Xiaodi Hou, the co-founder of TuSimple, has launched a new venture while simultaneously filing a lawsuit against his former company, TuSimple, urging that it be liquidated and $450 million returned to its shareholders. Hou, who holds the largest stake among shareholders, has initiated legal proceedings across three separate jurisdictions, specifically in courts located in San Diego and Delaware.
The crux of the lawsuit centres around allegations that TuSimple's current leadership, including co-founder Mo Chen and CEO Cheng Lu, are attempting to transition the company and its substantial funds to China, moving away from its original focus on autonomous trucking technology to developing AI-generated content for video games. In a letter addressed to TuSimple’s board, Hou asserted that “this pivot – from TuSimple’s autonomous driving mission to Artificial Intelligence Generated Content (AIGC) development in China – represents a fundamental change in business direction.” He contended that this shift occurred without any prior notice or vote from shareholders.
Hou, who has voiced his frustrations with TuSimple's management following his ousting as CEO in late 2022, is also facing allegations from TuSimple, which filed a lawsuit against him in a Texas court. The company accuses Hou of improperly leveraging proprietary technology while establishing his new startup, Bot Auto, which has commenced trials for autonomous trucks in Houston. Cheng Lu has publicly portrayed Hou's actions as the "lashing out of a disgraced CEO," alleging that he is attempting to sabotage TuSimple's progress.
The power struggle within TuSimple has roots in a tumultuous boardroom history where Hou's leadership was questioned due to perceived poor decision-making related to company resources. Following a series of contentious events, including the dismissal of independent directors, Hou briefly became TuSimple’s sole director before losing control to Chen, who reinstated Lu as CEO and maintained a significant influence over TuSimple’s operations.
The company has seen a marked decline from being a pioneer in the autonomous trucking field, with notable achievements such as an 80-mile pilot run without a driver conducted in late 2021. However, its status has diminished alongside a severe reduction in its workforce and its voluntary delisting from Nasdaq early this year.
In seeking a restraining order in San Diego to prevent TuSimple from reallocating funds, Hou expressed alarm at the company’s recent increase in registered capital for its Chinese subsidiaries by $150 million. Additionally, he is pushing for the restoration of his super-voting rights—his 29.7% stake translates into significantly more voting power than that of typical shareholders—and is looking to delay TuSimple's upcoming annual meeting scheduled for December 20.
As the situation unfolds, Hou's demands encompass full liquidation of TuSimple, which he believes is vital for equitably distributing assets to shareholders. In his communication to the board, he stated, “I am willing to do this because my sole priority is to maximize value for all shareholders.”
In parallel to the developments at TuSimple, Cummins Inc. is navigating its own challenges after admitting to deploying emissions-defeating technology in diesel engines, leading to a record civil penalty. The company is under pressure to encourage owners of affected Ram trucks to update their emissions software, an effort complicated by reluctance from truck owners who perceive no immediate problems with their vehicles.
The landscape for automotive companies, particularly those involved in electric and autonomous vehicle technologies, remains dynamic as companies attempt to pivot towards emerging trends and address ongoing legal and operational challenges. As these narratives interweave in the industry backdrop, the eventual repercussions for shareholders, employees, and the broader market ecosystem remain to be seen.
Source: Noah Wire Services