The first self-driving stock, with only 1% market value left

Image source: TuSimple

On May 11, local time in the United States, the delisting notice from Nasdaq broke the illusion of calm for the self-driving truck company TuSimple.

According to an announcement issued by TuSimple, it received a notice from the Nasdaq Exchange on May 5. Due to TuSimple's failure to timely submit its quarterly report as of September 30, 2022 and the year as of December 31, 2022 Report, does not comply with Nasdaq listing rules, Nasdaq has decided to reject the company's request to continue listing. The notice states that unless the company appeals the delisting decision, trading in the company's common shares will be suspended at the open of trading on May 15, 2023. As soon as the above news came out, TuSimple's stock price plummeted by nearly 30% that day.

In response, TuSimple stated that the company will appeal Nasdaq’s delisting decision to the Nasdaq hearing panel and request that the suspension of trading in the company’s securities be extended to the hearing date. It is reported that the hearing is usually scheduled to be held approximately 30 to 45 days after the date of the hearing request. At the same time, TuSimple said that on May 10, 2023, the audit committee of the company's board of directors has appointed UHY LLP as the company's new independent registered accounting firm for the fiscal year ending on December 31, 2022. Now that UHY has been appointed, it is expected that financial reporting related work will begin immediately. Despite this, TuSimple said it could not guarantee that the appeal would be successful or that the financial report could be successfully submitted.

According to the data, TuSimple was founded in 2015 and is headquartered in California, USA. It is an autonomous truck company with joint offices in China and the United States. The company is committed to developing advanced and cutting-edge heavy truck autonomous driving technology. At the beginning of its establishment, the company received financial support from well-known investment institutions such as NVIDIA, Composite Capital, and UPS. In April 2021, TuSimple raised US$1.35 billion and was successfully listed on Nasdaq in the United States. It won the "first autonomous driving stock" in one fell swoop and became a popular player in the autonomous driving track. At that time, the issuance was priced at US$40 per share, with a total market value of nearly US$8.5 billion.

After its listing, TuSimple has soared all the way, with its stock price reaching as high as US$79 per share, corresponding to a market value of US$17.854 billion. However, two years later, TuSimple has already lost its early halo. As of the close of U.S. stocks on May 17, TuSimple was trading at $1.280 per share, and its market value had dropped by 99% to only $289 million.

Image source: TuSimple

In fact, this is not the first time TuSimple has received a delisting notice. In early March this year, TuSimple announced that it had received a notice from Nasdaq that because it failed to submit Form 10-K to the U.S. Securities and Exchange Commission in a timely manner, the company did not comply with the Nasdaq listing rules, that is, it failed to submit the required form to the U.S. Securities and Exchange Commission in a timely manner. The SEC files all required periodic financial reports. In this regard, TuSimple stated that the reason for failing to submit the report on time is that the company needs additional time to identify and select new key accountants, who will complete the review and audit of the company's financial statements.

Due to TuSimple's inability to update its financial data, the outside world has speculated that this means that the company's financial situation is already very tight. Prior to this, the last financial report released by TuSimple was after the U.S. stock market closed on November 1, 2022, Beijing time, that is, the 2022 Q3 performance report. The financial report shows that TuSimple’s Q3 revenue in 2022 was US$2.653 million, a year-on-year increase of 48.63%; the net loss was US$113 million, compared with US$115 million in the same period last year. Diluted net loss per share attributable to common shareholders was $0.50, compared with net loss per share of $0.54 in the same period last year. The company ended the quarter with $873 million in cash.

We can roughly look at TuSimple’s “dissuasion” from two reasons: internal and external.

Let’s talk about the outside first. In recent years, the entire international environment has become increasingly stringent in regulating the autonomous driving industry. TuSimple is a joint office company in China and the United States. Since its listing, the Committee on Foreign Investment in the United States (CFIUS) has launched a nearly one-year investigation into TuSimple. It was not until February 2022 that TuSimple reached a series of agreements with the U.S. government on data security, policy supervision, etc., and the investigation came to an end.

Then in November 2022, TuSimple was once again exposed to be under investigation by multiple U.S. agencies. According to the Wall Street Journal, TuSimple is facing investigations by the FBI, the Securities and Exchange Commission (SEC), and the Committee on Foreign Investment in the United States (CFIUS). The investigations include TuSimple and hydrogen truck startups The relationship between the company Hydron, which was founded by Chen Mo, the co-founder of TuSimple.

According to reports, the FBI and SEC are investigating whether company executives violated fiduciary duties and securities laws by failing to properly disclose the relationship between the two companies. At the same time, these agencies are also investigating whether TuSimple shared intellectual property developed in the United States with Hydron, and whether this behavior deceived TuSimple investors by transferring valuable technology to overseas rivals. It is reported that the executives of the above-mentioned investigation company are mainly CEO Hou Xiaodi. Immediately, TuSimple issued a statement stating that it had terminated Hou Xiaodi’s positions as CEO and COO.

Hou Xiaodi, co-founder of TuSimple

Source: Internet

While facing strict regulations in the external environment, TuSimple is also experiencing constant troubles internally. The company first revealed a high-level personnel shakeup. Hou Xiaodi, co-founder, CEO and chief technology officer of TuSimple, was fired, and Ersin Yumer, the company's director of operations, served as interim CEO and president. In December last year, TuSimple announced layoffs and restructuring. Plan, this restructuring affects about 25% of employees, with restructuring costs of approximately US$10 million to US$11 million; at the same time, most of the company's test drive operations in Arizona have also been suspended, and the team working on autonomous driving algorithms was significantly reduced. It has even been revealed that TuSimple’s business in China was once almost stagnant due to regulatory requirements after listing in the United States.

