Autonomous Driving Startup Argo AI Might Be the Next Big Blockbuster IPO
Electric vehicles (EVs) and autonomous vehicles (AVs) are set to be the next megatrends that will reshape mobility, and there is no shortage of companies scrambling to become the next big player.
EV maker Lucid Motors is going public this year by merging with special purpose acquisition company (SPAC) Churchill Capital Corp. IV (NYSE: CCIV), while peer Rivian may pursue a traditional IPO. Autonomous truck startup TuSimple recently filed its S-1 registration with the SEC, signaling its intent to go public with an IPO.
On the self-driving car front, one of the more promising startups is Argo AI, which is developing self-driving cars in partnership with heavyweight OEMs Ford (NYSE: F) and Volkswagen (OTC: VWAGY).
In 2017, Ford committed to investing $1 billion in Argo AI over the subsequent five years, while Volkswagen closed a $2.6 billion investment in the company last year. With Argo AI now reportedly considering an IPO, here’s what investors need to know.
How Argo wants to solve autonomous driving
Argo AI is seeking to go public this year, according to a recent Bloomberg report, as it seeks more funding on its path to broader commercialization. The startup fetched a $7 billion valuation during its deal with Volkswagen. Ford is looking to put autonomous vehicles on the road as early as next year, while VW is targeting 2025.
There are a few different ways that companies and startups are approaching the daunting task of developing AVs. While companies like Tesla (NASDAQ: TSLA) hope to make its vehicles independently capable of navigating any scenario, Argo is taking the multi-prong approach of creating a database of high-definition maps that include geometric and semantic metadata, which it calls the Argoverse.
This data is then used in conjunction with an onboard sensor array that includes lidar, radar, and cameras. Combine all of that with extensive testing on public streets, and you arrive at Argo’s vision of how AVs will safely navigate the roads.
Argo’s Path to IPO
The company is currently testing in six cities in the United States: Washington, D.C., Pittsburgh, Miami, Austin, Detroit, and Palo Alto. With those tests proceeding well and the backing of two massive automakers, Argo feels that it is on the cusp of monetizing its technology, according to the report.
In terms of how Argo AI might go public, the company is said to be open to either a traditional IPO or a SPAC merger. Many startups in the EV/AV space have been opting for SPAC mergers since that route to the public market focuses less on historical financial results and allows companies to provide optimistic, forward-looking forecasts.
Since many startups in the sector are pre-revenue, SPAC mergers have emerged as a preferred method. It’s also worth noting that Argo’s timeline for going public could be pushed into 2022.
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