2026.09.24 | GP | Trucking | Class 8 Trucks: PACCAR Dealer

the Market Awaits EPA Rule Amendments

Associated:

RUSHB

DAN

ALSN

CMI

8TRA:GR

VOLVB:SS

DTG:GR

PCAR

Viewpoint:

Customer

Moderator: Matthew Brooklier (MB)

| Sep 23, 2026 | 29 Min Read

Kyle Treadway (KT), Dealer Principal - Kenworth Sales Company

SU MMARY

Overview

The discussion focuses on the trucking industry, particularly the demand for new Class 8 trucks and the impact of upcoming EPA emissions regulations. The expert, representing a major truck dealership, provides insights into the current market dynamics, including demand trends, regulatory impacts, and the competitive landscape. The conversation also touches on the challenges faced by the industry, such as driver shortages and fluctuating fuel prices.

Key Insights

The expert highlights a significant pause in the market due to pending EPA emissions regulations, which are expected to be finalized soon. This uncertainty has led to a decrease in new truck orders. There is a strong preference among customers for the option to purchase older model trucks, even with penalties, due to concerns over the reliability and cost of new compliant models. The expert notes that while freight fundamentals are improving, the market is in a holding pattern awaiting regulatory clarity. Driver shortages continue to be a significant issue, impacting the ability of fleets to expand and meet demand.

Competitive Landscape

Company/Product

Positioning

Key Points

PACCAR

Premium truck brand

Offers choice between compliant and non-compliant engines; betting on customer preference for choice.

Daimler Trucks

Compliance-focused

Plans to sell only compliant engines, risking market share due to higher costs and potential reliability issues.

Freightliner

Cost-absorbing strategy

Subsidizing penalties to maintain market share, potentially impacting margins.

Volvo & International

Undeclared strategy

Awaiting market trends before deciding on compliance strategy.

Quantitative Insights

Metric

Insight

Order Intake

Decreased by 50% from August to September due to regulatory uncertainty.

Used Truck Values

Remained flat, with minor increases expected seasonally.

Price Increase

New compliant trucks expected to cost $8,000 to $12,000 more, with additional penalties for non- compliance.

Clinical Data

Not applicable to this sector.

The discussion provides a comprehensive view of the trucking industry's current challenges and strategic responses to regulatory changes, highlighting the complex interplay between market demand, regulatory compliance, and competitive positioning.

MB: Hello, I'm Matt Brooklier. I work on the industrials team here at Guidepoint. I want to introduce our advisor for this afternoon. Kyle Treadway is the president of Kenworth Sales Company, a dealership with 39 locations in 10 states. If you have any questions for our advisor, you can email us at ask@guidepoint.com. Again, that's ask@guidepoint.com. Just a reminder, if we do receive any questions, your questions will be asked anonymously. Before we get into our conversation today, I'm going to pass it quickly over to Kyle, and he's just going to give us a little bit of background. Kyle.

KT: Good afternoon, everybody. Good to be with you. Yes, I am a third generation Kenworth dealer based in Utah. We represent Kenworth, Isuzu, Autocar. We also carry Fontaine fifth-wheel trailers. Our average annual revenues are around $650 million, and the segments that we serve are across the board. We do mining, agriculture, long haul, last mile, pretty much everything that there is, we cover it.

MB: Excellent. Well, thanks again for joining us and doing the call. So I wanted to start off first and foremost on the demand side and maybe you could talk about how demand trended for new Class 8 equipment in September and then maybe benchmark that relative to where it was in August.

KT: Sure, there's some unusual dynamics going on, of course, in terms of the clarity that we finally received from the EPA on requirements for January 2027, and that directly impacted the order intake that we saw in August and in September. We saw pent-up demand in August, a little bit of an uptick, and then what that precipitated was that the build out of the year essentially filled up for most of the line makes, so you saw a drop off in orders in September.

