June 29, 2023

TuSimple may sell US operations


Having laid off more than half its U.S. workforce and turned its attention to China, autonomous truck software pioneer TuSimple is taking steps to exit the U.S. market it once led.

The move follows months of turmoil in the boardroom that stained its reputation. It includes exploring a sale of its U.S. operations.

A TuSimple exit would be the second major player in autonomous trucking to leave the field. Startup Embark Trucks sold itself to Applied Intuition for $71 million in May.

Half of U.S. employees previously laid off

San Diego-based TuSimple has laid off more than half its U.S. workforce since December. It shuttered driver-monitored autonomous freight hauling for UPS and other customers. The company determined the cost was more than it could book in revenue.

It is in arrears in filing required financial reports. That could result in a delisting of its stock from the Nasdaq.

The company is controlled by co-founder Mo Chen, a Canadian who holds 59% of the company’s voting shares. He essentially determines the company’s course, though TuSimple has a new board of directors appointed following a series of messy events last fall.

The new board unanimously supported the hiring of Perella Weinberg Partners as a financial adviser to explore possible transactions for the U.S.-based portion of TuSimple’s business. That could include a sale of U.S. operations.

TuSimple focuses on China efforts

In announcements since the layoff of 300 employees in May, TuSimple has touted a 39-mile driverless pilot on an open highway near Shanghai and plans for its autonomous software to be tested in Japan without humans in the cab.

TuSimple, founded in 2015, was the first autonomous trucking software company to conduct driverless pilots in the U.S. In December 2021, the company sent one of its Navistar International trucks 80 miles from Tucson, Arizona, to Phoenix without a human in the cab. It conducted several more pilots on the same route.

It had announced plans to begin a commercial route on the same stretch of Interstate 10 in late 2024. Those plans are in question given the decision to explore “strategic initiatives” for the U.S. business.

“If this process results in a sale of TuSimple’s U.S. business, TuSimple would remain a global Level 4 autonomous driving technology company with an emphasis on operations in Asia-Pacific and other major global markets,” TuSimple said in a statement after markets closed Wednesday.

Government scrutiny of China ties

TuSimple (NASDAQ: TSP) shares have nearly tripled in price from a low of 83 cents in recent weeks. They closed Wednesday at $2.31. 

TuSimple stressed that its operations in the U.S. and China were distinct. Until the second round of layoffs in May, the company said it was exploring the sale or spinoff of its China-based operations. 

The Committee on Foreign Investment in the United States (CFIUS) had raised questions about technology sharing between TuSimple and a company started by Chen that was based in China. 

CFIUS earlier had cleared TuSimple of any conflicts with its China operations. But it required two board members who were part of Chinese conglomerate Sina Corp. to leave the TuSimple board. TuSimple went public in a traditional initial public offering in April 2021.

TuSimple manufacturing partnership with Navistar ends

A drama involving co-founder Xiaodi Hou played out last fall. He had assumed the CEO role in March 2022. Independent directors outsted him in October. Ten days later, he fired them. Manufacturing partner Navistar called off its 2 1/2-year partnership with TuSimple in December. 

That left the company without a source for a purpose-built autonomous truck with redundant safety systems. Those systems are critical when no driver is present.

CEO Cheng Lu told FreightWaves in a March interview that TuSimple could go it alone in working with Tier 1 suppliers to equip a truck for driverless operation. But the lack of a partner also led to many of the thousands of reservations TuSimple had collected being canceled. One of those was digital brokerage LoadSmith, which planned to get 350 TuSimple trucks. 

Customers with reservations for TuSimple autonomous trucks look elsewhere

Loadsmith last week announced plans to purchase 800 autonomous trucking software systems from rival Kodiak Robotics beginning in the second half of 2025.

“No assurances can be given that TuSimple’s exploration of strategic alternatives will result in any change in strategy or a transaction,” the company statement said. “The decision to explore strategic alternatives for the U.S. business was guided by the company’s review of multiple business factors and commercial opportunities.”

TuSimple said it would have nothing more to say until its board approves a specific transaction or other alternative or the review of strategic alternatives is completed.

Loadsmith orders 800 Kodiak Robotics autonomous trucking systems

TuSimple stock faces delisting from Nasdaq due to unfiled financial reports

TuSimple completes 39-mile driverless run in China traffic

Click for more FreightWaves articles by Alan Adler.





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