Dive Brief:
- Autonomous trucking startup TuSimple Holdings will reduce its workforce by 25% through a restructuring plan, the company confirmed in a securities filing this week.
- The company’s board of directors approved the measure Dec. 15 to “rebalance the Company’s cost structure in alignment with its strategic priorities,” the filing said. It expects a $55 million to $65 million savings annually and one-time restructuring expense of between $10 million and $11 million approximately.
- “We must be prudent with our capital and operate as efficiently as possible,” President and CEO Cheng Lu said in a news release, referring to a priority for shareholder value and calling the reduction “a necessary step as TuSimple continues down our path to commercialization.”
Dive Insight:
The restructuring also calls for rethinking the tech startup’s plans as the company tries to reassure investors and the U.S. government amid foreign investment probes.
TuSimple said in its securities filing that the majority of the restructuring is in its U.S. operations, and it’s exploring strategic alternatives for its Asia business, including a divestiture.
The autonomous trucking startup has undergone turmoil this year, including entering into a National Security Agreement with the U.S. government in February, changes in its board of directors throughout the year and replacing CEO Xiaodi Hou in October. The company also found workers had contributed to another business, Hydron.
Amid the disorder, the federal government has investigated TuSimple, which has included the Committee on Foreign Investment in the U.S. evaluating an acquisition and requiring former board directors Charles Chao and Bonnie Yi Zhang to step down.
The remaining workforce is expected to be approximately 1,100 workers, where about 80% of those employees are research and development staff.
Others in trucking have used layoffs and furloughs to reduce costs in a challenging economy. In a seasonal move, XPO offered voluntary furloughs to drivers and dockworkers, while C.H. Robinson Worldwide gave layoff notices to about 650 workers, the company confirmed in November. And in August, U.S. Xpress Enterprises revealed it would lay off up to 10% of its workforce.
As part of the TuSimple restructuring, the company is also looking to scale back less profitable freight routes as it moves toward commercializing its developing technology.
“TuSimple plans to actively work with key shipping partners to operationalize its autonomous technology,” the company said in the filing, “and in an effort to help ensure capital efficiency, the company also plans to scale back freight expansion, including unprofitable freight lanes and respective trucking operations.”
