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TuSimple Fires CEO Xiaodi Hou Amid Federal Investigation

TuSimple Fires CEO Xiaodi Hou Amid Federal Investigation
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TuSimple Holdings Inc.,

TSP -45.64%

The self-driving trucking company said Monday that it has fired its chief executive and co-founder Xiaodi Hou.

The board of directors removed Mr. Johnson on Sunday, the San Diego-based company said in a news release and securities filing. Hou was also chairman of the board and chief technology officer.

Mr. Hough was fired pending an ongoing investigation by board members.

“Basically, we Dr. Hou’s judgment, decision-making ability and ability to lead the company as CEO,” TuSimple’s independent board of directors said in a statement.

The board’s investigation found that TuSimple shared confidential information this year with Hydron Inc., a trucking startup that operates primarily in China and is funded by Chinese investors, the securities filing said. The document also said TuSimple’s decision to share confidential information with Hydron was not previously disclosed to the board. TuSimple signed a business agreement with Hydron.

TuSimple said it did not know whether Hydron had shared or disclosed confidential information.

In a statement posted on LinkedInMr. Howe has pleaded not guilty and said his firing was “unprovoked.”

“Unfortunately, the Board’s processes and outcomes have been questionable at best,” he said. You wrote “As the facts emerge, I am confident that my decisions as CEO and Chairman and our vision for TuSimple will be vindicated.”

Mr. Hou’s termination was reported by The Wall Street Journal as TuSimple and its management, mainly Mr. Howe faced investigations by the Federal Bureau of Investigation, the Securities and Exchange Commission and Committee on Foreign Investment in the United States, known as Cfiuson whether the company properly funded the technology to Hydron, according to people familiar with the matter.

TuSimple shares fell more than 45% in Monday trading. The company’s stock is down more than 90% for the year.

Investigators at the FBI and SEC mr. Hou violated fiduciary duties and securities laws by failing to properly disclose TuSimple’s ties to Hydron, a Chinese-backed startup founded in 2021 by TuSimple co-founder Mo Chen that says it is developing autonomous hydrogen-powered trucks, the magazine reported. Federal investigators are also looking into whether TuSimple shared intellectual property with U.S.-developed Hydron, a move that defrauded TuSimple investors by sending valuable technology to an overseas competitor.

Mr. Chen did not immediately respond to a request for comment.

It is reported that the management board of the magazine also informed in July began to investigate similar issuesincluding whether TuSimple incubates Hydron in China without informing regulators, TuSimple management or its shareholders. A June business presentation from Hydron seen by the Journal named TuSimple as Hydron’s first customer and said TuSimple would buy several hundred hydrogen-powered trucks from Hydron. self-driving technology. A TuSimple spokesperson said the company is considering a deal to buy trucks from Hydron, but is not a Hydron customer.

Mr. Hou said in a statement that he cooperated fully with the board and “I have nothing to hide.”

“I want to be clear that I strongly deny any suggestion of wrongdoing,” he said. you said

TuSimple’s securities filing on Monday said TuSimple employees worked for Hydron and earned less than $300,000. The Board was not aware of this and the members did not confirm it. Mr. Chen, who heads Hydron, is TuSimple’s largest shareholder, owning about 11.8% of the company, according to FactSet.

Mr. Hou said he has not sold a single TuSimple share and will continue to hold his stake as long as he can. He owns about 11.3% of the company, according to FactSet.

Mr. Howe’s firing follows months of upheaval at the company, including the departure of its chief financial officer and chief legal officer. Most of the confusion is due to Mr. Hou took over as CEO in March, former employees said.

In April, one of TuSimple’s autonomous semi-trucks crashed on an Arizona highway. Event discovered safety and security issues Former employees at TuSimple were fired by management in August, the magazine said.

TuSimple was founded in 2015 and went public in April 2021, raising over $1 billion in funding in the process at a valuation of $8.5 billion. The company develops autonomous driving systems that are intended to be integrated into large units produced by the world’s largest truck manufacturers. Its partners include Navistar International Corp. and Traton, publicly listed

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a subsidiary that manufactures trucks.

TuSimple said Ersin Yumer, the company’s executive vice president of operations, will serve as interim CEO while the board of directors searches for Mr. Hon’s successor, Mr. Yumer used to work on it autonomous vehicle technology hour

Aurora Innovation Inc.,

Uber Technologies Inc.

and Argo AI, the autonomous driving enterprise partly owned

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and

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recently closed. Independent board director Brad Buss, former chief financial officer of SolarCity Corp. and Cypress Semiconductor Corp., will serve as chairman, TuSimple said.

Mr. Buss said Monday — in an email to TuSimple employees seen by the Journal — that the company will continue to work toward its goal of having commercial self-driving trucks on U.S. highways. “We must continue to make the difficult decisions necessary to continue TuSimple’s trajectory toward long-term success and long-term stability,” he said. They said

TuSimple also announced its third-quarter earnings on Monday. The company reported a net loss of $133 million in the quarter, an improvement of about $2.3 million from the year-ago period. It had $2.7 million in revenue, up from $1.8 million in the prior period, and $86 million in research and development expenses. Earlier on Monday, TuSimple said it remained on track to meet the full-year guidance it announced in August, including ending the year with a cash balance of about $950 million.

Write to Heather Somerville heather.somerville@wsj.com and Kate O’Keeffe at kathryn.okeeffe@wsj.com

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