Gogoro, the company behind Taiwan’s thriving two-wheeler battery swapping ecosystem, is poised to succeed where others have tried and could not — and now it has the cash to do so.
On Monday, the company closed its merger with special purpose acquisition company Poema Global and is now listing on the Nasdaq under the ticker GGR. Gogoro expects to receive about $335 million in cash proceeds from the deal.
Gogoro’s public debut and success in raising money suggest there’s a market for battery swapping stations, but only if the conditions are right. Around a decade ago, Israeli startup Better Place tried and failed spectacularly to popularize battery swapping for electric cars. But it was both too early in the collective electric vehicle journey for such a business to succeed and too much of an investment to build all of the infrastructure required to easily swap out batteries of large four-wheeled vehicles en masse.
Backed by more favorable market conditions and much better timing, Gogoro has been able to unlock the recipe needed for scaling its battery swapping system. But that doesn’t mean Gogoro’s business model will work everywhere — while cities like New York or San Francisco suffer from congestion and would likely benefit from a platform such as Gogoro’s, too many habits surrounding Americans’ preference for four-wheeled vehicles would have to change to make it successful, and Gogoro knows that.
Instead, the company is focusing on the markets where it can win — namely dense Asian cities where two-wheeled vehicles are already popular. Gogoro will use the fresh funds from its IPO to continue to expand in Taiwan as it branches outward to larger markets like China, India and Indonesia.
Why battery swapping matters
Since its founding in 2011, Gogoro’s “Swap & Go” battery swapping solution — where riders of electric mopeds, scooters and motorcycles with Gogoro batteries can easily swap out a dead battery for a fully charged one — has become ubiquitous in Taiwan. Coupled with Gogoro’s Smartscooter, which the company first dropped in 2015 to help its business model along, the battery swapping system has enabled electric two-wheeler adoption.
In Taipei, a quarter of all new scooters sold last December were electric, and nationally, 97% of e-scooters sold in 2021 were either Gogoro scooters or powered by Gogoro’s batteries and charging infrastructure, according to data shared by Taiwan’s government.
Just last week, Taiwan said all new passenger cars and scooters will have to be zero-emissions by 2040 — the government is putting around $5.8 billion (TWD168.3 billion) toward this aim, including using subsidies and other incentives to see the share of new electric scooters hit 35% by 2030 and 70% by 2035.
“That’s a huge endorsement for what we’re doing,” Horace Luke, CEO and founder of Gogoro, told TechCrunch. “The company’s gotta be bulked up to take advantage of that transition and support our partners. We have Yamaha, Suzuki Taiwan, Aeon, PGO, and a bunch of guys are looking for us to build up the infrastructure as they transition to electric.”
While Gogoro’s Smartscooters are wildly popular, the company realized early on it could hit a bigger market if it partnered with manufacturers, like the ones Luke mentioned, to integrate Gogoro batteries into those vehicles.
“What we want to do is take advantage of the fact that people have already adopted urban mobility, but let’s put a cleaner solution in front of them,” Luke said.
Partnering with original equipment manufacturers in Taiwan has laid the foundation for Gogoro’s expansion plans internationally. Rather than try to sell its Smartscooters abroad and build up battery swapping stations, the company has instead made deals with existing manufacturers in new countries, providing them with the battery tech and network needed to scale together.
Last year, Gogoro partnered with two of China’s biggest two-wheel vehicle makers, Yadea and DCJ, to launch 45 swapping stations in Hangzhou, a number that has since gone up to about 100 stations in that city, as well as in Wuxi and Kunming, according to a Gogoro spokesperson.
In addition, Gogoro partnered with Indian manufacturer Hero MotoCorp, one of its PIPE investors, to set up battery swapping stations across India and launch electric scooters powered by Gogoro batteries, with plans to start setting down roots in New Delhi by the end of the year. In 2020, the registered number of two-wheelers in New Delhi alone was nearly 8 million, and in March, Hero MotoCorp sold 450,000 units, the majority of which were sold domestically.
Gogoro is also working with Foxconn, Apple’s iPhone manufacturer, to set up a plant for EVs, their parts and battery cells in Indonesia, where Gogoro has a joint venture with Gojek, a mobile on-demand services platform, to pilot EVs and battery swapping in Jakarta.
