TuSimple Holdings Inc., the self-driving semi-truck startup that raised $1.35 billion in a public offering Thursday, sees a rapid path to profits once it gets its driverless 18-wheelers on the road in 2024.
The San Diego-based company, with significant operations in China, has lost more than $300 million over the last three years. And it failed to deliver on a promise to book $1 million a month in revenue in the second half of 2019. Instead, it reported revenue of $1.8 million last year with a $178 million loss.
TuSimple now believes it will begin seeing profits shortly after it starts building self-driving trucks in three years for partners that include Navistar International Corp. and Volkswagen AG’s trucking unit Traton SE, according to Cheng Lu, its chief executive officer. Removing human drivers and allowing trucks to run more hours on the road will reduce hauling costs by 50%, he said.
“Each truck, the economics is very positive, it’s profitable,” Lu said in an interview. “So the more trucks we have on the network, the better our profitability.”
The red ink will turn black “when we have these trucks built at scale in the thousands—not even tens of thousands,” Lu said. The company said in its IPO filing that it has customer reservations for more than 5,700 trucks, though it cautioned that those orders do not equal revenue.
In a demonstration later this year, TuSimple plans to run a truck without a human safety driver behind the wheel for more than 100 miles, including at night, to show what its technology can do. However, that will be a one-time demonstration. The company is still building out its hardware to make it durable and safe enough for automotive applications.
“This doesn’t mean from that point on we pull the driver out of all of our trucks because the hardware we’re using is not even auto-grade and there’s still a lot of reliability and redundancy that we have to solve at scale,” Lu said. “But we want to show this as a big proof-of-concept.”
Investors have grown skeptical of the arrival of free-range robo-taxis after deployment delays and crashes slowed their progress. But the boom in online shopping combined with a growing shortage of truck drivers has attracted investment in driverless delivery.
Major autonomous vehicle players have rushed in, including Alphabet Inc.’s Waymo and Amazon.com-backed Aurora Innovation Inc. Self-driving startup Argo AI, AV partner to Ford Motor Co. and VW, is looking to go public as early as this year. Driverless truck startup Plus is in talks with special purpose acquisition companies for a merger, a route several electric vehicle firms have used to go public.
“When we started the company in 2015, it was very obvious to us that logistics would be first,” Lu said. “We’re hauling freight, we’re not hauling people, so obviously it’s a different technology framework. I don’t know why it’s taken some people five years to realize this.”