MB: September relative to August for your dealership network was weaker. On a sequential basis, is it fair to say the market is kind of paused and we are still waiting, you know, for more clarity on the amendment for the EPA emissions? Is that a fair statement?

KT: Yes, because as it stands right now, it is proposed rulemaking from the EPA. They are taking comments. Comment period is closed. We are anticipating they will finalize the rules sometime in December.

MB: You think we are going to have to wait until December before we hear the final ruling on if you can sell 26 equipment in 27?

KT: Right. The proposal is that we can continue to sell non-compliant engines in 2027. However, they will incur a

penalty and over time that penalty will increase such that eventually they will be phased out.

MB: And the consensus would be if that is allowed and you are able to continue to sell 26 trucks during 27, is your sense that customers are going to prefer this because even with the penalty, it is going to be under the potential sticker price of a 27 truck and also you are avoiding potential reliability issues as well?

KT: Exactly, yes, both cost and reliability because the freight market right now is pretty precarious. We are seeing a lot of carriers exit the industry, so demand is down. Any demand that you are seeing on our end is more replacement, not growth.

MB: Okay. If we look at from a year-to-date perspective for your demand and order activity through your dealership network, I'm assuming that's up and probably similar to the industry orders that we've seen, which had a nice uptick. But you think the majority of that is a reflection of replacement versus the fundamentals contributing to potentially some growth in terms of fleets, or maybe talk a little bit more about that.

KT: Sure. Yeah, there's capacity issues, the number of trucks that are available to carry the loads out on the road, and then there's the volume of freight that shippers are trying to get from point A to point B, and we seem to have finally hit the parity point, the inflection point where there are more loads than there are trucks to carry them, so you're starting to see freight rates climbing a little bit. That directly impacts carrier profitability, and then carrier profitability directly impacts their willingness to turn their equipment, to buy new equipment, replace their old equipment.

MB: Okay. Can you talk about your... You talked about some of the verticals in the industries that you sell into, but can you talk to what your customer base looks like with respect to maybe size or maybe expand on the types of fleets that you're selling into? Are you selling into the for-hire market? Are you selling into private fleets? What does the mix look like roughly at your dealership?

KT: Sure. PACCAR product, we consider ourselves a premium product, so we do charge more than the competition, than a Freightliner, a Volvo, or a Mack, or a Navistar. So we feel comfortable with about a $10,000 premium per truck. The majority of our customers are not large fleets, the ones that have thousands and thousands of units. They typically, the owner of the truck is not the driver of the truck, so they're all about the crunching the numbers on the spreadsheet, how does it pencil out, whereas our customers are mid-sized fleets that may have 300 trucks or even down to 20 trucks and they're focused on driver turnover and driver retention so they want a little bit nicer truck to keep and retain those drivers.

MB: Okay. And are there particular end markets that are feeling healthier relative to others? I don't know if you look at, like, is the over-the-road market stronger than the vocational market? Maybe if you could provide a little bit more color there.

KT: Yeah. I mean they've all got their own cycles that they're going through. Right now the healthiest are mining, gold mining, silver mining because everybody can tell what's going on with the price of precious metals. We also see a fairly healthy commercial construction business, not necessarily single family homes but multi-family homes and commercial projects and public works. Those two areas have weathered the last couple of years better than most. The weakest had been the long haul over the road and that's where we saw, as I mentioned, a lot of carriers exiting the industry, a lot of capacity coming off the roads. So we weren't selling a lot of that. And then the last mile delivery is fairly healthy right now as well. Yet another area that tends to weather the ups and downs better is refuse hauling and then seasonal we see agriculture; right now it's fairly robust but that will drop off here in the next 60 days.

MB: What kind of equipment are you selling into the last mile segment?

KT: We also have a line of the Isuzu trucks and some medium-duty trucks at Kenworth, and these are typically vehicles that don't require a commercial driver's license so that they have a larger pool to draw from for new drivers.

MB: Okay, and that particular segment has been steady or that's been stronger?

