Embark to Go Public: $5.2B SPAC Deal for Autonomous Trucking

Embark Trucks to Go Public via SPAC Merger

Embark Trucks Inc., a five-year-old company specializing in self-driving truck technology, announced on Wednesday its plans to merge with Northern Genesis Acquisition Corp. II, a special purpose acquisition company. This deal values the combined entity at $5.2 billion.

A Unique Approach to Autonomous Trucking

Unlike some competitors, such as TuSimple, Embark doesn't focus on owning and operating its own fleet of autonomous trucks. Instead, the company provides its autonomous vehicle (AV) software as a service.

This subscription-based model allows carriers and fleets to access the technology for a per-mile fee. Embark currently partners with prominent companies including Mesilla Valley Transportation, Bison Transport, Anheuser-Busch InBev, and HP Inc.

Platform Agnostic Software Design

Embark’s system is designed to be compatible with trucks purchased directly from original equipment manufacturers (OEMs). This “platform agnostic” approach allows for flexibility across various components and manufacturers.

The company’s software boasts impressive simulation capabilities, processing up to 1,200 sixty-second scenarios each second. These simulations enable the software to predict the behavior of other vehicles on the road and adapt accordingly.

Future Goals and Remaining Challenges

According to an investor presentation, Embark aims to achieve “driver-out” operation – functioning without a safety driver – by 2023. Commercial-scale deployment across the American Sunbelt is projected for the following year.

However, the company acknowledges that further technical development is necessary. The software still requires refinement in handling situations like interactions with emergency vehicles and responding to mechanical issues, such as tire blowouts.

Financial Implications of the Merger

The completion of this transaction will provide Embark with approximately $615 million in gross cash proceeds. This includes $200 million in private investment in public equity (PIPE) funding.

Key investors in the PIPE funding round include CPP Investments, Knight-Swift Transportation, Mubadala Capital, Sequoia Capital, and Tiger Global Management.

Strategic Board Addition

Former Department of Transportation Secretary Elaine Chao is joining Embark’s board of directors. This addition is expected to be beneficial, given the current regulatory landscape where autonomous trucking is commercially authorized in only 24 states.

Company History and Funding

Embark was established in 2016 by Alex Rodrigues (CEO) and Brandon Moak (CTO). The founders initially collaborated on autonomous driving technology while pursuing engineering degrees at the University of Waterloo in Canada.

Following its launch through Y Combinator, the company secured a total of $117 million in funding. This includes a $15 million Series A round led by DCVC, a $30 million Series B round led by Sequoia Capital, and a $70 million Series C round led by Tiger Global Management.

Timeline and Competitive Landscape

The merger is expected to finalize during the second half of 2021. Embark is joining Plus, another AV trucking developer, in going public through a SPAC merger.

TuSimple, in contrast, chose a traditional initial public offering route in March of this year.