TuSimple Hydron Self-driving

Self-driving truck firm TuSimple fires its CEO amid FBI and SEC probes

Rebbeca Ren

posted on November 1, 2022 0:57 am

Self-driving truck startup TuSimple said on Monday that it has fired its CEO and co-founder Xiaodi Hou.

Hou was ousted on Sunday over his connection to an ongoing investigation by members of the board, the company said in a press release. That review "led the board to conclude that a change of CEO was necessary," said the release.

The San Diego-based startup’s operations chief, Ersin Yumer, will serve as interim CEO and president while TuSimple’s board of directors searches for a permanent successor. 

Hou's termination came a day after The Wall Street Journal reported that TuSimple faced investigations by the Federal Bureau of Investigation (FBI) and the Securities and Exchange Commission (SEC).

The company's ties to Hydron, a start-up developing autonomous hydrogen-powered trucks, sparked the investigation, although Hydron has stated in previous news releases that it is a private company, not a subsidiary of TuSimple.

Hydron was formed by Mo Chen, co-founder of TuSimple, in June of this year and is said to be headquartered in Southern California. The startup focuses on developing, manufacturing, and selling hydrogen fuel-cell-powered autonomous-ready class-8 trucks and intends to provide hydrogen refueling infrastructure for large fleets and leading carriers in the future.

According to WSJ's report on Monday, the FBI and the SEC are examining whether TuSimple’s leadership failed to make required disclosures about its transactions with Hydron and whether the dealings harmed TuSimple investors.

The investigators are also trying to find out whether TuSimple shared intellectual property developed in the US with Hydron and whether that action defrauded TuSimple investors by sending valuable technology to an overseas adversary, the newspaper said.

Citing people familiar with the matter, the report said that Hydron's operations are mainly in China, where Chen spends most of his time.

Prior to this, TuSimple's board opened an investigation in July, looking into whether the firm had engaged in improper dealings with Hydron, such as providing funds and transferring technology to the startup without telling regulators, the TuSimple board, or its shareholders.

A TuSimple spokesman told WSJ that the company isn't aware of any FBI or SEC investigations and that Hou has never been a Hydron employee or received payment from Hydron. Hou also does not have a financial interest in the company.

Following the termination news, Hou posted an announcement on LinkedIn, denying any suggestions of wrongdoing. "The Board’s processes and conclusions have been questionable at best...I have been completely transparent in both my professional and personal life and I fully cooperated with the Board because I have nothing to hide," he wrote.

Autonomous driving is a big agenda in the tech war between China and the US, and TuSimple, which has offices in both China and California, has been pulled into the fight.

In March, the trouble-ridden company was reportedly looking to sell its China operations for $1 billion. The decision comes after it reached an agreement with Washington to restrict the China unit's access to data due to US security concerns.

One of China's leading automakers, Geely, who also owns Volvo, is apparently considering purchasing TuSimple's Chinese unit. Right now, the two are negotiating a mass production project for L4 autonomous vehicles.

In its 2021 annual report, the company said it operates about 100 Level 4 autonomous semi-trucks, 75 in the US and 25 in China, capable of running without human drivers on certain routes. TuSimple's operations in China were mainly focused on transportation at ports, as China allows limited public routes for autonomous driving vehicles to conduct road tests.

As of Monday's close, TuSimple closed at $3.43 per share, down 45.64%. The company's stock price has plunged 90.43% this year.