TuSimple, a company that develops technology for autonomous trucks, said on Wednesday that it intends to terminate the employment of twenty-five percent of its overall personnel as part of a larger strategy to restructure the business to keep it operational.
A couple of weeks after TuSimple and Navistar terminated their agreement to co-develop purpose-built automated semi trucks, the company began laying off employees. A rough year for the company, which included a series of executive shakeups, multiple federal investigations, a truck crash, and a plummeting stock price, led to staff reductions, which we estimate will affect around 350 workers. Additionally, the staff reductions follow a difficult year for the company. TuSimple, much like many other businesses researching pioneer technologies, has needed help generating enough money to meet its operating expenses and replenish its financial reserves.
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The Need For Layoffs
It shouldn't come as a surprise to anybody that the state of the economy right now is precarious. In a statement, TuSimple's President and Chief Executive Officer, Cheng Lu, emphasized the importance of being frugal with the company's resources and running operations as effectively as possible. After being fired earlier in the year from his position as CEO, Lu only just rejoined the organization. His predecessor and TuSimple's creator, Xiaodi Hou, was terminated due to an internal investigation that revealed several employees had links to and shared secret information with Hydron, a firm financed by China that specializes in hydrogen-powered trucks.
This is a component of our overarching strategy to select investments that deliver the greatest value to shareholders and establish TuSimple as an organization focused on its customers and products.
As TuSimple is now divesting itself of its Asia-focused company, the staff members in the United States are the only ones affected by the layoffs. TuSimple has employees in San Diego, Arizona, and Texas, among other places. These employees are responsible for working in areas such as hardware and software resilience, dependability, safety, and information security. One deep perception engineer in Los Angeles has already written on LinkedIn about being laid off. Still, it has yet to be apparent which teams were impacted or whether the layoffs will target a particular location. However, the layoffs will certainly hit somewhere. According to a statement released by TuSimple, over 80% of the remaining workers are in research and development.
The business is cutting back on its freight expansion, which includes non-profitable cargo lanes and corresponding trucking processes that still rely on older generations of autonomous software. According to TuSimple, this type of software contributes very little to the company's ongoing technological development.
How Will TuSimple Benefit From This Move?
According to the firm, the primary emphasis at this time is on verifying and commercializing its automated trucking technology via collaboration with shipping partners. Before this, TuSimple had received over 7,000 bookings for its Navistar vehicles from clients such as DHL Supply Chain, Schneider, and U.S. Xpress. It is still being determined which, if any, of those collaborations will continue, and TuSimple may have to look for new partners.
The reorganization will result in expenses for TuSimple of approximately $10 million to $11 million, which will be recorded as a line item on the company's balance sheet for the fourth quarter and paid during the first quarter of 2023. As a direct consequence of the organizational reorganization and personnel reductions, TuSimple projects that it will be able to realize yearly cost savings in the range of $55 million to $65 million.
TuSimple was trading at $1.42 when this article was written, representing a decrease of over 6% for the day and 96% for the year.
According to what Lu told TechCrunch, employees will continue to be paid for the full two months mandated under the WARN Act, and on top of that, TuSimple intends to give severance money to affected workers.
Featured image: TuSimple
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