Autonomous-truck company TuSimple is on the hunt for new leadership after firing its chief executive, apparently for the company’s undisclosed involvement with another start-up. Company officials said their strategy hasn’t changed and that it expects fully integrated production trucks in 2025 as part of its partnership with Navistar.
- Why TuSimple ousted a co-founder
- TuSimple earnings report
- Navistar production timeline
- Collaborative mapping
- Changing revenue model and the Texas Triangle
Why TuSimple Ousted One of its Founders
Xiaodi Hou, TuSimple CEO, president and chief technology officer, was fired as of Oct. 30.
The TuSimple announcement was vague on the reason, saying, “These actions have been taken in connection with an ongoing investigation led by the Audit Committee of the Board that led the Board to conclude that a change of chief executive officer was necessary.”
The Wall Street Journal reported that TuSimple faces federal investigations into whether it improperly financed and transferred technology to a Chinese startup. The company reportedly is facing probes by the Federal Bureau of Investigation, Securities and Exchange Commission, and Committee on Foreign Investment in the U.S. At issue is TuSimple’s relationship with Hydron Inc., started in 2021 by Mo Chen, TuSimple’s co-founder.
Federal investigators also are looking into whether TuSimple shared intellectual property developed in the U.S. with Hydron, according to WSJ, sending valuable technology to an overseas adversary.
Ersin Yumer, TuSimple's executive vice president of operations, is serving as interim CEO and president, while Brad Buss, lead independent director, takes over Hou’s previous spot as chairman of the board. The board is also actively engaged in the search to add new independent members to the board, according to the announcement.
In TuSimple’s third-quarter earnings call on Nov. 1, Buss emphasized that the decision to terminate the CEO was independent of the Wall Street Journal article but instead was made based on an ongoing internal investigation launched in July.
“The Independent Directors unanimously determined that it was necessary and in the best interest of the shareholders to terminate Xiaodi Hou. Furthermore, we lost trust and confidence in Xiaodi's judgment, decision making and ability to lead as the company CEO.”
The internal investigation, he said, indicates that during 2022, in conjunction with the company's evaluation of Hydron as potential OEM partner, the company shared confidential information with Hydron without relevant non-disclosure and other cooperation agreements in place, and that during 2021 certain employees of the company spent eight hours working on matters for Hydron without disclosing this as required by company policy.
TuSimple’s Third-Quarter Earnings Report
TuSimple was founded in 2015 by Hou and Chen. In 2017 it received a strategic investment from Nvidia. In 2017 it began autonomous freight operations with UPS and the U.S. Postal Service. In 2020 it launched its Autonomous Freight Network and announced a partnership with Navistar and with Traton.
The company reported an unaudited $113.16 million net loss for the third quarter of 2022, compared to a net loss of $115.49 million the same quarter a year ago. Its year-to-date loss of $333.66 million was better than the $617.18 million net loss for the first nine months of 2021.
TuSimple reported $2.7 million of revenue in the quarter, a 49% year-over-year increase and 4% from the previous quarter. The year-over-year performance was primarily driven by higher revenue loss from a larger fleet and high utilization.
The company said in its third-quarter earnings presentation on Nov. 1 that its number of reservations for the quarter remained steady and about 7,500. Its Autonomous Freight Network is being used by companies such as Werner Enterprises, U.S. Xpress, Schneider, UPS and DHL.
TuSimple/Navistar Production Plans
TuSimple also offered an update on its partnership with Navistar in its third-quarter earnings report. The latest agreed-upon timeline calls for:
- 2024: Production-intent prototype trucks to be used for pre-production testing and TuSimple’s revenue-generating capacity operations.
- 2025: Fully integrated production trucks expected
- 2026: First significant carrier-owned capacity revenue expected.
TuSimple said it will announce the exact date of the start or production at a later date. However, TuSimple’s Ryan Amerman, senior director of investor relations, told HDT during the American Trucking Associations’ recent Management Conference & Exhibition that it likely will be late 2025 or early 2026.
Tech Update: Collaborative Mapping
TuSimple's latest technology update is collaborative mapping, scheduled to be rolled out later this year. “Everything we operate on is HD mapped,” Amerman explained.
With collaborative mapping, a TuSimple truck will upload information into the cloud about hazards it encounters, such as emergency vehicles on the side of the road. That information can then inform the next TuSimple truck coming down the same highway so it knows to take actions to avoid it.
“When I did the run in Tucson, it was pretty cool because it was an emergency vehicle and it had a yellow triangle around and what that said was a truck prior had mapped that and sent it to our truck,” Amerman explained. “The more density you can get on a lane, the safer and more real time that map actually is. And it reduces our costs to actually have to send our mapping vehicles out there.
“Just as in transportation, density is your friend, and it holds true in autonomy as well.”
Although a demo showed the truck operating on roadways with traffic lights, he said, the company’s model is still to operate primarily on limited-access highways.
“We do launch and land from our terminal in Tucson, which is about 3 miles off the interstate," he said. "Some of our competitors have talked about having their launching/landing right off the Interstate. There’s not that many available properties” that would work for that, he noted. However, TuSimple trucks can navigate a few miles of drayage that’s well-mapped from the terminal to the highway.
The TuSimple truck on display in San Diego had a sleeper full of ruggedized computer servers. The production trucks will have a smaller autonomous domain controller that is purpose-built and automotive-grade.
Chasing Revenue and Lower Cost Per Mile in the Texas Triangle
“For the next couple of years, we will continue working to reduce cost per mile,” said Ersin Yumer in the earnings call. “Our focus on generating revenue models will concentrate on a few key lanes in and around the Texas triangle.”
A major aspect of reducing cost per mile, he said, is “removing the support vehicles which require improved reliability of key components. We are focused on upgrading our entire fleet to consist of the most updated hardware platform running a consistent version of our proprietary software. This does require us to pull trucks out of the fleet to undergo the upgrade process with the expectation that we will complete the entire upgrade by the end of 2023.”
TuSimple is also changing the model for its fleet. “Historically, our revenue fleet was run separately to work with our transportation partners and introduce them to our autonomous technology, while our test fleet was focused on advancing our technology and driver milestones in Arizona.
“Now that we have reached our initial driver-out milestone, I began the process of combining our revenue and test into one autonomous operations. The result of this will be that we have one fleet of trucks capable of running either test or revenue generating model with the same state-of-the-art AV software and hardware. This gives us the flexibility in how we utilize the fleet for servicing our customers, as well as for maturing the technology.”
TuSimple plans to offer two business models in the U.S.:
- TuSimple Capacity, where TuSimple will operate autonomous trucks to access its Autonomous Freight Network, charging a per-mile freight rate and using shared capacity and AFN terminals.
- Carrier-Owned Capacity, where carriers will obtain the autonomous trucks through the OEM but subscribe to TuSimple Path and pay a per-mile subscription fee to access the Autonomous Freight Network.
TuSimple expects to finish the year with 75 trucks in its fleet. The company continues expanding its presence in Texas, with a new South Paulo terminal coming in 2023 as well as a location in San Antonio.
Check out the video below for footage of TuSimple's driver-out operations:
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