Arbe Robotics: will you buy the new autonomous car SPAC?

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Earlier this week, Arbe Robotics announced that it would merge with the Special Purpose Acquisition Company (SPAC). Industrial Tech Acquisitions (NASDAQ: ITAC) in a deal that valued Arbe at nearly $ 600 million. Arbe offers automakers high-resolution 4D radar imaging technologies that integrate the sensors with advanced driver assistance systems (ADAS).

Here is everything investors need to know about Arbe Robotics.

Why Arbe Robotics’ SPAC?

Source: Getty Images

Arbe was founded in 2015 by a group of semiconductor engineers and radar technology specialists. The company states that its long-range radar sensors, made with a proprietary chipset, provide higher resolution at a lower cost to automakers developing ADAS with varying degrees of autonomy.

Compared to current radar sensors on the market today, Arbe claims that its 4D imaging radar performs better in a wider range of weather conditions while being more affordable and energy efficient. Conventional radar systems can also be prone to false alarms due to a limited field of view. These systems are also not designed for the detection of stationary objects, while this is reliably possible with Arbe.

Note that this is different from lidar sensors, which use lasers to create depth maps of the environment. Many companies that drive autonomously use lidar, but Arbe points out that radar and camera systems are the two most common types of sensors currently in use.

The combination of radar and camera is the sensor strategy that Tesla (NASDAQ: TSLA) has chosen to implement it. CEO Elon Musk has long been a critic of lidar in developing autonomous cars (although Musk’s SpaceX uses lidar sensors in its kite pod). Arbe refers to a Musk quote from 2019 in which he argues that “lidar is doomed to fail”.

With no one successfully achieving full level 5 autonomy, the answer regarding the sensor suite required remains unclear and the debate will continue for many years.

Arbe Robotics’ business pipeline

Arbe currently has 26 partnerships with companies interested in integrating its technology, including a variety of automotive suppliers. The company has partnered with a leading Tier 1 automotive supplier based in Europe for an unnamed global automaker – an unmarked one Volvo The vehicle (OTC: VLVLY) is displayed, indicating that the Swedish car company is the customer.

The total addressable market (TAM) for automotive radar sensors is projected to grow from $ 4 billion in 2020 to $ 11 billion in 2025, representing an average annual growth rate (CAGR) of 21%. This would be the fastest growing segment of the broader automotive sensor market, according to Arbe.

Arbe’s current sales base is negligible, with sales of just $ 400,000 last year. Revenue is expected to grow significantly this year to $ 7.8 million based on expected sales of around 6,000 units. Long-term, the company hopes to have sales of over $ 300 million in 2025.

The SPAC details: Merging with ITAC

The merger with Industrial Tech Acquisitions will provide Arbe with gross proceeds of $ 177 million, consisting of $ 77 million in escrow at SPAC and $ 100 million in PIPE (private investment in public equity) funding.

The transaction will give Arbe an enterprise value of $ 573 million and SPAC’s public shareholders will eventually own approximately 11% of the combined company.

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