TuSimple Fires Its CEO Xiaodi Hou Amid Probe
The San Diego-based company said in a news release and securities filing that its board of directors on Sunday had ousted Mr. Hou, who was also the board chairman and chief technology officer.
Mr. Hou was fired in connection with a continuing investigation by members of the board, the release said. That review “led the board to conclude that a change of Chief Executive Officer was necessary,” the company said in the release.
The securities filing said that the board’s investigation found that TuSimple shared confidential information with Hydron Inc., a trucking startup with operations mostly in China and funded by Chinese investors, which hadn’t been disclosed to the board before TuSimple entered into a business deal with Hydron. TuSimple said it didn’t know whether Hydron shared, or publicly disclosed, the confidential information, the securities filing said.
Messrs. Hou and Chen didn’t immediately respond to a request for comment.
Mr. Hou’s termination was announced the day after The Wall Street Journal reported TuSimple and its leadership, principally Mr. Hou, faced investigations by the Federal Bureau of Investigation, Securities and Exchange Commission and Committee on Foreign Investment in the U.S., known as Cfius, into whether the company improperly financed and transferred technology to a Chinese startup, according to people with knowledge of the matter.
TuSimple’s stock plunged more than 44% Monday. Shares in the company are down more than 90% for the year.
Investigators at the FBI and SEC are looking at whether Mr. Hou breached fiduciary duties and securities laws by failing to properly disclose TuSimple’s relationship with Hydron, the China-backed startup founded in 2021 by TuSimple co-founder Mo Chen, which says it is developing autonomous hydrogen-powered trucks, the Journal reported. Federal investigators are also probing whether TuSimple shared with Hydron intellectual property developed in the U.S. and whether that action defrauded TuSimple investors by sending valuable technology to an overseas adversary.
The Journal also has reported that the board in July began investigating similar issues, including whether TuSimple incubated Hydron in China without informing regulators, the TuSimple board or its shareholders, said other people familiar with the matter. A June business presentation from Hydron viewed by the Journal named TuSimple as Hydron’s first customer, and said TuSimple would purchase from Hydron several hundred hydrogen-powered trucks equipped with self-driving technology. A TuSimple spokesman said the company has considered an agreement to buy freight trucks from Hydron but isn’t a Hydron customer.
TuSimple’s securities filing Monday said that TuSimple employees worked for Hydron and were paid, earning less than $300,000. The board wasn’t aware of this nor had members approve it, the filing said. Mr. Chen, who founded and leads Hydron, is TuSimple’s largest shareholder, owning about 11.8% of the company, according to FactSet.
Mr. Hou’s dismissal follows months of upheaval at the company, which has seen an exodus of staff, including its chief financial officer and chief legal officer, and a plummeting stock price. Much of the turmoil began when Mr. Hou took over as CEO in March, said former employees.
In April, one of TuSimple’s autonomous semi trucks crashed on an Arizona freeway. The accident revealed longstanding safety and security problems at TuSimple that former employees said leadership had dismissed, the Journal reported in August.
The company said Ersin Yumer, TuSimple’s executive vice president of operations, will serve as interim CEO while the board searches for Mr. Hou’s replacement. Mr. Yumer previously worked on autonomous vehicle technology at
Aurora Innovation Inc.,
Uber Technologies Inc.,
and Argo AI, the autonomous-driving venture partly owned by
Ford Motor Co.
and Volkswagen AG that was recently shut down. Independent board director
the former chief financial officer at SolarCity Corp. and Cypress Semiconductor Corp., will be chairman, TuSimple said.
TuSimple said it would release its third quarter earnings Monday after market close. It was previously scheduled for Tuesday. The company, ahead of the results, said it remained on track to meet the full-year guidance disclosed in August, including ending the year with a cash balance of about $950 million.
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8