Officer and Trey leading our investor relations. There is also a host of other new great hires that we have had that have incredible skill sets and levels that I am sure we will have more to talk about too later for next quarter.
David Kelley (Analyst)
All right. Great. That's really helpful. Thanks again.
Trey Campbell (VP of Investor Relations)
Okay. That was our last question from our analysts.
Austin Russell (CEO)
Great. Thanks, everyone. This has been a hopefully helpful overview of everything and kind of status update in terms of where things stand. I really could not be more excited in terms of where we are and what we have been able to do. I think the whole Luminar team would have been blown away if we had heard just a year ago what we would be able to pull off and accomplish. I think that a big thank you to the entire Luminar team in that respect of working day in, day out to be able to make all of this stuff happen. We are only just getting started. Thanks, everyone, for joining. We will see you next time.
Thanks, Matt. If you can close out the call.