KT: It's been steady. It hasn't seen the same highs and lows. It's not as volatile as the classic truck.

MB: Okay, got it. And then is there any way to quantify the level of deceleration in terms of demand from August into September? Because if I look at the industry numbers, like the ACT Class 8 net orders, you saw a step down from July into August of... what I'm just going to round these numbers... like 22,000 units in terms of net orders to 17,000. In August, I'm trying to get my arms around the potential magnitude of decrease from August into September. If you have any numbers, that would be helpful.

KT: And you're just looking for order intake, not actual sales, correct?

MB: Yeah, I mean, if you have whatever number you think is the best representation in terms of the demand side of things, the activity that your dealership network saw during September where you drew your conclusion that we saw further deterioration, I would gladly take that number.

KT: Sure. Actual sales was flat from August to September, but the order intake, because of all the machinations that we described earlier in terms of what's going on with clarity on the emissions requirements, fuel economy standards, and replacement cycles as well as carriers exiting the industry, order intake dropped probably by half from August to September.

MB: So you saw a 50% decrease from August to September in terms of orders?

KT: Yes.

MB: So what's your sense in terms of once we get this rule... let's say we get it in December... carriers are able to purchase 26 equipment in 27. Clearly there's a penalty, but it's better reliability and maybe it's a couple thousand dollars less than the MSRP on a 27 truck. What's your sense? Do you think we see an order reacceleration? Do you think the market's on pause until we get this final clarity from the EPA in terms of this amendment?

KT: Yeah, I think both that as well as the 6 months in there'll be some experience, albeit anecdotal. There won't be as much data, but the carrier community will have a little more experience in how the new technology equipment is performing. Is it delivering the advanced fuel economy that it promises?

MB: Okay. So it sounds like we're in a bit of a period of... I guess... a pause. Even though freight fundamentals are continuing to improve, carriers have more money to at least increase the rate of replacement, right? And we're playing catch up too, with the industry having been in a bit of a downturn over the past couple years. The average fleet age is ticked up. But right now, the whole focus right now is on this EPA rule clarity.

KT: Correct. And its impact on costs, fuel economy, operational costs, etc. And then also another factor that folds into that as well is going to be the equity that is in used equipment. So another thing that can either spur or deter new truck sales is, "What's my old truck worth?" MB: Mm-hmm. And maybe expand on that a little bit. Where do used values currently sit and have we seen an improvement in terms of used truck values at this point? Maybe in the more recent past, if you will.

KT: Okay. They've been relatively flat. Any increases are very minor, 1% at most. Again, the seasonal thing that we see, the biggest used truck market is in the springtime and that's when we expect to see an uptick in those values. We

didn't, it was fairly flat. But the good news is it's not declining. As these carriers, the ones I referred to earlier, are exiting the freight markets, they're parking a lot of their equipment and we don't want to flood the market with all of their equipment and that would depress values. So they're hanging on to those, parking them against the fence. Some of them are just waiting for the recovery, some are waiting to get in. Others are wholesaling them out of the country, which we are seeing some increases in some export station of used equipment, but net effect values are flat.

MB: So can you make the argument that used truck values, if they are used as currency for trade-ins, right, for new equipment in certain instances, if we're sitting here waiting for this rule on 26 trucks? Is that having an impact on the used market as well, or is that not having any influence in terms of the value of those trucks? Like if 26 trucks, if we see this reacceleration in terms of... Orders, if we get, you know, the EPA final rule on this amendment, is the used market going to follow or are they not correlated?

KT: Prior to the announcement of this proposed rulemaking in an industry-wide consensus, we believe that used trucks would see an increase in value next year because there's lots of the market to buy it. With this announcement, that has taken some wind out of those sails. So we don't see a robust increase in used values next year.

MB: Okay, so again, if we're able to, if we extend by 12 months the timeframe in which you're able to, you know, purchase 26 equipment, you think that would have more of a negative than positive impact on unused equipment?

