Embark to Go Public, Merge With SPAC in $4.5 Billion Deal
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Self-driving truck technology company Embark Trucks Inc. has entered into a definitive business combination agreement with Northern Genesis Acquisition Corp. II, a special purpose acquisition company. Embark, which was founded in 2016, will become a publicly listed company with a post-merger enterprise value of $4.5 billion.
“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. Sun Belt beginning in 2024,” Alex Rodrigues, Embark co-founder and CEO, said in a release. “Following the transaction with Northern Genesis, we expect to have a war chest that fully funds this commercialization plan, and then some.”
Embark expects a wider rollout across the lower 48 states to occur in 2026.
Rodrigues
Under the agreement, Embark — which Rodrigues described as fundamentally an autonomous vehicle software-as-a-service company focused on trucking — is expected to receive $614 million in gross cash proceeds.
“Our respective teams share a conviction that success today demands alignment with the ongoing secular shifts toward sustainability and social responsibility,” Northern Genesis II CEO Ian Robertson said. “Embark’s commitment to autonomous trucking delivers that alignment through enhanced fuel efficiency, improved driver working conditions and safer roads for everyone.”
Northern Genesis Acquisition Corp. II is based in Kansas City, Mo.
The proposed business combination is expected to be completed in the second half of the year, subject to, among other things, the approval by Northern Genesis II’s stockholders, according to the companies.
Northern Genesis also was the SPAC sponsor in Lion Electric’s move to go public. Lion began trading May 7 on the New York Stock Exchange and Toronto Stock Exchange under the symbol LEV.
“Working with Lion cemented our belief in the opportunities arising from the ongoing transformation of mobility, including the Embark story,” Robertson said during a conference call the day of the announcement. “The trucking industry is intensely competitive, and the savings from operating a longhaul truck without a driver are even more significant than the total cost of ownership advantages of electric over diesel, which we saw with Lion.”
He noted labor costs would be reduced significantly, and the expected 43% reduction in an autonomous trucking carrier’s operating costs “should make competition almost impossible for conventionally driven trucking operations.”
Rodrigues said during the call its primary product is an advanced software stack it calls Embark Driver.
“We deliver this software as a subscription, partnering with leading carriers who pay a per-mile license fee and providing them with Embark’s Driver software as well as a suite of supporting services,” he said. “These include Guardian, Embark’s cloud-based dispatch and monitoring solution, which delivers 24/7 monitoring and remote assist capabilities.”
Embark is the latest self-driving truck startup to go public and is valued at about $5.2 billion in its SPAC deal. The CEO is 25 years old. https://t.co/wuo8h5FcxO — The Wall Street Journal (@WSJ) June 23, 2021
Embark Universal Interface is its standard sensor module and compute module designed to interface with most major steering and braking actuators, according to San Francisco-based Embark. This modular integration approach is designed to enable carriers to purchase an Embark Driver-compatible option from their preferred manufacturers.
Rodrigues said building direct relationships with carriers and offering modular integration across truck makers’ platforms is a proven approach in the trucking industry — one pioneered by engine manufacturer Cummins Inc., for instance.
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He said Embark’s software is able to simulate up to 1,200 different potential scenarios per second.
“Each of these 1,200 simulations explore up to 60 seconds into the future, and together they cover a wide variety of possibilities about how the actions of our truck would impact the predicted actions of other vehicles,” Rodrigues said. “By having a broad understanding of all the possibilities, the truck can make smart decisions about where exactly the best spot to be is at any given time.”
An earlier milestone for the company came in 2018, when it sent a self-driving truck on a test run from Los Angeles to Jacksonville, Fla., which the company hailed as the first coast-to-coast journey by an automated truck. Its technology controlled nearly all of the highway driving, with a driver behind the wheel and ready to take over if needed.
Meanwhile, Embark also announced it appointed former U.S. Secretary of Transportation Elaine Chao to its board.
Rodrigues said, “[Chao] will help Embark in its dialogue to establish the regulatory framework to further our AV policy leadership through the next stage of deployment.”
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