TuSimple Files to Become the Next Self-Driving IPO
At a time when nearly all electric vehicle (EV) and autonomous vehicle (AV) startups are opting to go public by merging with a special purpose acquisition company (SPAC), one company working on developing an autonomous truck is bucking that trend. Earlier this week, TuSimple filed its S-1 Registration Statement with the SEC, an early step in the march towards a traditional IPO.
Here’s what you need to know about TuSimple.
Why TuSimple Is Planning an IPO
TuSimple was founded in 2015 in San Diego based on the idea of creating a freight network of autonomous Class 8 semi-trucks that could offer low-cost service, leveraging logistics software for higher efficiency while reducing the carbon footprint associated with transporting goods. The company refers to its network as the TuSimple Autonomous Freight Network (AFN), which will connect shippers and carriers with customers.
The company says that it has developed the most advanced Level 4 autonomous driving technology for semi trucks, and TuSimple has accumulated over 5,700 reservations for its autonomous trucks. Instead of manufacturing the vehicles from the ground up, TuSimple is partnering with large incumbent manufacturers Navistar (NYSE: NAV) and Volkswagen (OTC: VWAGY) subsidiary TRATON, which happen to be in the process of merging.
The total addressable market for global truck freight services is massive, estimated at an astounding $4 trillion in annual revenue. Freight volumes in the United States tend to be concentrated along a handful of primary travel corridors, and TuSimple is strategically setting up its AFN on select routes in order to efficiently address demand. TuSimple expects to generate “substantially all” of its revenue from its AFN, which formally launched last summer.
In terms of financial results, TuSimple’s numbers aren’t pretty. Total revenue in 2020 was just $1.8 million, while the company incurred $175.9 million in operating expenses. The bulk of those costs ($132 million) were related to research and development (R&D), as developing autonomous driving technology is one of the most challenging artificial intelligence (AI) riddles in modern times. Net losses more than doubled last year to $177.9 million in red ink.
The Reason Most Electric Car Stocks Are Going Public via Spacs
There is one important reason why many EV/AV (electric/autonomous vehicle) startups are going public with SPAC deals instead of IPOs: Companies that go public with a regular IPO are only able to present historical information and are not allowed to provide prospective investors with optimistic long-term forecasts, due to strict SEC regulations.
Tip: Check out some of the best electric car stocks on the market right now.
Since many startups in this sector are pre-revenue or have only recognized negligible levels of revenue, the SPAC route tends to be rather appealing since the EV/AV market is expected to boom in the years ahead. While the forecasts that many EV SPACs offer are likely overly optimistic, they can potentially boost investor interest, for better or for worse.
The regulatory filing says that TuSimple is looking to raise up to $100 million from an IPO, although that figure may change as this was the first version and companies often amend the document several times.
Looking for more self-driving stock ideas? Millennial Money recently published our self-driving investing guide that includes 11 different leaders in this emerging market.
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