KT: I do, yes. I think it dampens it.

MB: No, I mean that makes sense.

KT: And then you mentioned too earlier that the average age of the equipment out there has increased. So yes, there's equity in those trucks, but they're a year older and what are people willing to pay for them? I don't think it's the same thing 12 months later.

MB: Right. Yeah, no, I mean, previous to this amendment, used trucks arguably had more value in them, right, because we didn't, the market for the most part was hesitant to purchase a much more expensive unit with unproven reliability. But to your point, now that you know this tranche of used equipment is going to be 12 months older and you can still purchase the 26-year model, likely to the end of this year. Is this year completely sold out? Does PACCAR have incremental slots? If I did want to order a truck right now, can I get a slot in fourth quarter or third quarter, or are we sold out at this point?

KT: We're not 100% sold out, but we are within weeks of being sold out. Last report I saw said there's about 1,100 slots remaining. That's not a lot.

MB: 1,100 PACCAR slots for the rest of this year.

KT: And we understand that our competitors are sold out, Freightliner, Navistar, they've all, I mean in terms of how we cross paths with them out in the marketplace, we understand they are sold.

MB: Right, OK. I'm curious, and potentially this has changed, but when this EPA amendment rule came out, PACCAR management indicated that they would continue to sell as many 26 trucks with the penalty. And on the other end of it, Daimler Trucks said they were going to sell 27 equipment into the market. That's a pretty... I just thought that was a very interesting dynamic, and the fact that one major company is taking one route and then Daimler indicating that they would be selling exclusively 27 equipment. Has Daimler, have you heard if management's walked that back at all, that comment? Was that misinterpreted?

KT: No, they have not. And I'm just speculating here, but I think there's a couple of things at play. One is that they are

primarily... final assembly for them is outside of the US. And so for them to continue to carry both compliant and non- compliant trucks adds cost factor. And so that's one way that they're trying to mitigate some of the tariff impacts that they're seeing. And the other thing, of course, is their investment, their R&D dollars that they placed into becoming compliant. They don't want to... they want to start capitalizing and getting return on that sooner than later.

MB: But you can't capitalize and get a return on that if you're selling less.

KT: selling any trucks.

MB: Yeah, relatively less trucks. What, like, let's say they stick to their guns. I would imagine they're going to lose a good amount of market share potentially, or is that not the case?

KT: Well, so far they have been subsidizing the tariff impact so that they would not lose market share. They've been basically propping it up with dollars. Now, next year that's going to be even tougher because they'll have the NCP, the non-compliant penalties, that again have not been finalized yet, but it's going to be very, very difficult to maintain the strong market share that they have and those penalties.

MB: Okay. So, I guess the point being is what do you think their mix of sales is going to look like? Are they going to sell 27 trucks, 26 trucks? It feels to me that, at a cost disadvantage, there is... there is the risk that Daimler Truck could lose a good amount of market share if their strategy is to try to push these trucks earlier than the market wants.

KT: In my 40-year career, I have never seen Daimler walk back anything like this. Of course, we are in unprecedented times. Just the fact that we're going through all of these jockeying for market position this late in the year is unique as well. I don't think they're going to change their tack. I think the strategy is to go all in on compliant engines.

MB: Okay. I guess the market's going to dictate if that's a good strategy or not. What does the customer want? What's your sense? They want a 27 compliant truck that's more expensive and more unreliable or they want to continue to buy the equipment that they know and is arguably less expensive.

KT: That is the gamble that PACCAR is making right now is that the customer wants choice. They can dive in with these compliant engines and test the promises of better fuel economy and see if it affects their bottom line if it delivers what they say it does. But our experience is from the last few waves of these rollouts from EPA and compliance and the technologies involved that it's rough. The first trucks that hit the road out there in the first 6 to 9 months have production issues and problems and that there are recalls and there are downtime issues, and eventually they deliver what they say. The first ones out, it's the bleeding edge, and they've learned in gunshot now.

