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TuSimple to Cut 25% of Staff in Broad Restructure

Driverless technology maker TuSimple said Wednesday it would lay off about 350 employees, amid what its CEO said is a “difficult” economic environment.  

The cuts amount to 25 percent of the company’s overall headcount and, once completed, will leave TuSimple with roughly 1,100 workers. About 80 percent of the employees expected to remain following the restructure hold research-and-development positions at the California company. 

“It’s no secret that the current economic environment is difficult,” TuSimple president and CEO Cheng Lu said in a statement Wednesday. “We must be prudent with our capital and operate as efficiently as possible.” 

TuSimple said the cuts would come at a cost of $10 million to $11 million, but would save the business $55 million to $65 million annually. 

The company’s shares closed down nearly 6 percent in trading Wednesday to $1.42 for a market capitalization of about $320 million. 

TuSimple also said it would “scale back freight expansion,” which would include cutting unprofitable routes. 

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Trucking operations along those lanes utilize previous generation autonomous software that provides limited value to the company’s ongoing technology development,” it said. 

The impact of Wednesday’s news will mostly be felt in the U.S., with TuSimple saying it would continue to “explore strategic alternatives” for its Asia business. 

The restructure follows a number of internal moves at the executive and board levels made by Lu, who rejoined the business last month to, as he put it, get the business “back on track.” 

Lu’s return came less than a year after he left the top spot at the company. His appointment followed former CEO and chief technology officer Xiaodi Hou’s termination after an audit committee investigation concluded with the need for an “immediate change of CEO,” chair Brad Buss told analysts last month.

Probes by the Federal Bureau of Investigation and Securities and Exchange Commission into the company’s ties with a China-backed hydrogen truck startup called Hydron also hit the business earlier this year. Although, Buss said Hou’s termination was made independent of a Wall Street Journal report that broke the news of the dual investigations.

A separate inquiry by the Committee on Foreign Investment, looking into whether an investment TuSimple received from Sun Dream was a matter of national security, concluded in February. The company agreed to, among other things, provide the government with periodic reporting and appoint a security officer. 

“While I deeply regret the impact this has on those affected, I believe it is a necessary step as TuSimple continues down our path to commercialization,” Lu said of the restructure. “This is part of our overall strategy to prioritize investments that bring the most value to shareholders, and position TuSimple as a customer-focused, product-driven organization.” 

Earlier this month, the company’s joint development agreement with commercial truck maker Navistar was severed without explanation.

TuSimple’s technology has so far been implemented in retrofitted trucks. The Navistar agreement was viewed as helping move the tech company forward on its goal toward commercialization. 

The agreement was originally announced in July 2020. Both companies confirmed the possibility they could still work together in the future. 

Under terms of the deal, Navistar would have produced trucks using TuSimple’s driverless technology, with an original start of production aimed for 2024. The vehicles would have been sold through Navistar’s retail network in North America.