Autonomous driving hasn’t quite arrived yet. But it has spawned several startups that are playing a critical role in advancing autonomous driving technology and adoption.
The startup Argo builds cloud infrastructure — including maps, software and hardware — for a complete platform for self-driving cars. It has raised $3.6 billion so far.
Israel-based Otonomo’s cloud platform captures billions of data points daily to inform its mapping capabilities, electric vehicle (EV) recharging, usage-based insurance and emergency and parking services. Its market cap is more than $250 million.
Shanghai-based Hesai Technology offers lidar (light detection and ranging) capabilities to autonomous vehicles. It’s partnered with Bosch and has raised more than $600 million.
And Beijing-based Momenta has developed a proprietary “brain” for autonomous vehicles that uses machine learning to constantly improve. It has raised $1.2 billion so far.
These are just some of the tech startups contributing to a burgeoning market. But autonomous driving is still an emerging industry that’s just getting off the ground. Future growth estimates range from 22% a year to 60% a year.
Autonomous driving is more than just a new vehicle category. Apart from its formative days in the early 1900s, the auto industry has never had an opportunity of this magnitude before. And it could be decades before it sees another one.
Automakers are under a lot of pressure. Nobody wants to be left behind. Everyone wants to be one of the leading companies driving innovation and revved-up growth. Startups that help automakers take full advantage of the fast-approaching new era in autonomous driving will be highly coveted.
Those are the stars of the future that you should be investing in now.
I’ll be showing you one of the brightest stars of the group today. Unlike companies focused on lidar and other autonomous driving-related technologies where competition is fierce, this company — HEVO — has the opposite problem. It has emerged as the most advanced AND only reliable supplier of its must-have product.
HEVO’s charging platform is designed to support the mass scaling and adoption of electric and autonomous vehicles. It’s hard to imagine what autonomous driving would be like without HEVO’s wireless EV charging platform. But, heck, let’s try anyway. Imagine this…
It’s a cold and rainy morning. But you don’t mind. You’re sitting in the back seat of a temperature-controlled self-driving taxi on the way to work, reading your latest text messages. The car beeps a warning. The battery is running low. At first you’re surprised, then annoyed. “Damn it,” you say to yourself. “Somebody must have forgotten to plug in this car last night.” The taxi automatically diverts from its normal route and heads to the nearest charging station. You frantically search for the instructions. You finally find them taped to the side of the door. It lists 15 steps. “What a pain,” you think. “There has to be a better way than this.”
There is a better way. It’s charging your EV wirelessly. Using HEVO’s technology, it’s easy. You line up your car with a pad on the ground that syncs with the hardware attached to your car’s battery. No need to get out of your car… fiddle with registration codes or the right credit card… or wonder about compatibility. Everything happens automatically. Everything is interoperable by design. And wireless charging costs no more than wired charging does.
This is the future. And there’s no avoiding it. Self-driving cars will have to be able to charge themselves without bothering passengers (to avoid scenarios like the above). But, just as importantly, cars will need to charge up even with no passengers on board.
HEVO offers a fully certified interoperable wireless system that’s easy to use via smartphone. Consisting of both hardware and software, it can be retrofitted for installation right now. And no other company offers what HEVO does. It’s way ahead of the pack.
HEVO presents an interesting investing opportunity because it’s really three investment opportunities in one. As such, HEVO has three distinct risk/reward profiles.
1. 2022-2024: Low Risk/Moderate Upside
HEVO will first target taxi, delivery, public transportation, rental and other fleets plus dealerships to perform aftermarket retrofit assembly and wireless station deployment.
Technically, revenues began in the fourth quarter of last year. But the company only received the down payment on systems purchased. This year marks the first serious revenue-generating year for the company. It expects to sell around 60 units. That would generate about $1.5 million in revenue.
Revenue is expected to jump to $10 million in 2023 as fleets and dealerships rapidly expand orders after first trying out the product via smaller orders.
HEVO rightly considers the fleets and dealerships as low-hanging fruit. They are not without their challenges, however. Mechanics will have to be trained. And at batch production, the price will be higher than ideal. HEVO is determined to reduce the cost of goods sold and lower prices. The aftermarket is quite large, and fleets are highly incentivized to adopt HEVO’s tech thanks to potential cost savings.
2. 2025-2026: Big Risk/Huge Upside
The fleets and dealerships are HEVO’s warm-up act. It establishes a nice floor. But HEVO has much bigger fish to fry. And that’s acquiring original equipment manufacturers (OEMs) and Tier 1 suppliers (companies that supply directly to automakers) as customers.
HEVO is engaged in the procurement cycle with several leading global OEMs and Tier 1 suppliers. Unfortunately, I’m prevented from disclosing many details about these discussions. But I believe I can tell you enough to give you a sense of how well they’re going.
