What does Embark do?
The concept of trucks plying the highways entirely unpiloted by humans seems a scarily futuristic concept for many of us.
But it will surely happen one day and when it does, one company that intends to be at the epicentre of this innovation is Embark.
Led by its youthful CEO Alex Rodrigues, it announced a deal to go public via a special-purpose acquisition company in June 2021.
Founded in 2016, Embark claims to be the first company to test self-driving trucks on public roads in the United States.
It licenses its own software on a per-mile basis and partners with leading carriers in a way that’s distinct from other market players.
Which companies has Embark partnered with?
Embark has launched partnerships with Anheuser-Busch InBev, Werner Enterprises and other major shippers and cargo haulers.
Forward-thinking companies within the freight industry are essentially “future-proofing” themselves by tying up with a firm like Embark.
A company like Amazon would not want to be wrong-footed if rivals launched deals with Embark and it is understood that the Jeff Bezos giant is indeed one of Rodrigues’s paying clients.
CNBC, for instance, claims Amazon has used Embark for some tests of cargo-hauling on US highways.
What are Embark’s SPAC plans?SPACs can be a bit confusing to get your head around. But they are essentially very similar to initial public offerings (IPOs).
The main difference is that the SPAC, a kind of shell or “blank-cheque” company, enables the process and ensures its smooth execution, and it does so through a process that, in essence, is a reverse merger.
- Read more: What is a SPAC and how do they work?
- Analysis: Our full guide to the latest IPOs and SPACs
Embark hopes to raise about $614 million cash, around a third of which would come through private investment from Knight-Swift Transportation Holdings, Sequoia Capital and Tiger Global.
The proceeds are expected to fund Embark’s business through to 2024. With about 120 full-time employees as of July 2021, it’s likely the headcount will increase substantially.
What are Embark’s rivals doing?
Embark is the latest self-driving truck company to make a deal to go public in recent months. Plus, formerly known as Plus AI, announced its own SPAC deal last month.
Another rival, TuSimple Holdings, took the more traditional initial public offering route and started trading in April.
Amazon has placed an order for up to 1,000 autonomous truck systems from Plus and has acquired the option to buy a stake in the company.
Embark faces additional competition from autonomous firms getting into freight hauling, including Alphabet-backed Waymo and other venture-funded start-ups such as Kodiak and Aurora.
What are Embark’s plans for the future?The SPAC merger between Embark and Northern Genesis is expected to be completed in the second half of 2021, subject to regulatory approvals.
Rodrigues says Embark is already achieving scale by “leveraging the purchasing power and the operational expertise of some of the largest carriers in the country”.
It is testing operations with an internal development fleet, which runs between transfer points with drivers in the vehicles. But they are intended to only have to touch the driving controls in emergencies.
He told CNBC: “On the business side, this is definitely something that’s going to be new to me but I have an exceptional group of advisors, folks like Sequoia Capital, folks like the Northern Genesis team who are going to be here with us as we build this company. We’ve seen this happen many times before.”
When will Embark turn profitable?
Ah, the eternal question in the tech world. Backing a company like Embark with hard cash is a classic long-term play of our times.
Costs and overheads outweigh revenue for many years and it’s hard to swing the pendulum into the black.
When Tesla recorded its first full year of net income in 2020, it came largely through a technicality: certain manufacturers in the US are forced to buy “regulatory credits” from rivals with a kinder carbon footprint.
Embark is targeting annual revenue of $867 million in 2024 and $2.7 billion by 2025, according to its investor presentation deck. Those kind of numbers would surely be enough to produce profits, but are they realistic?
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