A joint development agreement to make autonomous trucks between TuSimple and Navistar has been severed amid a rocky stretch for the driverless technology maker.
The two companies updated the markets on the status of their 2020 joint development agreement Monday, without offering an explanation for the change in plans. Although, the door was left open for the pair to continue collaborating down the line.
“The decision to end the development agreement does not preclude the companies from working together in the future,” the duo said in a joint statement.
Navistar makes commercial trucks under several brands, including International, and was originally expected to see the start of production on the self-driving trucks by 2024. Development of the trucks was seen as key to the implementation and commercialization of TuSimple’s technology, which has been integrated in retrofitted trucks.
Navistar took a minority stake in the business after the strategic partnership was announced in July 2020. The companies would have used Navistar’s retail sales network in the U.S., Canada and Mexico to sell the autonomous trucks.
TuSimple president and CEO Cheng Lu said at the time, the joint development agreement represented an “important milestone” for the business and offered “a clear path to commercialize self-driving Class 8 trucks at scale.”
Lu was brought back to the top spot at the tech company last month, less than a year after leaving that same position, following the firing of former CEO and chief technology officer Xiaodi Hou. Hou’s termination came after the board’s audit committee investigation concluded the need for an “immediate change of CEO,” chair Brad Buss told analysts last month.
Lu’s return also came with the naming of TuSimple cofounder and major shareholder Mo Chen to executive chair of the board.
The shakeup led the company to fall out of compliance last month in reporting its third-quarter results to the SEC. The company has until Jan. 16 to file its quarterly results.
“I’m returning as TuSimple’s CEO with a sense of urgency to put our company back on track,” Lu said at the time of his reinstatement. “We’ve dealt with turmoil this past year, and it’s critical that we stabilize operations, regain the trust of our stakeholders and provide the talented team at TuSimple with the support and leadership they deserve.”
Lu also maintained the company “hasn’t wavered” on its “vision.”
Federal probes have served as hurdles for the business, with investigations by the Federal Bureau of Investigation, Securities and Exchange Commission and Committee on Foreign Investment.
The company’s ties with a China-backed hydrogen truck startup called Hydron, first reported by the Wall Street Journal in October, and to what extent information was shared between the two is being scrutinized, with Buss telling investors some TuSimple employees had failed to disclose working on Hydron matters in 2021.
Buss went on to say the decision to remove Hou was “independent of the Wall Street Journal article, and was made in connection with an ongoing internal investigation launched by the audit committee in July,” adding the board had “lost trust and confidence in Xiaodi’s judgement, decision making and ability to lead the company as CEO.”
A separate probe looking into whether an investment TuSimple received from Sun Dream posed a matter of national security, due to the Department of Defense’s use of self-driving technology, had also been initiated in March of last year by the Committee on Foreign Investment. Sun Dream is part of Chinese online media firm Sina Corp. That investigation ended in February with TuSimple signing a national security agreement with the government that includes periodic reporting to monitoring agencies and the appointment of a security officer among other stipulations, according to an SEC filing.
TuSimple reported truck reservations for the third quarter at 7,485, with a 100-truck deal placed after the close of the three-month period. Meanwhile, it continued to expand its Texas footprint, with leases for terminals in Dallas and San Antonio, which the company said are expected to serve as start and end points for its autonomous freight network (AFN).
The company reported revenue of $2.7 million in the third quarter, up 49 percent from a year ago. Loss from operations increased 3 percent from a year earlier to $120 million.
Shares of TuSimple, which began trading in April 2021, have fallen about 93 percent since the start of the year.