TuSimple plans layoffs that could cut at least half of its workforce next week

The reduction follows a dramatic chain of events, incl Dismissal of the CEO In October, after a board investigation concluded that TuSimple shared confidential information with a Chinese startup. TuSimple He faces numerous federal investigations In its relationship with the Chinese startup, Hydron Inc.

TuSimple President and CEO Cheng Lu, who previously served as CEO and He returned to the post In November, he said on Friday, when asked for comment on the planned layoffs, that he intended to “get the ship right, and that includes ensuring the company is capital efficient.”

The people familiar with the matter said 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. As part of the downsizing, much of TuSimple’s operations in Tucson, Arizona, where it does much of its test drives, will be phased out, and the team that works on the self-driving software’s algorithms will be cut back significantly, the people said.

The people said TuSimple will focus on building a software product that matches self-driving trucks with shippers that have freight to move, with the goal of offering freight transportation at a lower cost than human-driven trucks.

This month, TuSimple and Navistar International Corp. said they had jointly ended a two-year partnership. TuSimple has planned to integrate its self-driving systems into Navistar trucks that will be sold for freight lifts starting in 2025. TuSimple does not manufacture the trucks itself.

Employees were preparing to lay off workers. Early this month, Mr. Low sent an email to employees saying management was reviewing “our employee expenses, the bulk of our burned cash,” according to a copy seen by the Wall Street Journal. He advised employees to “focus on the work at hand”.

TuSimple, based in San Diego, told employees this week that offices will be closed on Tuesdays and Wednesdays, the people said. They said the job cuts are expected to be announced on Tuesday.

TuSimple has been cutting costs and trimming its ambitions as it recovers from a series of crises this year, incl One of its self-driving trucks crashes In April, the loss of key business partnerships, a change of two CEOs, a drop in share prices, and concurrent government investigations. The Journal reported in October that federal authorities are investigating whether TuSimple improperly funded and transferred technology to Hydron.

TuSimple has struggled to generate significant revenue as its technology has remained in the testing phase; For the first half of the year, it reported revenues of $4.9 million and losses of $220.5 million. This revenue came largely from transporting goods to shippers in trucks while keeping a human driver behind the wheel. In recent weeks, some of those partners, including McLane Company Inc. , to distance themselves from TuSimple, according to people familiar with the matter.

“McLane is aware of recent leadership, operating and course changes at TuSimple and is in touch with its team. We are in the process of evaluating the working relationship with TuSimple and will determine the next course of action in due course,” said Larry Parsons, McLane’s chief administrative officer.

In October, following a board investigation and a day after the Journal reported that the FBI, the Securities and Exchange Commission, and the Committee on Foreign Investment in the United States, or Cfius, were investigating TuSimple, the company’s board fired former CEO Xiaodi Hui. After being overthrown, Mister Hu joins forces with co-founder Mushen, who is also the leader of Hydron, to order Launch the board. Together, they brought in Mr. Lu to run the company. Mr. Chen now controls the company with 59% of the voting power, while Mr. Hu has 30%, according to securities filings.

Last month, accounting firm KPMG LLP said in a letter to the Securities and Exchange Commission that it had resigned as TuSimple’s auditor as a result of the board’s dismissal, which also included the dismissal of TuSimple’s audit committee.

TuSimple announced changes in leadership in an effort to return to compliance with regulatory agencies and public stock market rules. This included adding two independent directors and a director of security to the board. Cfius had asked for the security director role as part of the national security agreement with the company, but TuSimple fired the previous security director.

TuSimple stock closed at $1.54 Friday, down 75% over the past two months and down 96% from its 2021 IPO price.

Write to Heather Somerville at [email protected]