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TuSimple Tweaks Union Pacific Partnership

Autonomous trucking technology maker TuSimple Holdings is re-working the rollout of some of its key programs amid new use cases and supply chain challenges.

The San Diego-based company said a partnership with Union Pacific, which invested in the company in 2020, is adjusting to better fit the railroad operator’s business model. Company officials provided the market update last week.

TuSimple’s autonomous vehicles were originally set to move trailers for Union Pacific.

“However, as we go deeper into the collaboration with Union Pacific, we realized that their model is really the real intermodal container transportation,” Xiaodi Hou, CEO and chairman, told investors in a conference call.

Hou, a TuSimple co-founder, assumed the top spot at the company in March and previously served as the company’s CTO.

“Therefore, it will be a much more significant achievement if we can haul the real intermodal container instead of a trailer, which is more like a smaller aspect of their business,” Hou said.

Intermodal containers differ from trailer containers when it comes to equipment, how a container locks onto a chassis, where the container is being picked up from and length of the haul. Intermodal hauls include movement of goods across sea, rail and truck, or multiples modes of transport.

The program with Union Pacific was originally supposed to begin in the spring and has been pushed to the third quarter as the company reworks its operating design systems for container hauls.

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“With this new plan we’ll be much [more] integrated with the daily operation model of Union Pacific,” Hou said.

The Union Pacific news came with other updates, including the progress of TuSimple’s Driver Out testing. Driver Out refers to autonomous vehicles operating without a human inside.

The company struck a deal with truck maker Navistar in 2020 to work on an autonomous heavy-duty truck originally scheduled for production in 2024. That’s since been changed to having a prototype ready in 2024 and vehicles on the road in 2025.

TuSimple expects to use retrofitted trucks beginning in 2023 and going into 2024.

The company’s also thinking differently about the miles clocked on its autonomous freight network (AFN), or the routes on the map that are compatible with its vehicle software. The company’s total mapped miles at the end of the first quarter were about 11,200, unchanged from the fourth quarter.

“So, I think for mapping, we have different phases of development,” chief financial officer Pat Dillon said. “The first phase is to demonstrate to the world that we can map cheaply and quickly, and that goal has been achieved.”

Hou went on to say when taking into account the number of trucks in operation, it makes sense to not map where TuSimple trucks are not operating.

Instead, mapping will focus less on expanding mileage and more on accuracy and additional use cases, Dillon added.

“TuSimple has entered the Driver Out era, a necessary step for every autonomous driving company to reach commercialization,” the company said in a letter to shareholders. “In this new era, we are focusing on increasing efficiency through expanding our operational design domain and optimizing our operations so we can deliver a world class product to our customers.”

The company said it spent the first quarter working on safety feature testing and features such as information sharing among vehicles in a fleet via a cloud-based system.

A total of 21 new patents were issued to the company in the quarter, bringing its intellectual property portfolio to 408 at the end of the first quarter.

TuSimple ended the period with revenue of $2 million, up 140 percent from the year-ago period. Its loss from operations totaled $112 million.

The company added 500 reservations during the quarter with what it described as “blue chip partners,” including digital third-party logistics platform Loadsmith.

It also struck partnerships with other companies in the quarter that further build on its autonomous network. That includes the addition of terminals in Houston and Laredo, Texas, with both located at maintenance facilities owned by trucking company Ryder.

“Building out our dedicated terminal network in Texas is an important step to prepare for expansion of our Driver Out operations,” the company said in its shareholder letter.

It also struck a deal with logistics company Werner Enterprises for 24/7 roadside assistance on the TuSimple AFN, which the company called out as “a critical step for our Driver Out commercialization.”

TuSimple, which had a recent market cap of $1.8 billion, was trading down about 11 percent afternoon Monday to $8.17 a share.