TuSimple co-founder Xiaodi Hou has started a second autonomous trucking startup. But he is suing his former company, urging that TuSimple be liquidated and $450 million returned to shareholders, of whom he is the largest.
Suits on 3 coasts
In separate filings in courts in San Diego and Delaware, Hou claims his co-founder, Mo Chen, and CEO Cheng Lu are trying to move TuSimple’s $450 million to China. TuSimple moved its business there and has shifted its business from autonomous trucking to AI-generated video game production.
“This pivot – from TuSimple’s autonomous driving mission to Artificial Intelligence Generated Content (AIGC) development in China – represents a fundamental change in business direction,” Hou wrote in a letter Monday to TuSimple’s board. “The Company implemented this transformation without any advance communication to or vote by shareholders.”
Xiaodi Hou, a co-founder of TuSimple, wants the company liquidated and $450 million returned to shareholders. (Photo: Bot Auto)
Hou makes no secret of his hard feelings toward TuSimple, which he co-founded in 2015 with Chen, a Canadian entrepreneur. He was ousted as CEO in late 2022 in a messy boardroom squabble. Hou had been chief technology officer before taking over as CEO in March of that year.
TuSimple sued Hou in Texas Business Court in Houston this month. It claims Bot Auto misappropriated key proprietary technologies and that Hou prepared to launch his company while he was still on TuSimple’s board.
It dismissed Hou’s latest salvo.
Cheng Lu, CEO of TuSimple, called Xiaodai Hou’s moves “another lashing out of a disgraced CEO.” (Photo: TuSimple)
“Sadly, another lashing out of a disgraced CEO that’s been trying to disrupt the company from moving forward so he can start a company using TuSimple trade secrets,” Lu said in a text.
Boardroom drama and a wind-down
The TuSimple board removed Hou as CEO in October 2022. It said he exercised poor judgment in allowing company workers to assist a startup called Hydron Motors without informing the board. Chen founded Hydron in 2022.
Ten days later, Hou fired the independent directors. For a brief period, Hou was TuSimple’s only director. But Chen, who restored Lu as CEO after Hou pushed him aside, returned as executive chairman. He secured a two-year agreement to control both his and Hou’s super-voting rights. That gave Chen 59% control of TuSimple until the agreement expired this month.
Mo Chen, co-founder of TuSimple, controls the company with 59% of the voting rights. Co-founder Xiaodi Hou is trying to regain control of the 29.7% he owns. (Photo: Hydron)
TuSimple was the first autonomous trucking company to demonstrate “driver-out” capability. It conducted an 80-mile nighttime pilot run on I-10 in Arizona in December 2021. At the time, analysts regarded TuSimple as the leader in driverless trucking. Shares traded as high as $70 in 2022 before a long decline that has left them a penny stock.
The company laid off more than half its U.S. workers and wound down its U.S. operations a year ago. It voluntarily delisted from the Nasdaq early this year. It went public in an initial public offering in 2021.
Hou wants his super-voting rights restored
Hou, who started Bot Auto in Houston and has been testing driverless trucks, said he has grown increasingly frustrated with the board.
“TuSimple raised over $1 billion from investors to develop autonomous driving technologies,” he wrote. “Without shareholder approval, those funds are now being redirected to gaming and animation development. Eight years of autonomous driving development and shareholder investment have been reduced to ‘partnerships and licensing.’”
Hou is seeking a restraining order in federal court in San Diego to stop TuSimple from moving its cash to China, especially after the company increased its Chinese subsidiaries’ registered capital by $150 million.
He asked a court in Delaware to restore his 29.7% super-voting rights – each of his shares is worth 10 votes to one for a regular shareholder – and to delay TuSimple’s Dec. 20 annual meeting if his voting rights issue is unresolved.
“As a founder, long-term executive, and the largest shareholder, I believe there is only one path forward for the benefit of all shareholders,” Hou wrote. “I demand the full liquidation of TuSimple with 100% of proceeds distributed to all shareholders on a pure pro-rata basis, regardless of share class.”
For that to happen, Hou would have to relinquish his super-voting rights.
“I am willing to do this because my sole priority is to maximize value for all shareholders,” he wrote.
Cummins trying to cajole owners to get emissions fix
Cummins Inc. agreed to pay a record $1.675 billion civil fine in December 2023 because it allowed emissions-defeating devices on diesel engines for several model years of Ram pickup trucks.
Its target is to have emissions software on 85% of the 630,000 2013-2019 Ram 2500 and 3500 heavy-duty pickups fixed within three years.
Owners of Cummins Turbodiesel powertrains in Ram Trucks that cost Cummins nearly $2 billion in fines are reluctant to get emissions software upgraded. (Photo: Stellantis)
So far, many owners are balking at following through because they aren’t experiencing a problem.
So, it is taking to social media and offering free extended warranty packages as well as Cummins’ swag – hats, pens and decals – to get owners to take action. They need to visit a Ram dealership to get the software reflash that makes the most of diesel exhaust fluid (DEF) injection to reduce tailpipe nitrogen oxide emissions.
Automotive site CarBuzz asked its readers for their thoughts.
“Gee, free stickers and a Cummins hat!!! Hilarious. … Hopefully, this [Trump] administration will gut the EPA and can put an end to this nonsense. I deleted my [2019 HD Ram] years ago and will never submit to a software update,” wrote one.
Said another: “If it isn’t broke, don’t fix it. I’m sorry, but my [2017] 2500 has 89,000 miles and runs great, and I’m getting decent fuel mileage. It hardly uses DEF unless I’m pulling heavy. I don’t care how many testimonials you show me.”
Briefly noted …
The California Air Resources Board has approved Bollinger Motors’ all-electric Bollinger B4, for a $60,000 credit under the Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project.
Paccar Parts, an earnings stalwart for the maker of Kenworth, Peterbilt and DAF Trucks, has opened its 20th parts distribution center globally in Massbach, Germany.
Canadian EV maker Lion Electric is the latest startup to cast doubt on its ability to survive the next 12 months, prompting Canacord Genuity to terminate coverage of the company.
Truck Tech Episode No. 92: Contract manufacturing for Bollinger electric trucks gets under way
That’s it for this week. Thanks for reading and watching. Click here to subscribe and get Truck Tech delivered to your email on Fridays. And catch the latest episodes of the Truck Tech podcast and video shorts on the FreightWaves YouTube channel. Send your feedback on Truck Tech to Alan Adler at aadler@firecrown.com.
