New IPO: TuSimple Nasdaq: $TSP – Autonomous driving for long haul trucks

TuSimple (Nasdaq: $TSP), a manufacturer of autonomous semi-trucks will IPO on April 14th. The company plans to sell 33 Million shares for $36 per shares netting $1.8B for the company and valuing it at $8B.

TuSimple
TuSimple targets the $4T trucking market

TuSimple was founded in 2015 by Xiaodi Hou and Mo Chen in San Diego. It has offices in China and the US. It has over 500 employees and has raised over $600M in funding so far.

Market

The global truck freight market is valued at $4 Trillion. In the US, trucking moves approximately 80% of the $1T freight market by revenue, with a 3% compound annual growth rate (CAGR).

The market challenges include increasing truck accidents, lack of drivers willing to join the profession and move from Internal combustion engine to Electric Vehicles.

TuSimple IPO
Long haul trucking challenges

TuSimple has reservations for about 5700 trucks and is expecting the first trucks on the road for production by 2024. It has partnered with Navistar to produce the trucks for the US market and started taking reservations in the third quarter of 2020.

Exclusive: Driverless Truck Startup TuSimple Seeks $1 Billion in U.S. IPO -  Caixin Global

The company has partnered with Volkswagen’s commercial trucking unit TRATON to expand internationally and build a truck for the European and Chinese markets. 

Product

TuSimple believes vertical integration, with proprietary software and hardware manufactured by world class OEMs and components partners as well as roadside assistance and maintenance partnerships, will deliver the most reliable and first-to-market purpose-built L4 autonomous semi-trucks at scale.

The company has over 240 technology patents and over 2.8 million road-tested miles.

The company also plans to offer its TuSimple Capacity, providing Capacity-as-a-Service offerings to logistics markets based on a per mile shipping rate which management believes will be ‘significantly lower than that of human-operated semi-trucks.’

The company’s primary offerings include:

  • Proprietary L4 autonomous semi trucks
  • HD digital route mapping
  • TuSimple Connect cloud operations oversight system

United Parcel Service (UPS) invested in the company in 2019.

Robot Truckmaker TuSimple Files For Nasdaq IPO

Financials

TuSimple’s revenue more than doubled in 2020 to $1.84m from $710,000 in 2019. The company’s net loss has also more than doubled as it has advanced its development, rising to $177.9m in 2020 from $84.9m in 2019 and $45m in 2018, according to the filing.

The company’s cash and cash equivalents increased to $310,815 in 2020, from $63,610 in 2019 and $98,814 in 2018.

Risks

Dual class structure (voting shares controlled by founders) is a risk. Since the company will only launch production vehicles by 2024 there is a lot of execution risk. The market for autonomous trucks is very competitive as well with Navistar, Tesla $TSLA, Volvo and many other trucking companies also investing in autonomous trucks.

Recommendation

Given the number of EV and autonomous companies that went public I will be waiting for 2 years before I jump on this.