Autonomous truck company TuSimple has reached a nine-figure settlement with investors accusing the company of misrepresenting the capabilities of its self-driving trucks, causing stock prices to plummet.
On Monday, Aug. 26, a motion for preliminary approval of a settlement was filed in a California federal court in a class-action lawsuit against TuSimple filed by investors. According to court documents, the autonomous truck company will pay $189 million to end the legal dispute.
If approved by the court, the settlement will end a two-year legal battle between TuSimple and investors that stemmed from a crash involving one of the company’s trucks. Upon news of the crash, TuSimple stock prices took a major hit.
In April 2022, a Level 4 autonomous truck owned by TuSimple was involved in a crash near Tucson, Ariz. In a video obtained by Land Line, the truck is seen veering into a highway median, nearly striking nearby vehicles. A test driver is seen reaching over to activate the truck’s autonomous functions. Immediately, the truck jerks to the left, striking a median.
In August 2022, The Wall Street Journal reported on the crash, highlighting safety concerns at TuSimple. Those concerns undermined the company’s representations of safety and revealed information it kept from investors.
On the same day that story was published, TuSimple shares fell nearly 10% compared to the previous trading day. When the lawsuit was filed less than a month after, shares traded as low as $7.05 per share. That is a decrease of more than 80% from the $40 initial public offering price in April 2021.
TuSimple’s downward spiral
TuSimple quickly began to unravel following the crash report and subsequent lawsuit.
About a week after the lawsuit was filed, Jim Mullen left his post as chief legal and administrative officer at TuSimple. Mullen left his job as acting administrator and chief counsel for the Federal Motor Carrier Safety Administration to work for the company.
Two months after the lawsuit was filed, the TuSimple board of directors booted then-CEO, President and Chief Technology Officer Dr. Xiaodi Hou from his positions with the company. Hou, who founded the company, was also removed as chairman of the board and as a member of the Government Security Committee.
Hou’s termination came the same day The Wall Street Journal published a story revealing a federal investigation looking into espionage charges against TuSimple and its founders. Hou is being accused of failing to disclose his relationship with Chinese autonomous hydrogen-powered truck company Hydron. He is also being accused of sharing TuSimple’s intellectual property with Hydron.
Shortly after Hou’s termination, Navistar announced it had ended its development agreement with TuSimple. No other details were given, other than the agreement severance does not preclude the companies from working together in the future.
In May 2023, TuSimple received a notice from the Nasdaq stock exchange that it was going to be delisted. That delisting was rescinded, but the company ended up delisting itself in January. Last December, TuSimple began dismantling its U.S. operations as it planned to move operations to China.
In January, a federal judge issued a temporary restraining order preventing TuSimple from transferring trade secrets or proceeds to anyone outside the United States.
The order is part of another lawsuit filed by shareholders alleging violations of the federal Defend Trade Secrets Act and California’s Uniform Trade Secrets Act.
A few days after the temporary restraining order was issued, it was revealed that the Department of Commerce had intercepted a shipment of high-powered Nvidia A100 computer chips from TuSimple to its new Australian subsidiary. Although sending computer chips to Australia is allowed, transferring them to China is not. The federal government blocked the shipment while investigating whether or not the computer chips’ final destination was intended to be China.
In a statement, TuSimple pointed out that the computer chips are widely available across the world and do not contain trade secrets or technology designed by the company. The company said it will save more than $150,000 by sending the chips to its Australian subsidiary rather than selling them at a discount, only having to rebuy at full price. TuSimple also denies any intent to transfer the computer chips to China.
In August, TuSimple announced it was getting into the animation and video game business. The move is widely seen as an attempt to generate revenue as its autonomous trucking operations continue to struggle. The company said a partnership to develop an animated feature film and video game allows it to commercialize its generative AI technology that it designed while developing autonomous driving tech. LL
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