Autonomous trucking software startup TuSimple Holdings Inc. (NASDAQ: TSP) plans to hire 400 new employees — a 50% increase — in the next six months with proceeds from its $1.1 billion initial public offering.
“Getting the best and finest talent is our top priority,” Jim Mullen, TuSimple chief administrative and legal officer, told FreightWaves on Thursday. “So, a good chunk of that cash will go toward human resources and increasing our team.”
TuSimple, co-founded in 2015 by CalTech Phd Xiaodi Hou, is the first self-driving software stack developer to go public. Hou is chief technology officer and owns about 25.4 million shares, roughly 14% of the company. Co-founder Mo Chen owns slightly more shares. Between the two, they control 62.5% of the voting stock through Class B shares.
TuSimple operates 50 high-autonomy Level 4 trucks with safety drivers that haul freight in southwestern states. Eventually,TuSimple wants to focus on providing software and support and forego operating as a trucking company.
In choosing the traditional IPO course rather than merging with a special purpose acquisition company (SPAC), TuSimple established itself as an early leader in technology that could eventually reduce the need for human drivers and improve road safety.
Secondary offering unlikely
TuSimple sold about 34 million shares of stock at $40 a share in the hours before the IPO began public trading Thursday. Shares rose as high as $41.50 at the open. They plummeted at midday to less than $33 before rebounding to close at the $40 opening price.
With the IPO proceeds and $500 million in cash on its books, TuSimple’s financial projections do not anticipate needing to raise money before 2024, Mullen said. That is the year when TuSimple and Navistar International Corp. (NYSE: NAV) expect to launch a purpose-built Level 4 heavy-duty truck. Navistar owned 5% of TuSimple stock entering Thursday.
“Our projections are that we would not necessarily have a need, but again, that’s not to say we may not do a secondary offering,” Mullen said.
Barriers to entry rising
Now that TuSimple has become a public company, Mullen thinks others in the autonomous vehicle space may have a difficult time. Competitors such as Cruise Automotive, a General Motors (NYSE: GM) subsidiary, and Aurora have higher valuations than TuSimple’s $8.5 billion book value.
But other competitors are miles behind TuSimple in fundraising and partnerships in the transportation ecosystem.
TuSimple’s investors include major carriers United Parcel Service (NYSE: UPS), Schneider National (NYSE: SNDR), Werner Enterprises (NASDAQ: WERN) and U.S. Xpress (NYSE: USX). Class 1 railways CN (NYSE: CNI) and Union Pacific (NYSE: UNP), tire maker Goodyear (NASDAQ: GT) and chipmaker Nvidia (NASDAQ: NVDA) also are investors.
“I think that the barriers to entry are increasing these days,” Mullen said. “[With] TuSimple going public and raising this capital, my suspicion is there will be some consolidation [of competitors] over the next four or five years.”
Don’t expect TuSimple to try to acquire any of its rivals, however.
“We haven’t discussed that,” Mullen said.
A former acting director and chief legal counsel of the Federal Motor Carrier Safety Administration (FMCSA) following a 15-year career at Werner, Mullen joined TuSimple as chief legal and risk officer last October. He added the title of chief administrative officer in November.
TuSimple is focused on a fourth-quarter pilot program to remove the driver from its trucks. Mullen said the testing in Arizona is likely to last 4-to-8t weeks.
“We will not take the human out unless it’s absolutely safe,” Mullen said. “The safety benefits that AV technology is going to bring to the trucking industry and supply chain is going to be dramatic. Not just TuSimple, but our competitors as well.”