TuSimple, an automated driving technology company, announced on October 31 that it has terminated Hou Xiaodi, the CEO, President and CTO of the company, and that it has removed him as Chairman of the Board. After the announcement, the company’s share price suffered a sharp decline, with a drop of about 45%.
Ersin Yumer, Executive Vice President of Operations, will take over as interim CEO and president, while TuSimple will start looking for new independent members. The firm might be under investigation by US departments such as the SEC for allegedly transferring benefits, which is one of the reasons behind Hou’s sudden dismissal.
In the first half of this year, Chen Mo, the co-founder and former CEO of TuSimple, founded a hydrogen-powered truck company called Hydron. The firm has completed two rounds of financing worth over $80 million, and the pre-investment valuation of round-B financing has reached $1 billion. Although Hydron is incorporated in mainland China, Hong Kong and Delaware, its business is mainly in China, where Chen spends most of his time. Subsequently, Hydron and TuSimple began to explore a technical cooperation relationship.
According to a report by the Wall Street Journal, the investigation by the US federal departments seems to assume that because Hydron is supported by Chinese investors, TuSimple’s cooperation and technical exchanges with Hydron have not been properly disclosed, violating laws on securities trading and foreign investment review.
TuSimple’s board of directors claimed in documents submitted to the SEC that in 2021, employees spent paid hours working on matters for Hydron. That work had an estimated value of less than $300,000 and was not presented to, or approved by, the audit committee. The board also believes that in 2022, the company shared confidential information with Hydron and its partners as part of an evaluation of Hydron as a potential OEM partner.
However, Hou defended himself in a LinkedIn post, saying that the board voted to remove him without cause. “I want to be clear that I fundamentally deny any suggestions of wrongdoing. I know my leadership style may sometimes be demanding, but that’s because autonomous driving itself is a demanding mission that requires our undeterred commitment. Unfortunately, the work we have done together and the sacrifices we have made along the way are sometimes under-recognized by those who do not understand the complexity of autonomous driving. It is so unfair to let politics get in the way of the dream we were pursuing together.”
Hou graduated from Shanghai Jiao Tong University with a bachelor’s degree in engineering, then went to the California Institute of Technology for further study with a doctorate in computing and the nervous system. He is an expert in AI, machine learning, computer vision and automated driving technology, and currently has 23 technical patents related to automated driving.
A financial report released on October 31 shows that TuSimple’s revenue in the third quarter of 2022 was $2.7 million, an increase of 2% from the same period last year. The firm’s R&D expenditure was $85.7 million, operating loss was $112 million, and EBITDA loss was $93.6 million.