SPAC merger for Plus’ autonomous trucks called off

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Automated trucks powered by Plus’ Level 4 technology. | Credit: Plus

Plus, an autonomous trucking software developer, and blank check firm Hennessy Capital Investment Corp. terminated their SPAC merger. The companies said this was a mutual decision made because of “recent developments in the regulatory environment outside of the United States.”

Announced in May 2021, the SPAC merger valued the new company at $3.3 billion. Founded in 2016, California-based Plus manufactures a Level 4 automated driving system for heavy trucks, called PlusDrive, that can be retrofitted onto existing trucks or integrated into new trucks.

Plus has a partnership with China’s FAW, which is the world’s largest heavy truck manufacturer. Plus is working with some of the largest fleets in the U.S. and China to pilot commercial freight operations. The company is also working with IVECO, one of the top global truck manufacturers in the world, to jointly develop autonomous trucks that will be deployed across China, Europe and other geographies.

Because the decision to end the merger was mutual, neither Plus nor Hennessy Capital are required to pay the other a termination fee. Daniel Hennessy, chairman and CEO of HCIC V, is leaving the door open for a future merger between the two companies. Hennessy has recently sponsored several other SPACs. Plus is also pursuing a “potential restructuring of certain aspects of its business,” after which new discussions about a merger could begin.

“HCIC was formed to merge with a company that provides sustainable technologies,” Hennessy said. “We believe in the potential for autonomous trucks to transform the trucking industry and in Plus’s ability to continue its global deployment of autonomous trucking technology. We remain optimistic that the parties can once again explore a business combination in the near term that will further advance sustainable transportation.”

So what happened?

The companies didn’t provide additional details about regulatory issues outside of the United States. And a Sept. 27 SEC filing, which suggested the SPAC merger was in jeopardy, doesn’t provide concrete answers either.

One line in the SEC filing does mention the Chinese government. “As of the date of this Current Report on Form 8-K, Plus has not received any inquiries or notices of investigation from any governmental or regulatory authorities and no permissions requested by Plus from a Chinese government entity have been denied.”

Although the mention is positive, China recently has begun severely cracking down on tech companies. As you can see from Plus’ May announcement of the SPAC, it has some lofty goals in China. It also has multiple offices in China. There are various theories about why China is cracking down on tech companies, but many revolve around the government’s reluctance to let outside investors have access to Chinese company data.

In just the last three months, Plus is at least the second autonomous driving company with a presence in both China and the U.S. to have a merger called off. In August 2021, Pony.ai, a developer of self-driving cars, suspended its plans to go public on a U.S. stock market via a SPAC merger with VectoIQ Acquisition. According to Reuters, this deal fell through after Pony.ai “failed to gain assurances from Beijing that it would not become a target of a crackdown against Chinese technology companies.”

Crackdowns from the Chinese government have been coming at hefty prices. Softbank is blaming the crackdowns for its $54 billion quarterly loss. Softbank founder and CEO Masayoshi Son invested $20 million in Alibaba over 20 years ago. He turned that investment into one that was worth $60 billion when Alibaba went public in 2014. Due to regulatory changes in China, however, Alibaba was recently fined a record $2.8 billion after authorities accused the company of acting like a monopoly. Alibaba also lost roughly $400 billion in market value in the last year, seeing its share price plummet 35% during its July-September quarter.

Reuters also reported that had the Pony.ai deal been finalized, the company also would have faced U.S scrutiny. “The U.S. Securities and Exchange Commission said [in July 2021] it would not allow Chinese companies to raise money in the United States unless they fully explain their legal structures and disclose the risk of Beijing interfering in their businesses.”

China and the U.S. are at odds over a number of issues, and it appears autonomous vehicles SPACs could be added to the list.

The Robot Report reached out to both Plus and Hennessy Capital Investment Corp. to learn more, but has not heard back.