MB: I mean, so PACCAR could also, you can buy a newly compliant.

KT: Yes.

MB: Truck from PACCAR, a 27 model year truck in 27 if that's your desire.

KT: Yes. And what will happen is that the large fleets don't buy. A fraction of their typical purchase will be the compliant ones and they'll start gathering their data and validating some of these performance issues and then if things are successful then they'll jump in more.

MB: Okay, so you think it's going to be like toe in the water, some KT: Yeah.

MB: of these larger fleets, like you have to, right? Because you have to bridge the gap. You can't buy 26 equipment

forever. At some point, likely the beginning of 28, this is going to be the only version of truck that's available. Let's test it out. Maybe it's 10% of our total purchases or maybe a quarter. If you're a big fleet with a lot of money and I guess you get a leg up to some degree by testing it and getting comfortable with it and then you go all in and all of your orders for 28 are going to be 27 model year EPA compliant emission trucks.

KT: Correct, yes.

MB: What do you think is the biggest risk from an operational perspective with the newly compliant truck? Like where do you think the failures could be in terms of the technology?

KT: Well, trucks are basically computers on wheels, so there could be some software issues that will derate the engines or sideline the engines and they may have to debug them, so I think that's the largest risk.

MB: Okay, so again, we're in a holding pattern, not to use a bad pun, but we're in a holding pattern until we get the final rule through this proposed rulemaking process on the emissions side of things.

KT: The industry as a whole is banking, they're wagering heavily that the final rule will look very much like the proposal.

MB: Diesel fuel hitting all-time highs this year, can you talk about, and maybe given your experience, talk about how, and I know this is a complicated year with the emissions changeover, but diesel fuel prices, where they're at, if this was a normal year, how much would that be in terms of how much dampening effect would higher diesel fuel prices have here on customers, overall customer demand?

KT: We saw a direct correlation when we first took on the conflict in the Gulf and the spike in fuel prices. We were in the first quarter of this year starting to see a gradual uptick in order intake and truck sales, and the very week that that conflict erupted we saw sales just drop off a cliff. Now they're gradually built back over the course of the second quarter, and here in the third quarter, as you mentioned, we had a fairly good August with the intake of orders, but then the prices have spiked again, and I don't know that it's directly correlated to the drop-off that we saw in September. I think it has more to do with the year has filled up and built out, but it has to have added to the slowdown.

MB: Yeah, I'm kind.

KT: Well, let me add to that too, that in terms of the price of diesel, that it disproportionately impacts smaller fleets and the small fleets more so than the large fleets because of the sophistication of their surcharges that they pass through in the contracts to the shippers. So when we see fuel prices spike, we see the smaller fleets and the owner operators are the ones who fall behind on their payments.

MB: Okay, so I mean when we, before the EPA emissions amendment rule impact on the market when we did see fuel spike earlier this year because I remember there was like a run-up in orders and then fuel... you know, was driven up and orders kind of decelerated. That was a contributing factor. Fuel does rise. It does have an impact in terms of clearly profitability for smaller and medium-sized fleets. And I guess it's more of a timing issue for larger fleets from a working capital perspective. But it is a headwind for the market. And arguably, maybe there has been some contribution, albeit it's down the list of what's driven this deceleration here from August to September, but it is influential on the market from a demand perspective for new equipment.

KT: Yep, yep.

MB: When do we think, and I think I know the answer to this, but when do we think we're going to get pricing for

these, you know, for the model 27-year trucks? Have any of the OEMs come out? I don't think they have, but has anyone come out and published, here's our Class 8 27, this is the price tag on it.

KT: Well, yes and no. We can quote you a truck for 2027. Can we give you a definitive price? Not so much because we have to put a caveat in there based upon what are the final rules going to be for noncompliance penalties, the NCPs, and what's going on with tariffs. So we can give you an ish kind of price.

MB: Okay, what do we think the ish price is for a model 27-year truck?

