In It For The Long Haul: Autonomous Trucking Startup Plus Goes Public Via SPAC
Autonomous trucking startup Plus (formerly known as Plus.ai) is a company I've begun to follow closely. While much of the hype around autonomous driving centers around the future of the consumer automotive sector, the technology holds vast implications for the massive commercial trucking industry, responsible for moving an estimated 70-plus percent of all U.S. freight. For that matter, truckers have been in even higher demand since the pandemic-induced surge of online shopping. This need outstrips the number of available drivers in coming years considerably. While many traditional, major tech players are involved in the autonomous vehicle category, since it is a developing technology, there is also significant opportunity for startups if they can pick the right niche and bring something truly differentiated to the table.
Plus demonstrated its inroads last month by announcing a significant deal with NVIDIA, whose DRIVE Orin SoC will power the upcoming generation of Plus's autonomous trucking platform, PlusDrive. Plus grabbed more headlines recently with the announcement it is going public via a SPAC (special purpose acquisition company) with Hennessey Capital Investment Corp. V.
In the story's coverage, though, I've been disappointed by how little I've seen written on what makes Plus unique. I thought I'd use the opportunity today to talk a little more about the deal and what Plus brings to the table, based on a recent discussion I had with the company's leadership. I think discussing these differentiators is especially relevant, as Plus's market debut comes on the heels of TuSimple's traditional IPO in April.
Hennessy Capital is a publicly-traded SPAC with proven experience and Plus represents the fifth startup it has helped go public. Once the deal closes, Plus will begin trading under the symbol PLAV on the NYSE. The deal promises to provide a $3.3 billion post-combination market valuation for Plus, along with approximately $500 million in cash (of which $345 million will stay in Hennessy Capital's trust account). These funds, Plus says, will enable it to begin mass production of its autonomous driving system for long-haul trucking. Plus's current shareholders will convert all of their ownership stakes to stakes in the joint company, giving them an estimated 80% ownership of the SPAC after closing.
What sets Plus apart?
Plus's David Liu shed much light on this question in a recent call. As he tells it, Plus's unique value is a result of three different factors. First, Liu cited Plus's singular focus on the estimated $4 trillion global trucking market. While robotaxis and other consumer autonomous vehicles face a long road towards broad commercialization, trucking is a surer, faster bet for those hoping to establish a profitable foothold in autonomous driving technology soon. And unlike others, according to Liu, Plus has focused on long-haul trucking since its early days as a company. While admittedly, it is a relatively new company, Plus has spent the last five years building up partnerships and an ecosystem around the trucking market. Others, slower on the draw, have not had as much time to cultivate this same edge.
The second factor Liu cited is Plus's bleeding edge automotive platform and its unique synthesis of software, hardware and big data. Plus has piloted fully autonomous, driver-out trucks since 2018, with its successful operation in Qingdao, China, the world's eighth-largest port. Meanwhile, others are just now rolling out their demos and pilots. This three-year lead is no doubt a result of Plus's early, singular focus on the sector. As others struggle to catch up on the technology side of things, Plus has been able to spend the last three years learning how to commercialize and mass produce its platform. This ties into Liu's third differentiator—Plus's "clear roadmap to commercialization."
There's a big jump from developing the basic technology for something such as autonomous driving and getting it to a place where it's ready to take the market by storm. As Liu tells it, it's all about big data and testing—a lot of it. Liu believes billions of miles of real-world testing are necessary to give humans the level of trust they need to feel comfortable sharing the road with these autonomous big rigs. It's essential that the technology not only matches the safety standards of human drivers but improves upon their performance. As Plus test drives the platform and gathers troves of data across these billions of miles, Liu says PlusDrive will only perform better and better.
Impressively, Plus is beginning to commercialize its technology this year, with the first batch of autonomous systems delivered to customers in the previous quarter in the U.S. And in China, the jointly developed trucks with FAW, the world’s largest truck manufacturer, will start mass production in the second half of 2021. Just to give a sense of the massive scale of FAW’s operations for those who may not be familiar with them – FAW makes over 300,000 heavy trucks a year. That is more than the total number of trucks made by all U.S. truck OEMs combined. This first batch of systems, hitting the market this year, will still require drivers to get the truck on and off the highway and fuel up, rest, etc. However, when they are on the highway, Liu says the truck runs on its own at the click of a button. Though all of these systems, for now, will be relegated to certain operating conditions on the highway, Liu says Plus expects to have the majority of all long-haul trucking routes and scenarios gamed out by 2024, with data-driven proof that these trucks are safer than those with a human driver.
One last differentiator that I would personally tack on is Plus’s commitment to environmental sustainability. I won’t go into detail, seeing as I covered this in-depth last month, but I encourage anyone interested to follow the link and read more.
SPAC mergers are great options for companies on the smaller side who wish to go public and gain access to the capital market. Plus is betting on this move to help further its commercialization efforts and scale-out the business effectively. If the company keeps up its current pace of innovation and commercialization, I believe it will remain several significant steps ahead of its competitors. The company's head start on the technology, the ecosystem and the company roadmap only stands to be solidified by the SPAC's influx of funding. I believe we're likely closer to seeing fully autonomous big rigs out on the highway than most people think.
Note: Moor Insights & Strategy writers and editors may have contributed to this article.
This article originally appeared on Forbes