A report of multiple federal investigations into autonomous trucking developer TuSimple Holdings has reignited concerns about its cozying up to China, prompting the US government to limited control over the company in February.

The FBI, the Securities and Exchange Commission, and the Committee on Foreign Investment in the United States (CFIUS) are reviewing TuSimple deals with Hydrona Chinese company founded by TuSimple co-founder and former CEO and Executive Chairman Mo Chen, This was reported by the Wall Street Journal on Sunday.

Hydron plans to make autonomous hydrogen-powered trucks that TuSimple plans to acquire, the Journal reported. The government wants to know whether and how much San Diego-based TuSimple shared intellectual property with Hydron.

The discoveries come when TuSimple looks for a possible sale or spin-off of its Chinese business. The split will help ease CFIUS concerns about technology transfers between American and Chinese businesses. TuSimple is expected to update those plans when it reports third-quarter earnings after markets close on Tuesday.

Unexpected continuity

An unexpected succession promoted co-founder Xiaodi Hou to CEO and chairman in March. This follows the conclusion of an earlier CFIUS investigation. Two Chinese directors linked to Chinese technology giant Sina Corp. have left TuSimple’s board of directors after their terms expired. Chen stepped down as TuSimple’s executive chairman at the time and launched Hydron in June.

TuSimple, meanwhile, is focusing on its plans to commercialize autonomous trucking. Autonomy veteran and engineer Ersin Yumer is one of Xiodai Hou’s founding principals as executive vice president of operations.

“You can [ask]”What does this technician do in operations?” Humer asked FreightWaves rhetorically in a recent interview.

“Once you’ve got your technology to a place where you know you can work with redundancy, the next step is commercialization. No one in the industry is addressing the big elephant in the room.”

Humor came to TuSimple from competitor Aurora Innovation, which is involved in both self-driving autonomous cars and commercial trucking. He was director of engineering at Uber’s Autonomous Technology Group, which Aurora acquired in an all-stock deal in December 2020.

Before that, Humer led machine learning of perception at Argo AI, which announced last week that it was shutting down. He holds a doctorate from Carnegie Mellon University, a hotbed of autonomy.

Ersin Yumer, TuSimple’s executive vice president of operations, has risen through the ranks quickly after joining the company 15 months ago from rival Aurora Innovation. (Photo: Alan Adler/FreightWaves)

Growth through change

At TuSimple, Humer first led the machine learning and then algorithms teams before becoming executive vice president of operations. As many of TuSimple’s public figures — including CEO Chen Lu, CFO Pat Dillon and chief legal and administrative officer Jim Mullen — left the scene after Howe took over as chairman and CEOHumor gained influence.

“When you’re looking at it from the outside and you’re just looking at the shallow tip of the iceberg, you’re like, ‘Oh my God, all these people are leaving. What’s going on?'” Humer said. “But it’s not uncommon for a CFO to leave shortly after their CEO.”

The departures and growth illustrate the transition from a startup going public to a startup defining its raison d’être. Even was the first to remove a driver from a Class 8 truck it’s just a demonstration of what’s possible. TuSimple has done this 10 times.

Instead of issuing regular updates on progress like some of its competitors do, TuSimple keeps its head down. Is trying.

In December 2021, TuSimple celebrated its first successful drone pilot. The test covered an 80-mile overnight trip west on Interstate 10 from Tucson, Arizona to Phoenix.

Less than five months later, a Navistar International LT equipped with a TuSimple Class 4 autonomous system responded to an old computer command when a safety driver activated the autonomous system. The truck veered left across the I-10 lane near Tucson, crashing into a concrete median as a safety driver tried to take control of the truck.

TuSimple has temporarily grounded its fleet of nearly 100 trucks and conducted an internal investigation. The National Highway Traffic Safety Administration and the Federal Motor Carrier Safety Administration were called. Both have open investigations, but no one has asked TuSimple to make any changes, Humer said.

Critics of autonomous technology received oxygen from the extensive media coverage of the April 6 incident. The lawsuit, which accuses TuSimple of misrepresenting the readiness of its technology, is pending in the U.S. District Court for the Southern District of California.