KT: It's going up anywhere from $8,000 to $12,000. Plus an NCP... excuse me, a '27 compliant won't have an NCP, but $8,000 to $12,000... and then on top of that, there's going to be a model year 3%.

MB: That's just the typical 3% increase in terms of price. And the penalty for a 26 truck sold in '27 is going to be, what, $6,500?

KT: It could start, yes, for class A, it could be around $6,500, $7,000, it could go up to $10,000.

MB: I guess what drives it up to $10,000?

KT: I believe it has to do with A, the milligrams that are being emitted in the exhaust stream because there's a matrix that shows what the penalty is relative to how far afield it is from the target. And then also... The model, I mean, who's going to pass it along? Some are subsidizing, like I mentioned earlier, that Freightliner is, whereas PACCAR is not. PACCAR is passing it through all the way to the customer.

MB: PACCAR is passing through that penalty all the way to the customer. And Freightliner is absorbing all of it?

KT: I don't know how much they are, but again, between the tariffs and the NCPs, they've got a really... it's going to hit their market share, so they're subsidizing them is what our guess is.

MB: Okay, so their margins are arguably going to take a hit even if they hold their market share level.

KT: Yeah, I think that's a certainty, yes. Yeah, no.

MB: And so that $6,500 up to $10,000, part of that's based on the amount of emissions over the new requirement. That's a function of what? Just the type of engine that's in the truck?

KT: The milligrams of NOx that's emitted in the particulate.

MB: Okay, so I guess this is probably too simplistic, but a larger engine is going to emit more emissions versus the new standard, or do I have that wrong?

KT: No, you have that right.

MB: Okay.

KT: I'm not an engineer, but the process in which they capture those particulates and the chemical reaction in the after treatment, what's involved.

MB: How are the other OEMs approaching this? Like we look at Volvo and we look at, you know, International is now owned by Traton. What's been their message into the market? You know, Daimler came out and communicated theirs. Do you know how Volvo or how International is approaching the new emissions?

KT: I don't. We're waiting for them to declare.

MB: Okay. What's your sense?

KT: Well, they're watching how the order intake is being received between Daimler and PACCAR, and then I think they'll wet finger in the wind and they'll follow which way the trend goes.

MB: Okay. I mean, I have to imagine the trend goes towards 26 versus 27 equipment, given what we talked to previously.

KT: Well, now Navistar has the same dilemma that Freightliner does in that most of their production is actually outside of the country, it's not domestic. So I'm sure they're leaning towards just producing compliant engines, but Traton has a different strategy than Daimler, so it'll be really interesting to see what direction they go.

MB: Okay. How do you think this potentially impacts Cummins? I know they were. I think the company previously stated that in some models they weren't going to have a compliant engine, maybe just share your thoughts there.

KT: Yeah, they, likewise, with PACCAR, did a flip-flop. They recognized that PACCAR will produce non-compliant engines, so they want to provide them, and so, likewise, Cummins is following that track, both tracks.

MB: So they're going to have a '26 and a '27. It just depends on the model. I mean, this is all very interesting, the dynamic. It seemed like we were, you know, locked in to making this change over to '27 equipment and we got a curveball thrown at us in the middle of July here. I mean, did anyone see this coming? Or it seemed like this was a surprise for the market.

KT: Well, the OEMs lobbied very heavily, and they were not unified in that lobbying. PACCAR, of course, pressed heavily for them to give us the option, let us have NCPs. So was it a surprise? No, I don't think so.

MB: Okay. Has there been any other change in the market from like a competitive dynamic and anything else happening in the Class 8 market specifically that you think is worth highlighting here that we haven't touched on at this point? We've covered a lot.

KT: Now you're referring to in terms of the competition, you know, the relative position of each OEM, correct?

MB: Yeah, competition or, you know, anything else out in the marketplace that you think is important that we haven't talked about at this point?

