Exclusive interview with TuSimple CEO Cheng Lu: “Driver Out” run was “0 to 1 moment”
“We will have scale deployment of continuous autonomous freight runs in the U.S. by 2024.”
2021 was a huge year for the autonomous trucking space in the U.S., with several players making major progress and hitting new milestones toward their goals of putting autonomous trucks onto roads amid rising concerns on truck driver shortage and demand on package deliveries as people shop more online.
The year culminated with perhaps one of the biggest milestones in the history of not just autonomous trucking, but autonomous vehicles in general: TuSimple, the San Diego-based autonomous trucking company, successfully completed the world’s first fully autonomous semi-truck run on open public roads without a human in the vehicle and without human intervention.
The run took place on the night of December 22, when a TuSimple upfitted autonomous semi-truck traveled more than 80 miles completely on its own, starting from a large railyard in Tucson all the way to a distribution center in Phoenix. Along the journey, TuSimple’s Autonomous Driving System (ADS) successfully navigated surface streets, traffic signals, on-ramps, off-ramps, emergency lane vehicles, and highway lane changes in open traffic while naturally interacting with other motorists.
For CEO Cheng Lu, the milestone, part of TuSimple’s “Driver Out” pilot program, was a “0 to 1 moment.”
“The biggest thing is, to be able to remove the driver on 80 miles of roads both on surface streets and highways, you have to be feature complete on the technology side,” Lu said in an exclusive interview on January 10. “You have to be 100% feature complete. No other competitor, nobody else in the trucking side is even close to showing this. And we’ve been able to demonstrate this.”
He likened the milestone to a “FDA 3” moment for drug development, which is the key stage showing that the drug works before it can be authorized for production and sales. For TuSimple’s “Drive Out” pilot, that means putting more trucks on the roads over the next several years, which will require additional engineering and commercial operations work.
One of the caveats of the milestone “Driver Out” run was the use of a survey vehicle five miles ahead as well as an oversight vehicle and unmarked law enforcement vehicle about half a mile behind to ensure public safety, and the fact that it was conducted at night with less road traffic. Lu said the “police escort” wasn’t required for the run, but since it was the first ever run, TuSimple wanted to make sure that if the truck were to stop for any reason, there would be law enforcement interaction. As the “Driver Out” pilot scales and more trucks are put on the roads, they naturally become survey vehicles for each other, according to Lu. Granted the run was conducted at nighttime with no bumper-to-bumper traffic, Lu said he would not discount it since that’s when trucks move and goods are delivered, which is still good business.
Speaking of business, while TuSimple, which became a NASDAQ-listed company in April 2021, only generated $1.8 million in revenues in Q3 2021 and $5 to $7 million expected for full year 2021, Lu believes the potential to tap the $800 billion U.S. trucking industry with autonomous trucking technologies is huge.
“The size of the industry is so powerful, the disruption so big,” he said. “TuSimple currently is only tackling the middle-mile, or long haul, part of the trucking industry, which is about 60 percent or roughly $500 billion in total addressable market size and growing. If TuSimple addresses just 5 or 10 percent the market, it would be a multi-billion-dollar revenue company.”
TuSimple currently makes money via two ways.
The first is providing a per-mile virtual driver subscription service to carriers like UPS, which buys trucks from Navistar upfitted with TuSimple’s ADS. That UPS partnership had racked up 160,000 autonomous miles as of November 2021 since the partnership began in 2019, achieving 13 percent fuel savings at speeds between 55 and 68 mph. A human truck driver today costs about $1 per mile based on annual salaries and benefits of $100,000 and 100,000 miles driven, according to Lu, and TuSimple can charge only 30 or 40 cents per mile through its subscription service, still making good money while saving UPS tons of money.
The second is operating a smaller fleet of trucks that provide a freight service for the Walmarts and big shippers, getting paid the whole $2.50 to haul freight. The fleet size is small now and operates with safety drivers on board but over time TuSimple will remove the safety drivers and make them fully autonomous.
Lu estimates that if TuSimple had 100,000 trucks on the roads averaging 200,000 miles a year driving 20 hours daily thanks to autonomy, essentially doubling the number of miles a human driver could do, that could generate roughly $7 billion in revenues annually based on $70,000-$80,000 revenues per truck just with the subscription model.
“That’s the size of the revenue, and that’s how we make money,” said Lu. “The reason why we’re a few billion dollars in valuation is not because what we make today but because of the opportunity here. You are providing a real service and getting paid not by the number of vehicles sold but by the number of miles traveled that deliver the freight. And that keeps growing because our demand as consumers keep going.”
Now that TuSimple has demonstrated that the “drug works” with the first successful “Driver Out” run, next comes producing those trucks in scale and putting them on the roads. To do so, it has teamed up with U.S. truckmaker Navistar on a deal to start production by 2024. From now until then, the challenge is engineering work, according to Lu.
“Today we have sensors that we have to add on ourselves, we actually change power distribution of the truck to make it more redundant. We’re using prototype components for steering and breaking. It’s really about integration of the virtual driver with the production ready hardware. That’s the work that needs to be done over the next two years: building a reliable truck that uses production ready components,” he said. “That’s something we don’t have today, yet.”
To get to the “end game” of using technology to solve and create low-cost and reliable freight capacity, TuSimple must have the most advanced software, the virtual driver, as well as scalable and reliable hardware or partnerships on hardware, according to Lu. One such partnership was formed with NVIDIA last week during CES 2022, where TuSimple exhibited for the first time. That partnership will see NVIDIA develop an advanced autonomous domain controller (ADC) specifically engineered for TuSimple’s autonomous trucks incorporating the NVIDIA DRIVE Orin system-on-a-chip (SoC), acting as the central compute unit for those trucks.
Another crucial aspect of putting autonomous trucks onto roads is TuSimple’s unique Autonomous Freight Network, or AFN, which was established in 2020 and has since expanded to Arizona and Florida, with plans to cover the entire country in the next few years.
“Think of it as we’re basically creating a virtual railroad, but the lanes of the railroad are these pre-mapped and updated routes,” said Lu. “The larger your railroad network, the denser it is, the more terminals you’re connected to, the more people can have access to autonomous trucks.”
The AFN also standardizes things like terminal set up, space design for trucks entering and leaving, hand-offs between humans and machines, system oversight, options, and solutions for refueling and passing way stations across State lines to keep trucks from waiting.
“That’s part of the holistic solution that we have to develop. Because you can’t just drive the truck off and assume this truck can drive itself,” Lu added. “We are the first to realize that we need to create a freight ecosystem with a network of terminals, routes, customers, oversized systems that allow scale deployment of autonomous trucks.”
And from now until CES 2023, Lu expects continuous expansion of that deployment as well as the AFN.
Asked about the potential of the autonomous trucking space in China, Lu said as the second largest logistics market after the U.S., China offers lots of potential and TuSimple can potentially capture two of the largest logistics markets. Though he believes China is a few years behind the U.S. because the driver shortage there isn’t as big of a problem, drivers there don’t cost as much, and regulations are also not as open as they are in the U.S.
So when will truly driverless trucks be roaming around neighborhoods in the U.S. in large scale? Lu is confident TuSimple can make this happen by 2024.
“We’ll have scale deployment of continuous autonomous freight runs in the U.S. by 2024,” he said. “Whether that’s 1,000, 2,000 or 500 trucks I think it’s going to be 2024. I’m fairly confident especially after what we accomplished last month.”
