Self-driving truck company TuSimple has reached a nine-figure settlement with investors who accused the company of misrepresenting the capabilities of its self-driving trucks, thereby sending its share price plummeting.
On Monday, August 26, a motion seeking preliminary approval of a settlement in a class action lawsuit filed by investors against TuSimple was filed in a California federal court. According to court documents, the autonomous truck company will pay $189 million to settle the dispute.
If the court approves the settlement, it will end a two-year legal battle between TuSimple and investors stemming from an accident involving one of the company’s trucks. After the accident became known, TuSimple’s share price suffered a severe drop.
In April 2022, a Level 4 autonomous truck from TuSimple was involved in an accident near Tucson, Arizona. In a video obtained by Land Line, the truck can be seen entering a median of a highway and nearly colliding with nearby vehicles. A test driver reaches out to activate the truck’s autonomous features. Immediately, the truck lurches to the left and hits a median.
In August 2022, the Wall Street Journal reported on the crash and highlighted security concerns at TuSimple. These concerns undermined the company’s security claims and revealed information it kept secret from investors.
On the same day this article was published, TuSimple shares fell nearly 10% from the previous trading day. When the lawsuit was filed less than a month later, shares were trading at a low of $7.05 per share. That’s a decline of more than 80% from the IPO price of $40 in April 2021.
TuSimple’s downward spiral
After the crash report and subsequent lawsuit, TuSimple quickly began to fall apart.
About a week after the lawsuit was filed, Jim Mullen resigned from his post as top legal and administrative official at TuSimple. Mullen left his job as deputy administrator and chief counsel at the Federal Motor Carrier Safety Administration to work for the company.
Two months after the lawsuit was filed, TuSimple’s board of directors fired then-CEO, President and Chief Technology Officer Dr. Xiaodi Hou from his positions at the company. Hou, who founded the company, was also fired as chairman of the board and a member of the Government Security Committee.
Hou’s firing came the same day that the Wall Street Journal published an article about a federal espionage investigation into TuSimple and its founders. Hou is accused of failing to disclose his relationship with Chinese company Hydron, which makes autonomous hydrogen-powered trucks, and of sharing TuSimple’s intellectual property with Hydron.
Shortly after Hou’s resignation, Navistar announced that it had terminated its development agreement with TuSimple. No further details were provided, except that the termination of the agreement does not preclude future collaboration between the companies.
In May 2023, TuSimple received a notice from the Nasdaq stock exchange that the company would be delisted. Although this delisting was reversed, the company itself delisted in January. Last December, TuSimple began winding down its U.S. operations as it planned to move its operations to China.
In January, a federal judge issued a temporary restraining order prohibiting 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 the California Uniform Trade Secrets Act.
A few days after the injunction was issued, it was revealed that the Department of Commerce had intercepted a shipment of high-performance Nvidia A100 computer chips from TuSimple to its new Australian subsidiary. Although the shipment of computer chips to Australia is permitted, their transfer to China is not. The federal government blocked the shipment while it investigated whether or not the final destination of the computer chips should be China.
In a statement, TuSimple pointed out that the computer chips are available worldwide and contain no trade secrets or technology developed 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 and then only having to buy them back at full price. TuSimple also denies any intention to ship the computer chips to China.
In August, TuSimple announced it would enter the animation and video game business. The move is widely seen as an attempt to generate revenue as its autonomous truck business continues to struggle. The company said a partnership to develop an animated feature film and a video game allows it to commercialize its generative AI technology, which it has developed as part of developing autonomous driving technology. LL
