Xiaodi Hou, cofounder, of TuSimple, was ousted as CEO and chairman this week.
Tim Pannell/The Forbes CollectionTuSimple, a leading developer of autonomous driving systems for trucks, fired CEO and cofounder Xiaodi Hou, the architect of its technology, following a report that he was being investigated for his role in improperly financing and transferring technology to a Chinese startup. Hou denies doing anything improper.
TuSimple shares plunged about 50% on the news.
The company’s board, which also removed Hou as chairman late Sunday, “unanimously determined that it was necessary and in the best interest of the shareholders to terminate Xiaodi Hou,” TuSimple said in an emailed statement. “Fundamentally, we lost trust and confidence in Dr. Hou’s judgment, decision-making, and ability to lead the company as CEO. This decision, which was made in connection with an ongoing investigation that was initiated by our Board’s Audit Committee in July, was made independent of any media coverage.”
Hou’s ouster occurred shortly after the Wall Street Journal reported that the Federal Bureau of Investigation, Securities and Exchange Commission and Committee on Foreign Investment in the U.S., known as CFIUS, were all probing TuSimple’s connection to Hydron Inc., a hydrogen truck startup founded by TuSimple co-founder Mo Chen, citing people familiar with the matter. The concern is that executives including Hou failed to properly disclose the relationship with Hydron, a potential breach of fiduciary duties and securities law, according to the people who spoke anonymously. Investigators are also probing whether TuSimple shared its U.S.-developed autonomous driving technology with Hydron, a company with Chinese operations, a potential violation of U.S. rules, the report said.
TuSimple did not reference the report in its statement, but Hou denied it in a LinkedIn post on Monday.
“I have been completely transparent in both my professional and personal life and I fully cooperated with the Board because I have nothing to hide,” he said. “I want to be clear that I fundamentally deny any suggestions of wrongdoing.”
The Caltech-trained computer scientist created TuSimple with Chen in 2015 with the goal of perfecting autonomous driving for heavy-duty trucks rather than robotaxis. Given the somewhat easier operating environment that semis experience–highways rather than crowded urban streets–and a persistent shortage of long-haul truck drivers, Hou believed it would be a faster path to commercialization. Companies including Alphabet’s Waymo, Aurora, Embark and Kodiak are also competing to bring robotic trucks to market in the next few years.
(For more on Hou and TuSimple, see, Robo-Rigs: The Scientist, The Unicorn and The $700 Billion Race To Create Self-Driving Semi-Trucks)
The ouster of Hou comes as the outlook for self-driving companies grows tougher as the push to automate vehicles to operate safely without a human at the wheel is increasingly seen as a costly, long-term challenge. Last week, Ford and Volkswagen decided to stop funding Argo AI, a promising autonomous tech company that had raised more than $3 billion after determining that it would be too many years before they saw a return on that investment.
“My motivation has always been and continues to be chasing that visionary dream,” Hou wrote today. “The painful truth is that on Oct. 30, the Board voted to remove me as CEO and Chairman of the Board without Cause. Unfortunately, the Board’s processes and conclusions have been questionable at best. As the facts come to light, I am confident that my decisions as CEO and Chairman, and our vision for TuSimple, will be vindicated.”
San Diego-based TuSimple named Ersin Yumer, its executive vice president of operations, as interim CEO. Board member Brad Buss was appointed as the new chairman.
Ben Kallo, an equity analyst with Baird Research, downgraded his rating of the company to Neutral from Outperform, citing Hou’s dismissal.
TuSimple shares plunged 46% to close at $3.43 in Nasdaq trading on Monday.
