Gogoro will seek to crack the notoriously competitive Chinese automotive market ahead of a Nasdaq listing via a special purpose acquisition company that will value the electric scooter and battery swapping tech group at $2.35bn.
The launch of Gogoro’s technology in Hangzhou on Monday is a sign of the enduring draw of the Chinese market despite investment and supply chain decoupling from China as Beijing cracks down on dominant domestic tech groups and foreign fundraising.
“It’s just a huge market. There’s just so many vehicles on the road there, you’ve got to go in,” Horace Luke, Gogoro’s founder and chief executive, told the Financial Times.
The Taiwan company’s foray into China also comes despite a plethora of challenges — including intellectual property theft, overcapacity and cut-throat competition — that has forestalled success for carmakers including Ford, Hyundai and Tesla in the country.
Gogoro is not selling its scooters in China, which, with 300m riders on the road, is the world’s biggest two-wheeled vehicle market. Instead, it is deploying its battery swapping technology in partnership with Yadea, the biggest maker of two-wheeled electric vehicles, and Dachangjiang, China’s leading seller of petrol-powered two-wheelers.
The Chinese companies are releasing new scooter models that will work on Gogoro’s swapping network, starting with 80 stations in Hangzhou. The network allows drivers to quickly swap depleted batteries, meaning they avoid charging their own scooters.
The joint-venture model, Luke said, was comparable to the approach in China of Microsoft or chip designer MediaTek, companies whose platforms and underpinning technology are licensed by local groups.
Luke also contrasted the plan with that of Tesla, whose dominance in China has been this year challenged by domestic brands and state media attacks. By working with Chinese companies, rather than competing against them, Gogoro believes it is less likely to suffer IP theft and will be less exposed to the competitive pressures that stymied other global automakers.
“We believed in an ‘Android’ platform, we don’t believe in the ‘Apple’ way of doing it, or the ‘Tesla’ way of doing it,” Luke said, referring to Google’s smartphone operating system, which is available on some rival manufacturers’ models. “Instead, we focus just on developing these partners and enabling them to use our platform.”
Gogoro’s entrance to the Chinese market comes at a critical juncture for the company, which is backed by Singapore’s state-owned investment fund and Al Gore’s Generation Investment Management.
Luke, a former Microsoft executive, plans to raise $550m by taking the company public through a merger with a blank cheque vehicle in the first quarter of 2022.
Gogoro’s existing shareholders will hold close to 80 per cent of the shares after the listing, which is also backed by iPhone maker Foxconn and GoTo, the merged business of Gojek and Tokopedia and Indonesia’s biggest tech group.
“How much is on the line? A lot,” Luke said of the timing.
Tu Le, managing director of Sino Auto Insights, warned that China would be a “challenging” business environment for Gogoro, saying it needed to ensure its battery swapping infrastructure was built “in the right places”.
Gogoro’s move also comes as the broader EV market is in flux. Booming electric vehicle sales in China are a bright spot for the broader industry, which has been beset by production cuts stemming from shortages of chips and other components and fears of power shortages.
However, factory overcapacity in China, a hangover from years of state subsidies, has complicated the outlook of the local sector, with ramifications beyond China as analysts pointed to fears that low-cost vehicles would be dumped in foreign markets.
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