TuSimple Leaves The Town

When I covered the Electric Vehicle industry in China, one topic always excited me: autonomous driving. TuSimple, named after the Chinglish “too young too simple”, is considered a star in the global autonomous driving sector, boosting a high valuation. In an era of frenzied capital investment, TuSimple’s narrative of reducing labor costs for shipping companies captured investors' imaginations about the future of freight markets. 

At that time, I never anticipated experiencing an autonomous taxi like Cruise in Austin, nor did I foresee the industry contracting so rapidly. 

Back in 2021, TuSimple was labeled “high-risk” by Goldman Sachs before its public listing, with a recommendation for a SPAC(Special Purpose Acquisition Company) debut. 

Chen Mo, the co-founder of TuSimple, didn't like this idea and insisted on an IPO. In an interview with Chinese media, he said, “We want to tell the market that the autonomous driving industry is not fraudulent.”

Three years later, TuSimple announced its decision to delist from the Nasdaq  exchange and to fullexit the U.S. market. I don’t want to repeat their dry explanation in the statement; let’s instead pivot back to some basic business questions: how well has TuSimple been doing in the last two years?

TuSimple has two distinct businesses in the U.S. and Asia. In China, their trucks drive around ports, but in the U.S., they drive on big, open highways. 

For a long time, TuSimple was a leader in U.S. self-driving truck development. They planned to create a network that would cover the whole country, but it turned out that the trucks themselves, more than the technology, posed the biggest challenges for the company.

Tian Zhe at 36kr:

These hardware issues were related to vehicle sensors and body structure design. However, the manufacturers showed a lack of strong interest in updating their vehicle designs. The main reason is that traditional trucks still hold a large market share in the U.S., meaning there's less urgency for these manufacturers to shift towards new energy trucks. In 2022, TuSimple ended a deal with truck manufacturer Navistar, which they had planned to use to co-develop heavy-duty autonomous trucks by 2024.

Their CEO Lu Cheng also mentioned this in a delisting interview. “That’s one of the benefits of focusing our business more on APAC because of the maturity of the hardware supply chain.”

Of course, the loss of Navistar was also related to investigations by the FBI and SEC, as there were concerns about TuSimple, a San Diego, California-based company with founders and funding from China, improperly sharing sensitive technology with a Chinese startup, leading to management turmoil, the replacement of its board and many rounds lay-off.

And the advanced software - In March 2023, the company introduced a Level 3 autonomous driving solution, but they haven't shared any updates on its progress. Then in July 2023, at a press conference in Shanghai, TuSimple still focused on showing off their advancements in Level 4 autonomous trucks. It's still unclear whether TuSimple will focus on realistically rolling out the limited Level 3 autonomy, or take a risk and continue pursuing their original goal of achieving full Level 4 autonomy.

This isn't just TuSimple's problem. Last year, the entire industry downsized. Embark Technologies sold itself due to a lack of funds. Cruise paused operations and cut staff after a crash involving one of its vehicles. Alphabet's Waymo also slowed down its self-driving truck work in its Via subsidiary.

Starting with Google's self-driving project Waymo in 2009, the autonomous driving industry still hasn't shown any successful commercial applications. Once the huge funding runs out, companies are often unsure how to fulfill the promises they made.

TuSimple's story reflects a common theme in tech innovation: aiming for massive transformation, they face uncracked technical and engineering challenges. The ceiling is high, but so are the uncertainties and investments. It leads to either tremendous success or drastic failure.

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