HEVO has signed an agreement with one global OEM to integrate the universal wireless charging communication protocol (SAE J2847/6) between HEVO’s system and the automaker’s vehicle platform.
Another automaker is weighing an arrangement for tens of thousands of cars for aftermarket retrofitting of HEVO’s technology initially, possibly to be followed by an agreement to factory-install HEVO’s wireless system in hundreds of thousands of its cars.
There’s no guarantee that this deal won’t fall through. But, at the very least, it’s an early indication that as small and relatively new to the scene as HEVO is, it has begun to command the attention of very large automakers. That’s a very positive sign.
At the request of another major OEM, HEVO has customized a vehicle-side charging pad for one of its upcoming models. And HEVO is in talks with other OEMs too.
HEVO’s Tier 1 discussions are just as encouraging. Some of the biggest Tier 1 suppliers in the world are eager to cooperate with HEVO.
HEVO is dealing with the big boys here, where the talk is big but the deals are very hard to capture. That’s the risk. And it shouldn’t be ignored.
So let’s dig a little deeper here. Capturing just one OEM would result in a huge leap in revenue for HEVO. HEVO hopes that will happen four to five years from now. This one OEM customer should give investors a big payout.
HEVO is aiming even higher. It wants to make $500 million in revenue by 2026. The company said it will need two to five OEM and/or Tier 1 deals to do it.
Signing up two to five of the seven OEMs it’s currently talking to is a big ask. But if HEVO enters into talks with twice as many OEMs (as I expect), I like the odds a lot better.
There are 14 global OEMs managing more than 60 auto brands. HEVO will be reaching out to all of them. The OEMs are taking wireless charging very seriously. One to three of the seven OEMs HEVO is talking to plan on making an announcement this year on including built-in chargers in their new EVs.
If HEVO reaches its objective (even one or two years behind its own schedule), you’ll hit the jackpot. Buy an island somewhere. You’ll be able to afford one. Speaking of jackpots…
3. Late 2020s: Enormous Risk/Insane Upside
This describes most moonshot deals. And that makes sense. Because this is a moonshot scenario involving dynamic charging. Dynamic charging allows a vehicle to recharge as it drives.
The charging has to be extremely fast and exceptionally powerful. Oak Ridge National Laboratory (ORNL), which is funded by the Department of Energy and is one of the government’s most highly prestigious labs, is currently working on both 200 kilowatt (kW) and 300kW systems. It wants to eventually develop 1.5 megawatt systems. HEVO is the commercialization partner for DOE-funded wireless EV charging technology developed by ORNL.
As futuristic as this sounds, it’s really not that far off. HEVO has invited potential customers to Detroit to observe its dynamic charging prototype in action. HEVO is taking this technology very seriously. And so are the OEMs.
I wouldn’t sell either ORNL or HEVO short. Granted, we’re in moonshot territory here. But if HEVO succeeds in commercializing this technology, it will be a historic achievement. Who knows, it could help wean the world off of gas and hydrocarbons (as long as HEVO sticks to its goal of making the “road power” come from renewable sources).
Russia may not appreciate that. But HEVO’s investors would. It’s the cherry on top of the sundae. It comes with your investment at no extra cost. If it never materializes into anything of significance — and that’s the likeliest outcome — no big deal.
But if it does? Your returns would be off the charts.
Deal Details
Startup: HEVO
Security type: Crowd SAFE*
Valuation cap: $50 million
Discount: 15%
Minimum investment: $250
Where to invest: Republic
Deadline: April 26, 2022
How to Invest
HEVO is raising up to $2 million on Republic. If you don’t already have a Republic account, you can sign up for one here.
Once you verify your account and are logged in to Republic, visit the HEVO deal page.
Then click the blue “Invest in HEVO” button. Enter the amount you want to invest, starting as low as $250, and proceed through the required steps. Be sure your investment is confirmed, then you’re good to go.
*NOTE: The security you will be investing in is a Crowd SAFE. A SAFE is a Simple Agreement for Future Equity. An investor makes a cash investment in a company, but gets company stock at a later date in connection with a specific event. The Crowd SAFE is a modified SAFE that is better suited for crowdfunding.
Risks
This opportunity, like all early-stage investments, is risky. Early-stage investments often fail. HEVO will likely need to raise another round of funding in a year or two, if not sooner.
If it executes well, this shouldn’t be a problem. But that’s a risk worth considering when investing in early-stage companies. The investment you’re making is NOT liquid.
Expect to hold your position for five to 10 years. An earlier exit is always possible but should not be expected.
All that said, I believe HEVO offers an attractive risk-reward ratio.