The original high-level has returned, but Tucson's future has been greatly damaged.
Source: Lieyun Selection, text / Wang Fei
The future civil unrest of self-driving truck company Tucson has a new process.
Less than two weeks after former CEO Hou Xiaodi was abruptly removed from the board of directors, on November 11, Tucson Future issued an announcement announcing the appointment of former CEO Lu Cheng as CEO, and the company's co-founder Chen Mo re-assumed the company's chairmanship. It also means a return to the core management structure that existed before March this year.
At the same time, the founding team used the majority voting rights to kick Brad Buss, Karen C. Francis, Michelle Sterling, and Reed Werner off the board, making Hou Xiaodi the only remaining member of the company's board of directors (sole director). Subsequently, the sole director appointed Chen Mo and Lv Cheng as members of the company's board of directors.
In response to the changes in this announcement, Tucson Future said that the fundamental reason for the company's recent series of high-level changes is that the company's founding team and the independent directors of the board of directors have major differences in the company's business philosophy and management methods. The independent directors of the board of directors of the company terminated Hou Xiaodi as CEO, president and CTO and removed him from the position of chairman of the board of directors according to the internal investigation of the audit committee that has not yet been determined, which is a serious damage to the interests of shareholders and the company and an abuse of power.
Tucson Future said the company is at risk of being delisted because the two co-founders, including the recently ousted CEO, used their majority voting rights to fire independent members of the board (Nasdaq has a minimum number of outside directors per company). "The Company intends to comply with the NASDAQ Listing Rules before the end of the applicable remedial period," the filing said. ”
It also exposed the divisions of the board. One and a half years after its listing, Tucson will usher in three high-level upheaval changes in nine months. Even if the new situation of the return of the original executive is ushered in, it cannot change the fact that the company's vitality is greatly damaged.
In the complex external environment superimposed on multiple factors, Tucson's future stock price has fallen by 96.21% to $2.78 per share, with a market value of $626 million. Even when the company's infighting began in early March, Tucson's future share price has fallen by 83.55%.
Source: Snowball
Shortly after the IPO, it was subject to continuous investigation, and the former chairman and CEO both stepped down in early March
According to public information, Tucson Future was co-founded in 2015 by CEO Chen Mo, CTO Hou Xiaodi, and Chief Architect Hao Jianan.
Among them, Chen Mo is a serial entrepreneur, and Tucson Future is the fifth company he founded; Xiaodi Hou has more than ten years of R&D experience in computer vision and machine learning; Lu Cheng joined Tucson Future as CFO in 2018 and was promoted to CEO in September 2020.
As a technology company with operations in both the U.S. and China, Tucson Future was subject to ongoing investigations by the Committee on Foreign Investment in the United States (CFIUS) shortly after going public.
On Feb. 18 of this year, CFIUS officially concluded its long-term investigation into Tucson's future. Tucson Future also said on February 22 that it had reached an agreement with U.S. authorities to address safety concerns related to its self-driving truck business.
Under the agreement, Tucson will give the U.S. government some oversight rights over the technology behind its self-driving operations in the future. In addition, two Sina-related board members of the company will leave at the end of their terms this year.
After the above agreement, Tucson began to rapidly promote senior management personnel changes in the future.
On the evening of March 3 this year, Tucson Future, the first stock of autonomous driving, issued a "major event" announcement, announcing the company's chairman succession plan. Lu Cheng, former CEO of the company, and Chen Mo, former chairman of the company, resigned from their respective positions. Both positions are currently taken over by Hou Xiaodi, CTO of the company. Former CEO Lu Cheng will serve as Hou Xiaodi's CEO advisor until March 2023 to further ensure an effective transition.
Affected by the news, Tucson's future stock price fell in response, falling 21.92% overnight.
According to the financial data disclosed by Tucson Future, Chen Mo and Hou Xiaodi both hold more than 7% of the company's Class A shares and 50% of Class B shares, the former has 31.4% of the voting rights, the latter has 31.1% of the voting rights, and the total voting rights of the two are more than 60%.
Suspected of defrauding investors, the board of directors abruptly removed CEO Hou Xiaodi from all positions
After Chen Mo left Tucson Future, he founded a hydrogen-powered truck company called Turing Intelligent Card (Hydron) in June, and reached a technical partnership with Tucson Future, which caused conflicts and attracted regulatory investigations.
