TuSimple Announces Restructuring and Layoffs for 25% of Employees
TuSimple, an autonomous driving technology company, has announced a restructuring plan which will impact approximately 350 of its employees, or 25% of the workforce, while 80% of the remaining approximately 1,100 employees are in R&D functions. The announced number of layoffs is lower than the 700 reported by the Wall Street Journal last week.
TuSimple plans to actively work with key shipping partners to operationalize its autonomous technology. Also, in an effort to ensure capital efficiency, the firm plans to scale back freight expansion, including unprofitable freight lanes and respective trucking operations. Trucking operations along those lanes utilize previous-generation autonomous software that provides limited value to the company’s ongoing technological development. The majority of the restructuring is in the company’s US operations as the company continues its plan to explore strategic alternatives for its Asia business, including a divestiture.
Moreover, TuSimple stated that one-time restructuring would reach approximately $10 million to $11 million, with the majority recognized in the fourth quarter of 2022 and paid in the first quarter of 2023. Compensation related restructuring savings in the company are expected to be between $55 million and $65 million on an annual basis.
These layoffs are actually a continuation of TuSimple’s management turmoil a few months ago. On October 31, when TuSimple released its financial report for the third quarter of 2022, the board of directors suddenly announced the dismissal of Hou Xiaodi, the CEO, President and Chief Technology Officer at the time, and removed him from the board of directors.
According to the 8-K documents submitted by TuSimple, there may have been improper funding and technology transfers between TuSimple and Hydron, a startup of self-driving hydrogen-powered trucks. The company was accused of sharing some confidential information with Hydron, and these behaviors were not notified to the audit committee in advance. Hou denied the board’s comments and said in an open letter that he had not sold any shares in the company and would not sell any shares as long as he could support his family.
SEE ALSO: TuSimple’s Stock Price Plunges 45% After Firing CEO
On November 10, Hou began to fight back. He joined hands with co-founder Chen Mo to formally dismiss four board members, namely Brad Buss, Karen C. Francis, Michelle Sterling and Reed Werner. Hou became the sole remaining member of the board, then he appointed Chen and Lu Cheng, a shareholder and the former CEO, to the board.
After the reshuffle, TuSimple announced that the root cause of the recent series of changes in the company lies in the differences between the founding team and the board of directors in the company’s business philosophy and management methods, rather than political tensions between China and the US.
At the beginning of December this year, Lu, the new CEO of TuSimple, released an email saying, “Our personnel expenses are the largest part of cash consumption. The company is reviewing the manpower expenditure, hoping that employees can focus on the work at hand.” He made the commitment to set the company on the path towards stability and long-term success. In the past 30 days, the company has named three independent directors to the board, reconstituted its board committees, and stabilized the management team, including naming its interim CFO, Eric Tapia, as permanent CFO. In addition, Mike Mosier, one of the new independent board members, was named as TuSimple’s security director.