KT: Well, we haven't mentioned the driver shortage. And that, while it seems like a sleeper kind of an issue, it is having an impact, no question, in terms of the pool of drivers that are out there. So part of what's sidelining a lot of the equipment as well, besides the profitability, is the ability to seat a driver in the truck. There are fleets out there that would grow if the population of drivers was there, and it's not. So in some regards, that's helping the industry as a whole, because then there's more pressure on freight rates. But I am concerned that capacity constraints are going to put us back into the situation we were in during COVID, where there's inflation and there's cost increases and there's inability to meet timelines and timeframes. So I'm worried that we're repositioning ourselves for a repeat of that.

MB: Mm-hmm. Right. And a big part of this story here with driver shortages is the regulation, right, the enforcement of certain rules by the federal government. It seems like if you're an equipment seller, that's a negative. But if you're a truckload carrier, it's a positive because less supply in the market means price support and prices, specifically contract rates. I've had a, you know, tremendous tick up this year and it doesn't seem like that maybe it slows a little bit, but the carriers that I've spoken with seem relatively confident they're going to get incremental price next year and it all filters

back to the fact that we have the supply shortage because the demand side, freight demand, doesn't seem like it's particularly strong.

KT: No, no, and there's a corollary to this too that in terms of freight patterns could be impacted because if you are in a class 6 or 7 truck and you don't have to have a commercial driver's license that opens up the potential driver pool a little bit bigger that smaller truck lower capacity to haul and also they're doing shorter hauls instead of long across country hauls you're doing regional hauls so I could see an impact to freight patterns as a consequence.

MB: Yeah, that's a great point. If they're only cracking down on CDLs, you can potentially shift certain moves, right, to smaller equipment. Have you, has there been any movement in terms of customer demand for electric commercial vehicles or is that still kind of dead at this point?

KT: It's pretty much dead. The only buyers that we had even at its peak were the ones that had to buy. So those would have been counties, municipalities, or government contractors. That's who were purchasing the equipment.

MB: Okay. But it doesn't seem like customers are like willingly coming into your dealership network and asking for electric vehicles.

KT: No, no, there's still some isolated development going on with specific applications, again through government contractors and municipalities. They're quietly pursuing this model, but it is a fraction of what it was before.

MB: Okay. Are you involved in terms of autonomous trucks? What are your thoughts on that market?

KT: Well, we've been briefed on that over the course of the last 5 years, and we have some customers who have been testing and validating some units. But are we ourselves involved in repairs and maintenance? No, they're reserving that to the manufacturers, engineers, and they're keeping a very tight lid on that.

MB: Okay, so it seems like the dealers, for the most part, are probably, at least initially, not going to be involved in terms of the distribution of autonomous vehicles. Does that go directly to the customer from the OEM? Is that how the channel is going to work?

KT: I think initially, yes. I mean, once they work out the kinks and once they figure out what the liability allocations are, then yes, dealers will probably jump in.

MB: Yeah, no, it seems like it's starting, we're finally potentially going to start to see some of this autonomous... these autonomous vehicles. In commercial use, you had the Aurora announcement that they're going to have, I think, 25 to 50 units, Gatik, right, the private company that's doing kind of medium haul to shorter haul type movements, they have some vehicles in. In commercial use at this point, whether or not they're totally L4 driver out, I think that's another debate. But it seems like this year we got a little bit closer to these vehicles actually sharing the road with these vehicles, which to me seems a little bit scary, but I guess we'll hopefully if the safety is there, we have nothing to worry about.

KT: Yeah, I think you and I have talked in the past about the levels of automation. There's 5 levels and currently we're at level two and what you're describing is level three where there's still a driver in the vehicle but he is primarily there for backup.

MB: Right, a safety driver, if you will. Okay, great. Well, Kyle, thank you so much for the time. As always, a pleasure speaking with you and looking forward to our next conversation.

KT: Okay, thanks so much. Have a great day.

MB: All right. Yep, you too. Bye-bye.

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