It is understood that the FBI and the Securities and Exchange Commission (SEC) investigation focus on whether Tucson will deceive investors in the future by financing and transferring technology to Chinese hydrogen-fueled heavy-duty truck startup Hydron.
Tucson Future said in the regulatory filing that according to its board investigation, some of its employees had already worked for Turing Intelligence Card in 2021, and before signing the confidentiality agreement, Tucson employees shared confidential information with Turing Intelligence Card.
According to Tucson's Board of Directors filing in an 8-K filing, last year some Tucson employees took on some Hydron-related work during working hours worth up to $300,000, but these contents were not informed or approved by the audit committee.
Investigators are investigating Tucson's future leadership, whether it made the necessary disclosures about its dealings with Turing, and whether those deals hurt Tucson's future investors, the report said.
The investigation of the board of directors began as early as July, which means that soon after the establishment of the Turing Intelligence Card, it aroused the suspicion of the FBI.
Finally, at the end of October, Tucson Future issued a recall open letter, saying that the board of directors has terminated Dr. Hou Xiaodi, CEO, president and chief technology officer of the company, and from October 30, 2022, Hou Xiaodi has been dismissed as chairman of the board and a member of the government safety committee. The CEO position is temporarily held by Dr. Ersin Yumer, Executive Vice President of Operations.
In response to the investigation and removal, Hou Xiaodi said on the LinkedIn that he was removed without cause. Believe that you will be "rehabilitated". Hou Xiaodi also fundamentally denied the accusations of various investigations, saying that his future work and life in Tucson were completely transparent and fully cooperated with the investigation of the board of directors, "I have nothing to hide."
Affected by the news of the CEO's ousal, Tucson Future's stock price began to plunge, the stock price fell 45.64% to $3.43, with a market value of $770 million, a loss of $647 million from the market value three days ago.
Q3 had a net loss of USD 113 million and will upgrade trucks by 2023
And under the cloud of civil unrest in the company, Tucson also handed over an average financial report in the future.
After the US stock market on November 1, Beijing time, Tucson Future announced its third-quarter financial report showing that the company's revenue was 2.653 million US dollars, compared with 1.785 million US dollars in the same period last year, a year-on-year increase of 48.63%; Net loss was $113 million, compared to $115 million in the year-ago quarter.
It is worth mentioning that so far, Tucson has not recognized a substantial amount of revenue in the future. The company expects the loss ratio to rise significantly in the coming period.
It is understood that research and development expenditure is the main reason for Tucson's continued losses in the future. The company's R&D expenditure in the third quarter was $85.7 million, an increase of 1.49% year-over-year. The largest portion of its R&D expenditure was $59.1 million related to R&D personnel, including $16.9 million in equity-based compensation expenses. In the third quarter, the number of its R&D personnel was flat sequentially, up 10% year-on-year.
And continuous R&D investment is also gradually showing results. As of the end of the third quarter, Tucson Future Road Mileage was 9 million miles, an increase of 11% sequentially; Bookings for fully automated trucks totaled 7,485 units, unchanged month-on-month; Map miles totaled 11,400 miles, flat sequentially, and revenue miles increased 4% sequentially to 1,212,000 miles.
As of September 30, 2022, Tucson Future held cash, cash equivalents and restricted cash of $873 million, compared to $1.414 billion in cash, cash equivalents and restricted cash held for the same period last year.
Tucson Future revealed in its earnings report that for the remainder of 2022 and 2023, trucks will be upgraded to ensure consistency across the fleet, with each truck in the fleet equipped with state-of-the-art hardware and the latest version of proprietary software. This will require a careful upgrade by temporarily setting aside trucks from the fleet, with the entire upgrade expected to be completed by the end of 2023.
Earlier this year, Lu Cheng, the then CEO of Tucson Future, said: "As a public company, we achieved all the important milestones of 2021 in the first year, including the industry-first 80-mile end-to-end driverless autonomous freight business. "Last quarter, we automated the first automated freight lane; In 2022, we will fully strive to deliver commercial-scale Level 4 autonomous driving technology. ”
In 7 months, after walking a circle back to the original point, what future will Tucson face?
When will Lu Cheng's plan to "deliver commercial-scale L4 autonomous driving technology" be realized?