TuSimple Shares Plunge After Robot Truck Company Spooks Market With CEO Shakeup

Shares of TuSimple, a San Diego-based developer of robot truck technology, tumbled Thursday after it unexpectedly said cofounder and CTO Xiaodi Hou, who dreamed up the company and designed its core technology, was immediately replacing Cheng Lu as CEO and board chairman. 

TuSimple ended Nasdaq trading for the day at $13.25, down 22%. The stock rose about 2% in after-hours trading. 

The company announced the move in a press release, saying the management change is part of a “planned executive succession” as TuSimple moves toward commercial operations of its growing fleet of AI-enabled semis. Lu, who joined the company in 2018, will be an advisor to Hou, TuSimple said.

“We have worked closely together to develop a clear roadmap to commercialization, and to scale our Autonomous Freight Network,” Hou said in a statement. “Over the past several years we have assembled a world-class management team to continue to build on our success and to ensure a smooth transition.” 

TuSimple, which late last year started test runs of its semis “driver out” with no human technician at the wheel, is still at least a year away from generating meaningful revenue. Still, the company wants to shore up a leading position in the emerging market for robotic trucks to stay ahead of competitors including Alphabet Inc.’s Waymo, Aurora and Embark. Unlike Waymo, which is also refining its autonomous technology for the robotaxi and personal vehicle markets, TuSimple is focused solely on commercializing robotic heavy-duty trucks operating on highways. That’s because the operating environment is considered somewhat simpler than crowded city streets, demand for trucking services is growing and there’s a shortage of long-haul truck drivers. 

The company last month reported revenue of $6.3 million for 2021, mainly from hauling cargo in its test trucks, and a $732.7 million annual loss as it remains mainly in development mode. 

Hou, a computer scientist who grew up in China and earned a PhD in computation and neural systems from Caltech in 2014, began developing the idea for TuSimple about seven years ago. He founded the company in 2015 with partner Mo Chen, TuSimple’s former CEO and executive chairman, who remains a member of the company’s board.

(For more on Hou and TuSimple, see, Robo-Rigs: The Scientist, The Unicorn and The $700 Billion Race To Create Self-Driving Semi-Trucks)  

“We are very familiar with Dr. Hou and continue to have high confidence in the TSP story but acknowledge that this sudden transition brings near-term noise/execution risk,” Ravi Shanker, an equity analyst with Morgan Stanley, said in a research note. “This comes as a surprise to us but has likely been in the works for a while.”

TuSimple was the first autonomous vehicle company to go public, completing a SPAC deal last year that generated $1 billion to help fund development of its technology. It also has some operations in China and because of its substantial base of Chinese investors, the company underwent a review by the Committee on Foreign Investment in the United States, or CFIUS, a group of government agencies led by the Treasury Department. The review concluded last month, with a determination that there were no “no unresolved national security concerns,” TuSimple said in an SEC filing.

However, the company agreed to “limit access to certain data and adopt a technology control plan, appoint a security officer and a security director, establish a government security committee of the board of directors of the Company to be chaired by the security director, and periodically meet with and report to certain CFIUS monitoring agencies,” according to the filing. Additionally, two board members with China-based investor Sun Dream Inc. agreed not to stand for re-election when their terms expire and Sun Dream said it won’t nominate replacement candidates or boost its stake in TuSimple.