Shares of Romeo Power surged to an intraday high of 55% on Tuesday after the energy-technology company announced inking a five-year deal to provide battery packs, modules, and battery management systems to the electric vehicles of Paccar, one of the world’s largest manufacturers of medium- and heavy-duty trucks.
“Romeo Power’s battery technology solutions will enable PACCAR to deliver state-of-the-art transportation solutions that enhance customers’ operations and environmental impact,” Darrin Siver, Paccar senior vice president, said in a statement Tuesday.
Shares of Romero Power climbed steadily to their highest in two weeks after the announcement was made at 7 a.m. ET. Trading volume grew to 129.54 million shares compared to the 6.48 million average.
The two companies are looking to combine their respective expertise to develop, test, and sell semi-trucks powered by Aurora’s autonomous-driving technology.
“Paccar looks forward to partnering with Aurora because of their industry-leading autonomous driving technology and impressive team,” Preston Feight, Paccar’s chief executive officer, said in a press release on Tuesday. “This strategic partnership complements Paccar’s best-in-class commercial vehicle quality, technology, and innovation.”
The Bellevue, Washington-based Paccar is a global leader in the design and manufacture of high-quality light, medium, and heavy-duty trucks. The company also provides its clientele with advanced powertrains, financial services, information technology, and distributes truck parts.
Aurora, meanwhile, has been in the self-driving technology game since 2017 when former Google autonomous-driving engineer Chris Urmson, former Tesla self-driving director Sterling Anderson, and Carnegie Mellon’s Drew Bagnell came together to create the company.
Since 2017 Aurora has been making moves in an attempt to create the first fleet of self-driving semis.
In December, Aurora acquired Uber’s self-driving unit giving up 26% equity to do so. The company then expanded testing on public roads in California, Pennsylvania, and Texas, focusing on long-haul, commercial trips.
Now, Aurora’s technology will be paired with the Peterbilt 579 and the Kenworth T680 semi-trucks at Paccar.
Despite the bullish news, PACCAR and Aurora will face stiff competition going forward, and not just from the big names like Tesla.
Alphabet’s Waymo announced plans last year to develop semi-trucks with Daimler, and self-driving startup TuSimple announced it is joining forces with US truck manufacturer Navistar to create driverless big rigs by 2024.
The news of a strategic partnership with Aurora should be cheered by Paccar shareholders. The company’s revenue has taken a hit recently, falling some 24% year-over-year in the third quarter, according to its latest SEC filings.
Additionally, Paccar earned just $2.57 per share for the nine months that ended September 30, 2020, versus $5.34 per share during the same period in 2019.
Paccar currently trades around $92 per share and holds a $30 billion market cap.
The company boasts 10 “buy” ratings, 14 “neutral” ratings, and six “sell” ratings from analysts.