Self-driving semi-truck outfit TuSimple Holdings said Wednesday that it would cut 350 jobs, mostly in the U.S., as the San Diego company restructures to conserve capital amid a series of recent corporate shake-ups.
The layoffs amount to 25 percent of TuSimple’s global workforce. The company has operations in San Diego, Arizona, Texas, Europe and China.
Following the restructuring, TuSimple will have 1,100 employees — 880 of which are full-time research and development personnel.
It is unclear how many jobs will be eliminated in San Diego. A company spokesman declined to comment.
As of Wednesday evening, TuSimple had not filed Worker Adjustment and Retraining Notification Act (WARN) paperwork with the state of California or local employment officials.
WARN notices are required for “mass layoffs” of more than 50 workers within a 30-day period in California.
TuSimple leases about 80,000 square feet of space in San Diego to house corporate administration and research and development, according to filings with securities regulators. It is unknown if the space is fully occupied.
The job cuts were expected. The Wall Street Journal reported Friday that TuSimple was eyeing the termination of at least 700 workers.
The Journal also said TuSimple would largely cease its operations in Arizona, where the company has been testing Level 4 self-driving big rigs on public roads between freight warehouses in Tucson and Phoenix. These trucks operate with hands-free autonomy but have a driver in the cab who can grab the wheel just in case.
TuSimple was embroiled in corporate drama in recent months. In October, its board of directors fired Chief Executive and co-founder Xiaodi Hou after an internal probe found that the company shared confidential information with a Chinese hydrogen truck startup without proper disclosures.
In a post on LinkedIn, Hou denied any wrongdoing and strongly disagreed with the board’s decision to remove him. At the time, the Wall Street Journal reported that the Federal Bureau of Investigation, and the U.S. Securities and Exchange Commission were looking into the matter.
The Chinese startup that allegedly received confidential information was created by another TuSimple cofounder, Mo Chen.
Chen controls a large chunk of TuSimple’s voting stock. In November, Chen teamed up with Hou, who also owns a significant percentage of voting shares, to remove TuSimple’s board.
The company formed a new leadership and brought back Cheng Lu, who had previously run the company, as CEO and president. It appointed a new board, including independent directors, and hired a permanent chief financial officer.
But the company also lost a key customer when Navistar stepped away from their self-driving truck development deal last month. TuSimple’s shares are down 96 percent year to date. They closed Wednesday at $1.42 on the Nasdaq Exchange.
TuSimple has a two-pronged business model. Its developing self-driving semi-trucks with partners, which it expects to begin delivering in 2024. It also is building a subscription software stack to help improve fleet management and fleet capacity.
In a statement, the company said the layoffs are part of a restructuring strategy to build long-term value. Most of the layoffs are centered in the U.S. in part because TuSimple continues to look for “strategic alternatives” for its Asia business, including a possible sale.
“It’s no secret that the current economic environment is difficult,” said CEO Cheng Lu in a statement. “We must be prudent with our capital and operate as efficiently as possible. While I deeply regret the impact this has on those affected, I believe it is a necessary step as TuSimple continues down our path to commercialization.”
The company expects to take a $10 million to $11 million charge in the fourth quarter and first quarter of 2023 related to the restructuring, primarily cash outlays for severance.