TuSimple Holdings and Navistar Inc. are going their separate ways. Their two-year marriage intended to birth a purpose-built Class 8 autonomous truck for long-haul freight is ending in divorce.
The announcement late Monday is the latest setback for TuSimple (NASDAQ: TSP). Boardroom drama and federal investigations have sent its shares to a 52-week low on the Nasdaq. Shares traded at midday Tuesday down 12.17% at $1.99.
Since a friendly panel discussion during CES in January, relations have soured between the Traton Group division and TuSimple. The startup’s failure to tell Navistar about a crash of a retrofitted Navistar LT truck in April created trust issues.
That followed an awkward leadership change at TuSimple in March. Co-founder Xiaodi Hou abruptly replaced Cheng Lu as CEO and ultimately replaced Mo Chen, TuSimple’s other co-founder, as executive chairman.
Questions abound following breakup
It is unclear what happens to the approximately 8,000 reservations TuSimple has for the purpose-built autonomous truck with Navistar. Also unknown is whether any intellectual property or money would change hands. Finally, has or would TuSimple would seek another manufacturing partner?
The future of TuSimple’s autonomous efforts with Traton’s Scania in Sweden in unclear. The two have an autonomous hub-to-hub route between the Swedish cities Södertälje and Jönköping using Scania trucks.
“The presence of an OEM partner for these companies is critical,” said Sam Abuelsamid, principal analyst at Guidehouse Insights. “You want to be able to offer your customers the ability to just go to their OEM of choice, order the truck and have it ready to go. You don’t want to have to do a retrofit on every truck in your fleet.”
With Navistar out of the picture, TuSimple is left to rely on aftermarket upfit of its autonomous technology. The software and hardware is installed on about 70 Navistar trucks. TuSimple hauls freight for UPS and other customers. Those trucks lack all the redundancy in the braking and steering that a purpose-built truck would have.
Falling behind the competition?
Even though it was the first autonomous trucking company to remove the driver in pilot runs last December, competitors Aurora Technology, Waymo Via and Torc Robotics have OEM development partnerships that TuSimple now lacks.
The departure of practically the entire senior leadership team under Lu brought questions about TuSimple’s stability even as major media probed the crash that TuSimple blamed on human error and outdated software programming.
Then on Oct. 30, the board fired Hou, saying he had failed to inform the board of efforts to help Chen’s hydrogen fuel cell autonomous startup called Hydron Inc. Ten days later, Hou and Chen combined their 10:1 super-voting power to oust the company’s four independent directors and bring back Lu as CEO and Chen as executive chairman.
Hou then transferred voting rights in the company to Chen for two years, giving him sole control of the company with 59% of the voting shares.
Talking past each other
Navistar did not address the breakup in a TuSimple news release.
“Navistar believes autonomous driving technologies will be a key component of a future transportation and logistics system and is committed to the development of a safe and efficient autonomous driving solution,” Navistar Vice President Srinivas Gowda said.
Nor did TuSimple.
“I decided to return as TuSimple’s CEO to address the challenges ahead and to set us on a path to long-term stability,” Lu said. “We have proven our technology works, and I’m committed to the concerns of stakeholders.”
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