Autonomous transportation company TuSimple used its second-quarter earnings call to address an April crash in which one of the company’s autonomous trucks suddenly veered off I-10 in Tuscon and crashed into a concrete barricade.
The crash was first revealed through a Youtube video which showed footage of the crash, along with a letter from the Federal Motor Carrier Safety Administration (FMCSA), dated May 26, warning TuSimple of a “safety compliance investigation.” The accident was later reported by The Wall Street Journal.
“An error occurred when a test driver and safety engineer attempted to re-enable autonomous driving mode before the system computer was prepared to do so, and the truck swerved out and made contact with the highway barrier,” said Xiaodi Hou, co-founder and CEO of TuSimple . , during Tuesday’s earnings call. “No one was injured. And the only evidence of the accident is a few scratches and some minor damage to our truck.”
Hou noted that TuSimple had accumulated 8.1 million miles of road testing in the past seven years with “exactly one incident.” When the incident happened on April 6, TuSimple grounded the entire fleet and began an independent investigation, Hou said. After determining the cause of the error, the company upgraded all of its systems with an overhaul of the human-machine interface to ensure the same problem never happened again, the CEO continued.
That internal report, which was reviewed by WSJ, found that the truck veered to the left abruptly due to an outdated command, which was 2.5 minutes old and should have been cleared from the system, but was not.
Researchers at Carnegie Mellon University told WSJ that common safety measures, if they were in place, would have prevented the crash. For example, the truck may not respond to a command that is even a few hundredths of a second old, let alone more than two minutes old. The system also shouldn’t be able to run as sharply while driving at 65 miles per hour, nor should a safety driver be able to engage a self-driving system that isn’t working properly.
The National Highway Traffic Safety Administration has since joined the FMCSA’s investigation into the TuSimple highway crash.
Hou said the two agencies have not yet found any anomalies in their investigation or issued TuSimple safety recommendations, but the investigation is not yet complete.
During the earnings call, TuSimple reiterated its plans to commercialize driver operations, where there is no human safety operator in the vehicle. The company first completed an 80-mile driver demonstration in Arizona in December and has completed several more runs since.
TuSimple said the crash would not affect plans to start driver-out operations for Union Pacific Railroad, but it’s unclear if the company is even on track at this point. TuSimple was intended to launch fully autonomous freight forwarding for Union Pacific in the spring of this year and scale to commercial viability by the end of 2023, but Hou said the company has experienced a complete road closure for its distribution center at its destination, delaying the run by “a few weeks”. He also reiterated that the company’s deadline for driving out a driver in Texas is set for 2023, but did not specify whether these will be its first test drives or fully commercial operations. TuSimple did not respond to requests for clarification in a timely manner.
TuSimple Q2 Financial Data
TuSimple’s total revenue was $2.6 million in the second quarter, up 73% year-over-year and 13% sequentially. Wall Street Analysts Expect TuSimple Earnings to come in at $4.06 million; moreover, they expected the company to beat those estimates.
The company attributed its growth, as it was, to increased use of existing assets and year-over-year price increases.
TuSimple’s net loss was $108.6 million, compared to $116.5 million in the year-ago quarter. The company appears to have slimmed down in total operating expenses, which came in at $107.5 million this quarter from $119.4 million last year. However, R&D spending increased 13% year-over-year to $85.5 million. TuSimple said the majority of its R&D expenditure was $60.8 million related to hiring, including a $22.4 million share-based compensation expense. That said, sales, general and administrative expenses were significantly lower than last year.
To prepare for driver operations and expand its autonomous freight network, TuSimple has invested a total of $3.8 million in real estate and equipment purchases. The company ended the quarter with $1.16 billion in cash.
Updated guideline for the whole year
TuSimple’s updated guidance for 2022 revenue remained unchanged at $9 million to $11 million. Overall, the company plans to spend less and thus lose less money this year. TuSimple’s adjusted EBITDA loss for the year is expected to be between $360 million and $380 million, compared to previous expectations of $400 million to $420 million.
In addition, TuSimple will spend less on stock-based fees – due to a recruitment slowdown – and on real estate and equipment purchases. The company hopes to end the year with $950 million in cash, compared to previous expectations of $900 million.
Executive shake ups
Hou addressed some key leadership changes announced in June, including Chief Financial Officer Patrick Dillon leaves the companyto be temporarily replaced by Eric Tapia, TuSimple’s global controller and principal accounting officer.
In addition, Dr. Ersin Yumer, formerly head of TuSimple’s autonomous freight network, was promoted to EVP of operations, becoming Dr. Lei Wang promoted to EVP of technology. Both were promoted to support TuSimple’s driver-out operations.
It’s worth noting that TuSimple wouldn’t answer a question about the company’s tentative plans to sell its Chinese operations, something that was brought up during the first quarter earnings call.
At the time, TuSimple told londonbusinessblog.com that the company’s share price today does not reflect the value of China’s autonomous freight business, so it would be a good idea to spin off the APAC business. An inspection of the company’s 10-Q revealed that TuSimple is likely to want to sell its Chinese business because it’s too expensive to run, given the National Security Agreement the company agreed to as part of a review by the Committee on Foreign Investment. in the United States.
Tapia, the interim CFO of TuSimple, also shared that the company is in the process of upgrading most of its older trucks to the latest AV hardware technology, a process that will last through 2023 and will include adding upgraded sensors to the vehicles.
“While we plan to add some new trucks to the fleet, it is difficult to add a significant number of trucks given the challenges of buying new or even lightly used trucks,” he said. Tapia. “Finally, we plan to continue investing in adding terminals to the [autonomous freight network], mainly around the Texas Triangle. Our intention is to do this in a simple way and to work together where possible.”
in 2020, TuSimple partners with Navistar to build fully autonomous trucks, and has previously set a deadline to start production in 2024 and deliver to certain customers, like DHLby 2025. Hou and Tapia dodged an analyst’s repeated attempts to clarify this timeline.