Finally, there is TuSimple’s L4 business. TuSimple's future market has always been focused on L4 heavy-duty trucks. It previously announced that it would develop a hydrogen-fueled heavy-duty truck with L4 autonomous driving capabilities and establish a new company in Los Angeles, USA. However, according to media reports, industry insiders estimate that the price of an autonomous hydrogen-powered heavy truck is at least 2 million yuan, and the cost of a hydrogen fuel cell engine alone is close to 1.2 million yuan. The most important point is to implement it at the commercial level. Relevant data shows that the sales volume of hydrogen fuel heavy trucks in China in 2021 will be less than 1,000 units. Obviously, as far as the current market is concerned, the application of hydrogen energy vehicles is considered an advanced project and lacks certain market potential.

Under the shroud of all kinds of negative news, TuSimple's vitality was severely damaged. However, under heavy pressure, TuSimple is also seeking to save itself. Regarding its current difficulties in the L4 level autonomous driving business, TuSimple is trying to transform to L2+ and L3 levels.

At the Shanghai Auto Show held last month, TuSimple announced the launch of a new smart driving product, the domain-controlled centralized large sensing box TS-Box. Through dual optimization of hardware and software, the overall cost of TS-Box can be reduced by about 25%. According to reports, the kit integrates its self-developed autonomous driving domain controller, centralized 4D radar solution, centralized positioning module and perception and positioning fusion algorithm to realize the overall package of perception solutions and a more flexible autonomous driving function development model. . The TS-Box base is compatible with commercial vehicle and passenger car scenarios, and can optimize and upgrade the perception model by pushing upgrade packages.

In terms of hardware, Tucson's self-developed TDC is customized and developed based on system-level SoC chips, which can provide more fine-grained scene technology customization capabilities. At the same time, signal processing tasks are concentrated on the SoC chip, further reducing the overall cost. Compared with independent procurement, the overall cost can be reduced by about 25%. In terms of software, TuSimple's self-developed integrated navigation fusion algorithm can utilize multiple data sources and positioning Information is fused to improve positioning accuracy and further reduce software development and update costs.

In fact, the recent autonomous driving track can be described as "troublesome". When TuSimple received the delisting notice, Alibaba Damo Academy merged its entire autonomous driving team into Cainiao, becoming a technical team affiliated with Cainiao Group. At this point, Alibaba Damo Academy will no longer retain relevant teams and businesses. Information shows that DAMO Academy is the birthplace of Alibaba's logistics robot "Little Man Donkey" and is also the "center" of research and development of Alibaba's autonomous driving technology. It is committed to researching machine learning, software and hardware integrated design, perception, decision-making planning, positioning and other automatic Drive core technologies to achieve productization, scale and commercialization.

Picture source: Alibaba Damo Academy

Suddenly, the two major high-end autonomous driving companies encountered difficulties one after another. Not only that, earlier, Argo AI, an L4 autonomous driving company backed by two major car manufacturing giants, Ford and Volkswagen , also declared bankruptcy . What is reflected behind all the above is that the popularity of L4 autonomous driving has declined.

According to the Science and Technology Innovation Board Daily, automotive industry analyst Zhu Yulong predicts: “2023 will be the year when China and the United States begin to withdraw from the capital-intensive L4 level autonomous driving business, and there may only be a few companies in the world that insist on this. Business." Zhu Yulong believes that this may be the biggest bubble burst in the field of autonomous driving investment, and many companies may not be able to persist. “Due to the failure of multiple scattered autonomous driving application scenarios, L2+ and L3 level autonomous driving led by passenger cars have become the world’s first choice.”

From the current point of view, L4 level autonomous driving is not as mature as L2 level in terms of technology research and development, capital investment, market demand, and practical application, so it is gradually being marginalized.

Taking this year's Shanghai Auto Show as an example, Huawei released the ADS 2.0 high-end intelligent driving system solution, which will be launched on the AITO Wenjie M5 Huawei high-end intelligent driving version. According to reports, this solution is extremely close to L3 intelligent driving; companies such as Qingzhou Zhihang have even released urban NOA-related products. Even earlier, Baidu Apollo also announced the dimensionality reduction layout L2+. Some organizations predict that by 2025, the assembly rate of L2 and L2+ ADAS will exceed 50%, of which L2+ is expected to exceed 15%. It can be seen that L2 and L2+ level solutions are gradually becoming the mainstream solutions for autonomous driving today.

In all industries, the research and development of every technology must eventually return to actual implementation, and autonomous driving is no exception. The road conditions on which cars are driven are often complex. Whether it is pedestrian avoidance, traffic light recognition or roadblock recognition, autonomous driving solutions must be reliable. Relatively speaking, L2 level is safer in these aspects, and the definition of accident liability is also relatively clear.

Looking around the current autonomous driving track, whether it is Tesla, BYD, NIO, Xpeng, or Ideal, they are more focused on assisted driving and high-tech experience with controllable technology, controllable costs, and expected profitability. etc. L4 level is difficult to achieve commercialization in the short term. Especially as the development of smart cars enters its second half, the priority of commercialization capabilities will surely become higher and higher in the research and development process of autonomous driving technology.

Part of the content of this article is compiled from Science and Technology Innovation Board Daily, Wall Street Journal, 36Kr, etc., and is for communication and learning purposes only. If you have any questions, please contact us at info@gsi24.com.

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