Deal focus: Plus pulls financial, strategic levers

When China Growth Capital participated in a seed round for autonomous driving player Plus in 2016, the Chinese company was still searching for its application scenario. But there was certainty as to what to avoid. Plus eschewed the crowded robotaxi segment in favor of trucks, and this appealed to China Growth Capital.

“Many people believed that robotaxis and trucks could use the same algorithm. But we thought that, once you go deeper, the application scenarios could be very different – a robotaxi player wouldn’t have the bandwidth to cover trucks at the same time. We ended up backing two autonomous driving companies almost at the same time: Plus for trucks and WeRide for robotaxis,” says Wayne Shiong, a partner at China Growth Capital.

Some of the differences are obvious. Trucks often reach speeds of more than 80 kilometers per hour on highways, much faster than robotaxis operating in city centers. Moreover, the driving behavior of a truck can vary hugely based on the load weight it is carrying.

Plus explored several different directions within the truck space. Agricultural machinery and industrial vehicles were the initial focus, leading to collaborations with traditional original equipment manufacturers (OEMs) like Zoomlion Heavy Industries. While these initiatives didn’t necessarily go far, engagement with OEMs has proved key to the company’s success.

Plus started working with FAW Jiefang on agricultural machinery but they soon expanded into trucks, and Plus settled on cargo trucks as its core offering in 2018. It formed a joint venture with FAW, China’s largest truck maker, in 2019. They will launch the country’s first mass-produced autonomous driving truck in June. The plan is to deliver 100-150 vehicles this year, several thousand in 2022, and several tens of thousands the year after that.

The full chain

The company recently secured $220 million in funding, led by FountainVest Partners and ClearVue Partners, to support the rollout. It is an extension to a $200 million round announced in February that was led by CPE and Guotai Junan International. Other investors in the extension include SAIC Capital, the VC unit of the eponymous state-owned carmaker, and Full Truck Alliance, China’s “Uber for trucks” that also goes by the name Manbang.

“FAW builds cars with us, SF Express uses them, and Manbang sell them for us. This is a complete ecological chain,” Wen Han, CFO of Plus, tells AVCJ. Han joined Plus in 2018, having previously been a partner at GSR Ventures, one of the company’s earliest backers.

Manbang is the company’s largest external shareholder. SF Express – like FAW – is not an investor, but heavily involved on the application side. It launched a pilot with Plus last December that runs supervised autonomous trucks between Wuhan and Wuxi and Wuhan and Changsha. Meanwhile, SAIC hooked up the company with Netherlands-based OEM Iveco, one of its China joint venture partners. A new line of Iveco trucks will feature Plus’ automatic driving system.

If Europe is a market for the future, Plus already has operations in the US as well as China, albeit with different strategies. The mass-production model, FAW J7+, spearheads the company’s approach to China. It is capable of level-three (L3) autonomy, where drivers are still necessary but safety-critical functions are performed autonomously. In the US, Plus supplies software that OEMs install in their vehicles, but it is L4 technology.

“Just like Tesla, we use a complete set of L4 technology in a scenario where a driver is sitting in a car. Our algorithms can collect data and learn, which is an efficient way to move towards a totally driverless solution,” Han explains.

Competitive threats?

Trucks present a shorter route to commercialization at the L4 level than robotaxis because safety protocols are less strict when transporting goods instead of people. This dynamic has prompted the likes of US-based Waymo, as well as China’s Pony.ai and AutoX, to expand into trucking. However, China Growth Capital’s Shiong doesn’t see them as a threat to Plus.

“Their arrival is more about vitalizing the market than providing direct competition,” he says. “I think electric vehicle makers will also be a strong force in pushing autonomous driving forward. Nio is launching a vehicle equipped with Lidar, and others may do the same. When OEMs invest in autonomous driving infrastructure, companies like Plus, WeRide and Pony can flourish.”

Han adds that he has yet to see a robotaxi player release a material mass production plan for trucks. “Mass production requires a lot of people devoting a lot of time, supported by a lot of capital. The later you get in, the harder it is to get in. When an OEM works with one solution provider, it won’t repeat the same process with a second player,” he says.

There are other truck specialists in China, notably TuSimple and Inception. Both have received private equity funding, and TuSimple recently took the next step by completing a $1.3 billion IPO in the US. But Plus is set to become the first to deliver a mass-production truck, aided by what Han describes as a winning combination of industry expertise, financial and strategic capital, and potential customers.

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• Topics
• Greater China
• Expansion
• Technology
• China
• automobiles
• Transportation
• China Growth Capital
• Fountainvest Partners
• ClearVue Partners
• SAIC Capital