Global self-driving trucking company TuSimple Holdings Inc. is reportedly set to lay off at least 700 employees next week just ahead of the Christmas holidays.
The San Diego-based technology company with offices in Arizona, Texas and China employs approximately 1,430 full-time employees. TuSimple executives are looking to cut that workforce by about half as the company scales back efforts to build and test autonomous truck driving systems, the Wall Street Journal reported Friday.
The layoffs would come at a turbulent time for the company, which underwent a change in leadership in October after reports revealed that the FBI, the Securities and Exchange Commission (SEC) and the Committee on Foreign Investment in the US (CFIUS) were each the ties from TuSimple to the Chinese startup Hydron Inc.
The job cuts are expected to be announced on Tuesday. The Journal reported that TuSimple will “significantly” scale back its efforts to build self-driving systems and test self-driving trucks on public roads in Arizona and Texas. “As part of the downsizing, much of TuSimple’s operations in Tucson, Arizona, where it conducts many test drives, will be eliminated, and the team working on the algorithms for the self-driving software will be significantly reduced,” the report said.
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TuSimple will shift to improving a software product that pairs self-driving trucks with truckers who have cargo to move to offer freight transportation at a lower cost than human-powered trucks, people familiar with the company’s plans said.
FOX Business contacted TuSimple for comment but received no response.
Employees are preparing for layoffs. TuSimple CEO Cheng Lu, who previously ran the company and returned in November, announced via email to employees earlier this month that management was reviewing “our staff costs, most of our cash burn,” the magazine reported.
Lu told the Journal that he intends to “put the ship in order, and that includes making sure the company is capital efficient.”
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“TuSimple is cutting costs and trimming its ambitions as it has been rocked by a series of crises this year, including an accident of one of its self-driving trucks in April, the loss of key business partnerships, two CEO changes and a falling share price, and simultaneous government investigations “, says the report.
The company loses money. According to the report, TuSimple reported just $4.9 million in revenue and $220.5 million in loss for the first half of 2022. Its partnerships with other companies, including Navistar International Corp. and McLane Company Inc., have also fallen apart amid the controversies.
“McLane is aware of the recent leadership, operations and route changes at TuSimple and is in communication with his team. We are in the process of evaluating the relationship with TuSimple and will determine the next course of action in due course,” McLane Chief Administrator Larry Parsons told the Journal.
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In October, TuSimple fired its CEO and co-founder Xiaodi Hou after an internal board investigation found that Hou had shared confidential information with Hydron, a Chinese truck startup that operates primarily in China and is funded by Chinese investors. After his fall, Hou recruited TuSimple co-founder and Hydron founder Mo Chen to retaliate against the board and fire her. Together they brought Lu back to run the company, the Journal reported.
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The company is now working to comply with US regulators.