“The timing of us going public is perfect, because we’re at a seven-year milestone in our network,” Luke said. “We’ve gone through three generations of batteries, three generations of stations. Our latest station can sustain 64 hours of continuous power; it can do bidirectional vehicle-to-grid charging, or connected battery-to-battery charging. We have the formula right. We’ve got the partnership with Foxconn. We’ve got the partnerships with the right vehicle makers, and we’re seeing this next decade as a huge leap in the electrification of urban mobility.”
How going public unlocks battery swapping in Asia
For the type of scale Gogoro needs to expand into China, India and Indonesia, going public is essential, Luke said. It not only will give Gogoro instant deployable cash, but it will also allow the company to raise funds more easily in the future.
In the private sphere, raising capital means spending time telling your company’s story to each investor for every new round, efforts that could be better spent on execution, according to Luke. While for public companies, issuing new stock can be a quicker process, and one for which the pricing issue is already settled by the market.
In addition, as Gogoro seeks out more powerful partners to help it expand its business model across new markets, it needs to be able to show that it won’t fail in two or three years.
“We’re planning to announce big partners, and you can only imagine the size of the partners we’re talking to for infrastructures in big regions, and they’re going to ask what our corporate governance is like — what is the risk factor versus the fundamentals of the company?” Luke said. “They want to be able to see it transparently and ensure a company can operate at a global level.”
Gogoro’s risk factors
Aside from the usual risks associated with a company like Gogoro — like issues with defective batteries or the costs associated with R&D to enter new markets — COVID-19 remains a risk factor for Gogoro. China is enforcing a zero-tolerance policy at the moment, wherein even a couple dozen cases of COVID caused the city of Shanghai, which has 25 million inhabitants, to go under strict lockdown. Gogoro has a number of employees in Shanghai, but its factories are in Hangzhou, Kunming and Wuxi, which is also experiencing a lockdown, Luke said.
“We’re going to go as aggressive as we can, but at the same time, we have to be understanding of things slowing down during outbreaks,” Luke told TechCrunch. “Will this have an impact on our business? Obviously, yes. Will it be significant? I think we just have to look at the long term and say that urban electrification of mobility is inevitable, it will happen. It’s just a question of catching up and there being a slight delay.”
The Taiwanese company’s F-4 document, which was filed with the U.S. Securities and Exchange Commission in mid-March, reveals other concerns related to China, namely the recognition that the Chinese government has “significant oversight and discretion over the conduct of Gogoro’s business and may intervene or influence operations of Gogoro in the [People’s Republic of China (PRC)] as the government deems appropriate to further regulatory, political and societal goals.”
A company that has large operations in mainland China — particularly one that will be conducting operations in foreign markets — may be subject to a variety of laws regarding cybersecurity and data protection. Gogoro might also be subject to the changes in policies, regulations, rules and enforcement of laws of the PRC government, which can be sudden and give Gogoro little notice.
For example, last year, China’s edtech and test prep industry were nearly wiped out due to sweeping regulations from the central government, including a ban on any for-profit tutoring services focused on the country’s core public school curriculum or oriented around high school or university entrance exams. In 2020, Chinese regulators squashed fintech startup Ant’s IPO, which would have been the largest IPO in history, and laid out guidelines for the company to revamp its credit business in a way that would make it subject to the same set of regulations overseeing financial institutions.
“Any such action, once taken by the Chinese government, could cause the value of Gogoro’s ordinary shares to significantly decline or become worthless,” reads the SEC filing.
Regardless of potential issues with its neighbor, establishing a presence in the Chinese market is undoubtedly a boon for Gogoro. Its strategic partnerships there and in India and Indonesia represent a total addressable market of more than 500 million vehicles. Gogoro is the only major player in the battery swapping game, so it stands to gain the most from building up that infrastructure alongside the burgeoning electric mobility scene in Asia.
China concerns aside, the company’s move to bring battery-swapping tech to the world more broadly could herald a period when charging times become a secondary concern for EV drivers on the go. If the company’s vision for the future bears out, it could make its way to Europe next, becoming as adept at changing out electric power units for vehicles with four wheels as it is with two-wheelers today.