Self-propelled trucking company TuSimple Holdings inc
plans to potentially cut at least half its workforce next week, people familiar with the matter said, as it scales back efforts to build and test autonomous truck driving systems.
A workforce reduction of this magnitude would likely affect at least 700 employees, the people said. As of June, TuSimple had 1,430 full-time employees worldwide. It has offices in San Diego, Arizona, Texas and China.
The cut follows a dramatic series of events, including the ousting of the chief executive officer in October, after a board investigation revealed that TuSimple had shared confidential information with a Chinese startup. TuSimple is facing multiple federal investigations regarding its relationship with Chinese startup Hydron Inc.
Cheng Lu, TuSimple’s president and chief executive, who previously held the job of CEO and returned to the position in November, said Friday when asked to comment on the planned layoffs that he intends to “put the ship in order.” and that includes ensuring the business is capital efficient.”
The company plans to significantly scale back its work building self-driving systems and testing self-driving trucks on public roads in Arizona and Texas, people familiar with the matter said. As part of the downsizing, much of TuSimple’s operations in Tucson, Arizona, where it conducts many of its test drives, will be eliminated, and the team working on the algorithms for the self-driving software will be significantly reduced. said the people.
TuSimple will focus on developing a software product that pairs self-driving trucks with truckers who have cargo to move, with the goal of offering freight transportation at a lower cost than human-powered trucks, the people said.
This month, TuSimple and Navistar International Corp. announced that they have ended a two-year partnership together. TuSimple had planned to integrate its self-driving systems into Navistar trucks to be sold to carriers starting in 2025. TuSimple does not build any trucks itself.
The employees have adjusted to the layoffs. Earlier this month, Mr. Lu sent an email to employees saying management was reviewing “our personnel expenses, most of our cash burn,” according to a copy seen by The Wall Street Journal. He advised employees to “focus on the work at hand.”
San Diego-based TuSimple told employees this week that offices would be closed on Tuesdays and Wednesdays, the people said. The job cuts are expected to be announced on Tuesday, it said.
TuSimple is cutting costs and trimming its ambitions as it has been rocked by a series of crises this year, including a crash of one of its self-driving trucks in April, the loss of key business partnerships, two CEO changes, a falling share price and simultaneous regulatory investigations. Federal authorities are investigating whether TuSimple improperly funded and transferred the technology to Hydron, the Journal reported in October.
TuSimple struggled to generate significant revenue as its technology was in the testing phase; In the first half of the year, it reported revenue of $4.9 million on losses of $220.5 million. Most of this revenue came from transporting cargo for shippers in trucks while a human driver remained behind the wheel. In recent weeks, some of those partners, including McLane Company Inc., have distanced themselves from TuSimple, according to people familiar with the matter.
“McLane is aware of the recent leadership, operational and route changes at TuSimple and is in communication with his team. We are currently evaluating the relationship with TuSimple and will make a decision on how to proceed in due course,” said Larry Parsons, McLane’s Chief Administrative Officer.
In October, following a board investigation and the day after the Journal reported that the Federal Bureau of Investigation, the Securities and Exchange Commission and the US Committee on Foreign Investments (Cfius) were investigating TuSimple, the company’s board of directors fired the then CEO Xiaodi Hou. After his dismissal, Mr. Hou joined forces with his co-founder Mo Chen, who is also the head of Hydron, to fire the board. Together they brought Mr. Lu back to run the company. According to securities filings, Mr. Chen now controls the company with 59% of the voting rights while Mr. Hou owns 30%.
Last month, accounting firm KPMG LLP said in a letter to the SEC that it had resigned as TuSimple’s auditor as a result of the dismissal of TuSimple’s board of directors, which included the dismissal of TuSimple’s audit committee.
TuSimple has announced leadership changes to regain compliance with regulators and public exchange regulations. This included the addition of two independent board members and a security director to the board. Cfius had requested the role of director of security as part of a national security agreement with the company, but TuSimple fired the previous director of security.
TuSimple’s stock closed at $1.54 on Friday, down 75% over the past two months and down 96% from its 2021 IPO price.
Write to Heather Somerville at [email protected]
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