At a time when almost all electric vehicle (EV) and autonomous vehicle (AV) startups are choosing to go public by partnering with a special purpose vehicle (SPAC), a company working on the development of an autonomous truck is resisting , this trend. Earlier this week, TuSimple filed its S-1 registration statement with the SEC, an early step on the road to a traditional IPO.
Here’s what you need to know about TuSimple:
Why TuSimple is planning an IPO
TuSimple was founded in San Diego in 2015 based on the idea of creating a freight network of autonomous Class 8 tractor units that provide cost-effective service and utilize logistics software for greater efficiency while reducing the carbon footprint associated with the transportation of goods. The company calls its network the TuSimple Autonomous Freight Network (AFN), which connects shippers and carriers with customers.
The company claims it has developed the most advanced level 4 autonomous driving technology for tractor units, and TuSimple has collected over 5,700 reservations for its autonomous trucks. Instead of building the vehicles from scratch, TuSimple works with large established manufacturers Navistar (NYSE: NAV) and Volkswagen (OTC: VWAGY) Subsidiary TRATON, which is currently in the process of being merged.
The overall addressable market for global trucking freight services is huge, valued at a staggering $ 4 trillion in annual sales. US freight traffic is typically concentrated in a handful of major travel corridors, and TuSimple is strategically setting up its AFN on select routes to efficiently meet demand. TuSimple assumes that “essentially all” of its revenue will be generated from the AFN, which was officially launched last summer.
In terms of financial results, TuSimple’s numbers aren’t particularly pretty. Total sales in 2020 were just $ 1.8 million, while the company incurred operating expenses of $ 175.9 million. The bulk of that cost ($ 132 million) went to research and development (R&D) as the evolution of autonomous driving technologies is one of the toughest artificial intelligence (AI) puzzles today. Net losses more than doubled last year to $ 177.9 million in red ink.
The reason most electric car inventories go public through Spacs
There is an important reason why many EV / AV (electric / autonomous vehicles) startups go public with SPAC deals instead of IPOs: Companies that regularly go public can only present historical information and are not allowed to present potential ones Provide investors with optimistic long-term projections due to strict SEC regulations.
Tip: Check out some of the best electric car stocks out there right now.
With many startups in this sector earning up-front or negligible income, the SPAC route is rather attractive as the EV / AV market is expected to boom in the coming years. While the predictions many EV SPACs offer are likely to be overly optimistic, they can potentially fuel investor interest for better or for worse.
According to the approval application, TuSimple intends to raise up to $ 100 million from an IPO. However, this number is subject to change as this was the first version and companies often change the document multiple times.
Are you looking for more self-driving stock ideas? Millennial Money recently released our guide to self-driving investing which spans 11 different leaders in this emerging market.
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