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SPACs are perfect for a company like Gogoro to go public: CEO

Horace Luke, Founder, Chairman, and Chief Executive Officer of Gogoro joins Yahoo Finance Live to discuss the company's move to go public via SPAC and outlook for growth

Video Transcript


- The electric vehicle and battery making space has been heating up lately, and one electric scooter and battery swapping company is set to become the latest to hit the public markets. Earlier today, Taiwanese startup Gogoro announced plans to list on the NASDAQ through a SPAC merger in a deal that would set the company's value at over $2 billion, and that deal is set to close in the first quarter of 2022.

And here to discuss some more now is Horace Luke, founder, CEO, and chairman of Gogoro. And Horace, thank you so much for joining us today. First I want to ask, in terms of this deal, why now for going public?

HORACE LUKE: Well, thanks for having me on your show. You know, we founded the company back in 2011 with the idea of making cities cleaner and better for the future generation. And it's really important to highlight how important the two wheelers are for Asian cities across the East here. Over $500 million vehicles are moving around every day and over half of the individual commute miles done every day is on two wheelers.

And we've been tackling this problem of transitioning to electric, from the traditional ICE vehicle maker to now electric, for the last several years here in Taiwan. And we've been using Taiwan as a place for us to develop the technology, to refine our business model and really prove it out. Before we started, there was less than 1% of the penetration into the vehicle space, before Gogoro swap and go infrastructure.

And now, after several years, we have over 2000 locations of where people can swap in seconds and at the same time, we now grew the market 1,000% to over 10% market share. In comparison, if you think about where Tesla is today, they are about 3 and 1/2% of the US automotive market, and we've done a really phenomenal job building that.

And within the EV space, in Taiwan and the market in Taiwan, we have 97% market share with our partners. And we just announced big deals to make partnerships with the world's number one electric two wheeler maker, Yadea in China, which sold about 11 million vehicles last year and then [NON ENGLISH SPEECH] the largest ICE vehicle maker in China also as well. Combined, they've sold 12 million vehicles last year. And then also a deal with Hero MotoCorp in India.

All of which is really, think of us as like the Android of EV, we make technology and we make the platform to enable our partners to really accelerate the transition to electric. And with those big deals announced, we're taking this next big step to go public, to raise the necessary funds to build the awareness, bring our company to a level where we can expand very, very quickly into these big territories.

- Horace, there's only been six SPACS so far in the third quarter, the market has really slowed down since late last year. Why did you choose this structure?

HORACE LUKE: Well, you know, it's really interesting that you ask that. SPEC are designed for companies exactly like Gogoro. We have very solid revenue, we've been in business for many years, combined between when we start to now, we've accumulated about slightly over a billion dollar in revenue, we've been EBITA positive since 2019.

But our business model and our technologies, to be honest with you, is very, very comprehensive. It takes a little while to really understand vehicles that uses batteries swapping as a means of refueling and then you're buying a vehicle but you're subscribing to the battery swapping as a service, that takes time.

And when usually go into an IPO process and you're doing a roadshow, you really get about 10, 15 minutes to tell your story. But in our case, we have complex partnership with going into large markets, we really needed time to tell our story, to really kind of get the investors to understand. And the good thing is, I mean, I think investment is like water, it flows to where the good fundamentals are.

And in this particular case, we were targeting $175 million pipe, we oversubscribed to slightly over $250 million, so we went to upsize the pipe. It's been super exciting to have strategic partners as well as existing investor, all the money that's going into pipe is all primary. So it's really exciting time, we got really good reception in the market. And like you said, when there's only six, the company like ours with a good fundamental and good strong future really stand out.

- Yeah, interesting that you noted that you are EBITA profitable. This year, what will you do financially? What is your sales and profits? What does that look like and where are you expecting to grow over the next five years?

HORACE LUKE: Well, our biggest target right now, immediately ahead of us, is China. We'll launch in China in Q4 in Hangzhou and then Woshi quickly after that, and then about five or six cities immediately after that, in 2022.

The China opportunity is gigantic. There's about 290 million vehicles and because of the 2019 regulation that was in place to retire these lead asset battery vehicles that are very environmentally damaging to now lithium ion batteries which are much more powerful, much more efficient, but not looking for a solution very much like Gororo's.

Working with our partner, we're going to deploy it into their portfolio and transform the portfolio from either the traditional gas vehicles or the plug-in charging vehicles, they're using that asset, to now the swappable battery version. In our forecast in 2024, we're forecasting about one, 1.1 million units in China.

When you look at that against our partner's portfolio of this year, about 20 million vehicles, we're really talking about 5% penetration into their portfolio. So quite conservative as how we looking forward.

But at the same time, we're very ambitious. I think China is very binary, either it works and really takes off, and in our case, we're working with the number one electric vehicle maker in China, number one ICE vehicle maker in China, number one in the world when it comes to Hero MotoCorp.

They're in 40 countries, who just celebrated, by the way, 100 million vehicles shipped and then put another aggressive target of another 100 million in just seven years using electric and clean energy. So I think this partnership is really, really going to take off faster than we think.

- You mentioned your expansion plans in China and India, which are, of course, both major markets but do you see this model, when you think longer term, working in the US or in North America or in any of these kinds of markets as well?

HORACE LUKE: Well, our focus right now is really in Asia, where millions of people are living on top of each other, where the challenges of traditional plug-in charging that takes a long time to get from low energy to high energy.

We are swapping those system, just overcomes all that with, not only the usability of that so that the consumer can go not worry about range and not worry about where to go to get refueled, but also about cost economics too because you don't have to buy the battery.

Instead of paying for the battery when you buy the vehicle, you just don't pay for that. So the vehicle actually is about the same cost and same prices that the ICE vehicle that they're used to buying but at the same time, they get transition to electric and then they pay for battery swapping as a service so that over time, our customers are subscribers.

And what's amazing about our model is that we're super sticky. You know the cohort stacks up year over year, we're very much like a hardware as a service business model, you sell the vehicle to get in and then over the lifetime of the vehicle, we acquire 100% of the hardware acquisition revenue.

So one for one over time, making that a very, very, very, attractive, I would say attractive revenue stream coming in, in a very, very sustainable and re-occurring kind of way. But I think never say never, I think for densely populated cities, we're targeting cities that where space and time is really hard to come by and that's where we're going to go after.

And, of course, China, India, Southeast Asia, South America, those are, of course, really immediately in front of our periscope but I think the cities around the world, they are large and with lots of people living on top of each other. They're looking for cleaner and better solution, Gogoro is going to come their way.

- All right. Horace Luke, founder, CEO, and chairman of Gogoro, thank you so much for joining us.