Self-Driving Truck Startup Embark to Launch IPO in a $5.2 Billion SPAC Deal
【Summary】San Francisco-based autonomous truck startup Embark Trucks Inc. plans to launch an IPO this year in a merger with special purpose acquisition company (SPAC) Northern Genesis Acquisition Corp. II (Northern Genesis 2), becoming that latest startup to merge with a SPAC to secure funding from investors.
San Francisco-based autonomous truck startup Embark Trucks, Inc. plans to launch an IPO this year in a merger with special purpose acquisition company Northern Genesis Acquisition Corp. II (Northern Genesis 2), becoming that latest startup to merge with a SPAC to raise capital from investors.
The business combination is expected to be completed in the second half of 2021.
The transaction reflects an implied pro forma equity value of $5.16 billion and enterprise value of $4.55 billion, according to the press release. Upon closing, the combined company is expected to receive approximately $614 million of gross cash proceeds comprising approximately $414 million of cash held in the trust account of Northern Genesis 2, assuming a $200 million fully committed PIPE at $10 per share.
The PIPE is supported by top-tier investors including Sequoia Capital, Tiger Global Management, Canada Pension Plan Investment Board (CPP Investments), Knight-Swift Transportation, as well as the Northern Genesis management team and its associated institutional investors.
"We are committed to leveraging our deep owner-operator business building experience to assist Embark on its transition from a great private company to a great public company," said Ian Robertson, Director and CEO of Northern Genesis 2.
Embark also announced that former U.S. Secretary of Transportation Elaine L. Chao has been appointed to its Board of Directors. Secretary Chao's public and private sector experience will further strengthen Embark's position in industry.
Embark is developer of software for autonomous Class-8 trucks. The company was founded in San Francisco in 2016 by CEO Alex Rodrigues and CTO Brandon Moak and has been working on autonomous driving for the past five years.
Embark says it has operated America's longest running road-testing program for self-driving trucks for long-haul freight delivery, which has the potential to make shipping goods much more efficient and safer.
The trucking industry has grown to a $700 billion a year trucking market boosted by the rapid growth of e-commerce. The rising demand for goods transport has also led to an industry-wide shortage of drivers, which self-driving trucks can help address with its technology.
Embark partners with leading freight haulers to outfit their trucks for autonomous driving, which includes a camera and lidar perception system. Customers pay a per-mile subscription cost for "Embark's Driver" software to deploy and enable self-driving trucks within their fleets.
Embark's self-driving trucks have traveled over one million real world miles driven without incident. Embark said it was also the first company to successfully complete a cross-country trip with a self-driving truck. The company was the first to establish dedicated transfer hubs for interstate autonomous freight delivery.
"We have been solely focused on solving the problem of self-driving software for trucking since Embark's CTO, Brandon Moak, and I founded the company in 2016," said Alex Rodrigues, Co-Founder and CEO of Embark. "After many years of R&D on the world's most mature self-driving truck software stack, we plan to enable carrier operation of self-driving trucks in the U.S. sunbelt beginning in 2024. Following the transaction with Northern Genesis we expect to have a war chest that fully funds this commercialization plan, and then some."
Many industry analysts predict that self-driving trucks carrying freight will be deployed on public roads long before self-driving vehicles designed to carry passengers.
From an engineering standpoint, developing an autonomous truck for long stretches of highway driving is much less challenging compared to autonomous passenger vehicles or robotaxis designed to safely navigate on city streets packed with other vehicles, pedestrians and bicyclists.
Embark built a dual-redundant real-time computer guaranteeing the accuracy of each autonomous driving command. The trucks' software runs hundreds of self-tests every second to ensure everything is working as intended for safe operation.
In March, Embark unveiled a new universal autonomous driving hardware and software stack called the "Embark Universal Interface'' (EUI) that can be integrated into trucks from multiple manufacturers, including Freightliner, Peterbilt, International and Volvo Trucks to make them capable of self-driving. The universal interface makes it easier for Embark to integrate its autonomous driving technology.
Embark is currently working with shipping customers Anheuser-Busch InBev, HP IncWerner Enterprises, Mesilla Valley Transportation, and Bison Transport, to help prepare their fleets to integrate self-driving technology and scale with Embark's technology.
Embark is one of several high profile startups working to outfit long-haul trucks for autonomous driving.
Autonomous driving startup Aurora recently announced a partnership with Volvo to jointly build autonomous trucks. Alphabet's self-driving division Waymo, which spun out of Google's self-driving car project, is also outfitting trucks for long-haul freight delivery as part of its Waymo Via logistics business.
In Oct 2020, Waymo announced a global partnership with Daimler Trucks in which Waymo will integrate its autonomous driving stack it calls "Waymo Driver" into Class 8 trucks from Freightliner. Waymo is working directly with Freightliner to integrate its self-driving technology into the Class-8 trucks during production.
Another company working on autonomous freight delivery is TuSimple.
Embark's business combination with Northern Genesis 2 is subject to customary closing conditions, including a review from the U.S. Securities and Exchange Commission and regulatory approvals to publicly list the securities of the combined company.
Originally hailing from New Jersey, Eric is a automotive & technology reporter covering the high-tech industry here in Silicon Valley. He has over 15 years of automotive experience and a bachelors degree in computer science. These skills, combined with technical writing and news reporting, allows him to fully understand and identify new and innovative technologies in the auto industry and beyond. He has worked at Uber on self-driving cars and as a technical writer, helping people to understand and work with technology.
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