Separately, a raft of plaintiffs’ lawyers deadline is Monday to find a lead plaintiff for fraudulent investors who lost more than $100,000 in TuSimple Holdings. The company went public in April 2021 at a valuation of $8.5 billion.

TuSimple financial lane

Such are the legal distractions common to many young companies whose share prices have plummeted over the past year. TuSimple shares are down 83% this year.

Analysts expect a 3Q loss of 58 cents per share. Revenue from controlled autonomous freight is forecast at $2.32 million, up 29.6% from a year ago.

Humer is proud that TuSimple took the more difficult route to a public listing through a traditional initial public offering instead of taking the shortcut offered by a merger with a special-purpose acquisition company.

“The analysts we interact with believe in the steps we’re taking in terms of moving the industry forward,” Humer said.

According to TipRanks, five of the eight firms covering TuSimple recommend buying and three recommend holding the stock. The stock has an average target price of $14.42, a 128% upside from Friday’s closing price of $6.31.

$1 billion on the books

With about $1 billion at the end of the second quarter and a spending pace of $300 million to $400 million a year, TuSimple has at least three years to go without raising new capital. TuSimple is in line for cash infusions China operations are being separated.

“During the boom, we were basically driven by capital to grow faster than we needed to,” Howe said at the 10th annual Morgan Stanley Laguna conference on Sept. 15. “Now is the time to evaluate the team and find the true supporters of autonomy.”

TuSimple is strategically increasing its staff. But Howe noted that he is weeding out “a small fraction of people who joined the company because they felt it was a growth company. “We just do nothing and enjoy all the glory that comes from it.” That time has passed.”

The latest iteration of the Navistar International LT autonomous upgrade from TuSimple was on display at the American Trucking Association’s Management Conference and Expo earlier this month in San Diego. (Photo: Alan Adler/FreightWaves)

Autonomous monetary crisis

Several stand-alone SPACs are experiencing financial difficulties.

  • Embark Trucks was supposed to conduct a 1:20 reverse stock split to get its shares above the $1 required to remain listed on the Nasdaq.
  • Aurora, which wiped $1 billion of cash-free goodwill from its books as its market capitalization fell below the value of its assets, has been considering selling itself to a larger technology company such as Apple or Microsoft. the leaked memo wrote CEO Chris Urmson.
  • Plus abandoned SPAC plans when his sponsor, Hennessy Capital, bailed. It promotes a controlled version of its Level 4 autonomy, which works as an advanced driver assistance system, also known as Level 2 autonomy.

Kodiak Robotics is a privately held company recently borrowed $30 million to strengthen their finances.

Operating costs vs. maintenance

For autonomous trucking to have a chance to become a viable business, the delivery industry must keep pace with the computer technologies that enable autonomy, Howe said.

“Excessiveness is the foundation. The operating cost is now zero. But when you’re running a system with redundancy, there’s always something you need to maintain,” he said. “And if you can’t keep maintenance costs low enough, you’re never going to commercialize that system.”

Preferred display technology

TuSimple is still committed to creating high-definition maps for its autonomous truck network, trucks to follow, although that is slowing down now that more than 11,200 miles have been mapped. The Kodiak uses “light reflection” based on the fact that little changes from mile to mile on the interstate.

“The HD card is one of the foundations of security,” Hummer said. “If you have a map and if you know it [like] the back of your hand, you’ll be safer.

What happens when things change, like when a construction zone or an emergency lane pops up with law enforcement and pedestrians present?

“We have collaborative mapping which ensures that any of our trucks at any point in time moving over a previously mapped part of the map is actively collecting data from that area while it is in operational mode. And it correlates that to the HD map and pushes that data to the cloud in real time,” Humer said.

TuSimple may sell autonomous truck business in China to boost stock price

The U.S. assumes limited oversight of TuSimple as the foreign investment investigation is concluded

Analysis: The normally transparent TuSimple is hampering management change, troubling investors

Click to see other FreightWaves articles by Alan Adler.


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