TuSimple has “clear pathway to commercialization” after successful Driver Out runs
SAN DIEGO — TuSimple President & CEO Cheng Lu believes the autonomous trucking startup has a clear pathway to commercialization of its autonomous freight services within the next two years.
“Our pathway to commercialization is clear,” Cheng said during the company’s Q4 2021 earnings call on February 9. “We expect to continue to scale Driver Out operations, and lower autonomous driving operational costs to be the first-to-market with a commercially viable solution. We’re proud of all we’ve accomplished in 2021 and we look forward to the New Year.”
The year 2021 was certainly a big year of milestones for TuSimple. At the beginning of the year, the company started its IPO journey, culminating in its IPO in April. In December, it completed the world’s first Driver-Out semi-truck run on public roads via an 80-mile terminal-terminal route.
“Since our founding, we’ve had a single vision of building the first-to-market scalable Level 4 autonomous trucking solution that will transform the freight industry,” Lu said. “2021 was an amazing year for TuSimple. At the beginning of the year, we started our IPO journey, we knew it was going to be critical to earn the trust of our investors and we’re proud to say that we achieved all of our major goals in the first year as a public company including the start of Driver-Out.”
Since that first Driver-Out run on December 22, TuSimple has successfully completed six additional runs, reached a partnership with Union Pacific Railroad which became the first customer to move freight on TuSimple’s fully automated trucking route between Tucson and Phoenix starting this spring, and reached an agreement with AllianceTexas to build a 1-million-square-foot facility to sever as a launch and landing pads for autonomous trucks.
“Our technology has advanced significantly even from six months ago,” said Lu. “Driver-Out operations on one route is a step that any autonomous trucking technology company will need to take to reach commercialization. We’ve made it even more challenging is the fact that we’re working with prototype components and a retrofitted truck. Nevertheless, we accomplished this feat and we believe our technology is ready to start scaling now. Not years down the road, but today.”
TuSimple is working with TRATON Group’s Navistar unit for its U.S. production truck program, which has made “tremendous progress” as the partners eye start of production in 2024 based on a deal that was reached back in 2020, according to Lu.
The company had received a total of 7,325 trucks as of February 9 from a “diverse group of major fleets and logistics players” including DHL, which reserved 100 trucks in Q4, according to CFO Pat Dillon.
In that quarter, TuSimple reported revenues of $2.1 million, which increased nearly threefold versus the same period last year and represented a 15 percent increase quarter-over-quarter. Full-year 2021 revenues reached $6.3 million, also roughly a threefold increase year-over-year. Net loss from operations was $116 million in Q4 and for the year was $411 million. The adjusted EBITDA loss of $279 million reflects sustained investment in its technology and commercial development. Cash balance at quarter end was over $1.3 billion, which Dillon is confident is enough to get the company to execute its roadmap through 2024.
For 2022, the company expects revenues of $9 million to $11 million and EBITDA loss of $400 million to $420 million, reflecting continued investment in its technology and commercialization, and prioritizing resources to scale up Driver-Out operations.
“This means focusing a significant portion of our resources on automating dense routes in the Texas Triangle area and using our own fleet of autonomous trucks,” said Dillon. “We will be less focused on adding human operated trucks or partner fleet capacity to our AFN (Autonomous Freight Network) this year.”
Lu noted that Navistar has been a critical partner in the Driver-Out program, helping TuSimple every step of the way to develop the retrofitted trucks, providing insights as TuSimple develops its safety case and supporting it with suppliers of critical components. The two have set a clear strategy for components where the supply base requires additional maturity, not hardware components requiring advanced technology breakthroughs but rather suppliers going through a process to have automotive grade components that can support scale production.
“This is critical because autonomous trucks sold to third-party customers require certification, aftermarket support and warranties,” said Lu. “We will continue to be proactive with the supply base to push for the component level development schedules. We also continue to work with TRATON and Navistar to continuously pressure test our production process and timeline.”
In January, TuSimple and longtime partner NVIDIA began development on a proprietary, dedicated autonomous domain controller (ADC) incorporating NVIDIA’s next generation Orin SoC and TuSimple’s autonomous driving software. It is the first and only player in the autonomous trucking space to develop an integrated and proprietary compute solution.
From here on out, Lu says commercialization will be a “linear progression” that TuSimple can make step-by-step. For example, it plans to scale the ODD and reduce autonomous operating costs, including removing all non-scalable operations. Later this year, it plans to add daytime runs followed by expansion into new routes in Texas. It also expects to gradually remove survey and chase vehicles which currently act as safety precautions in the Driver-Out runs to help normalize operations and build trust with the public.
By the end of 2023, TuSimple aims to have a fleet of Driver-Out retrofitted semi-trucks to support continuous commercial freight operations and begin hauling customer freight on multiple routes in the Texas Triangle along Highway 10, according to Lu.
“We expect to have a clear line of sight on a per mile unit economics being lower than that of human operated trucks,” said Lu. “No one can clearly articulate the steps needed to reach commercialization or show evidence that those milestones are met. At TuSimple, we are doing just that. Over the coming quarters, you should expect to see us hit these visible milestones as we scale to commercialization.”
That means continuous operations with autonomous trucks in high density routes in all times of the day, less the safety vehicles. And once the routes are denser, more trucks can be put on them, which will in turn update maps faster and these trucks naturally become a fleet of survey vehicles for each other, creating a network effect.
Internationally, TuSimple recently concluded a Phase 1 pilot program with Swedish truck maker Scania, another unit of TRATON Group, in Europe. This program, the first of its kind, has conducted over 40,000 km of autonomous operations along Sweden’s main freight corridor, and work has already started on the next phase of the partnership.
In China, although there will be no meaningful revenue contribution this year, Lu believes it has the rest project for near-term commercialization, which is a project in the Shanghai Deepwater Port.
“We’re always pressure testing and optimizing our resources to make sure we have the highest ROI and value to our shareholders,” hes aid. “The U.S. will be first commercialized. But at the same time, we want to ensure that we have upside to our shareholders once China does take off. Afterall, it is the second largest freight market in the world that’s growing very fast.”
