Advertisement

TuSimple co-founder blames exit on CEO pay and autonomy downgrade

TuSimple co-founder Xiaodi Hou has refuted allegations from senior leadership that he was trying to poach staff for his new company. In a LinkedIn post, Hou said that he resigned from TuSimple's board last week due to disagreements about CEO Cheng Lu's compensation package, as well as the company's shift in focus from Level 4 autonomy to Level 2 autonomy.

"I believe that the so-called investigation was retaliation instigated by TuSimple’s Chairman and CEO in response to my disagreements over several decisions," wrote Hou in a LinkedIn post.

Yesterday, TechCrunch reported that Hou resigned amid an internal investigation that sought to verify whether he had approached TuSimple employees about joining his new venture. TuSimple fired Hou last year from his CEO, president and CTO posts after the board learned that TuSimple had transferred confidential information to Hydron. The hydrogen-powered trucking startup is led by TuSimple co-founder and majority stakeholder Mo Chen and is backed by Chinese investors.

Hou told TechCrunch that he has not begun another venture, implying that it is illogical to accuse him of poaching staff.

"I am regularly approached by current TuSimple employees who are disappointed with the current leadership and direction of the company," wrote Hou in a statement. "They come to me because we were a family, and we still are. Over the past few months, many employees reached out to me for my advice about their careers and the changes at the company. Many asked about my own plans. In every engagement, I stayed true to my responsibilities and duties as a director."

Hou went on to accuse TuSimple's management of cornering, harassing and threatening certain employees in the course of their investigations.

Hou said his resignation was fueled in part by his rejection of current CEO Cheng Lu's "lucrative" compensation package, which was awarded to the executive within days of layoffs that wiped 25% of the company's workforce.

According to a filing, Lu gets an annual base salary of $450,000, a target annual bonus of around $400,000 and a monthly housing allowance of $9,000. If Lu is fired without cause, or if there's a change in control of the company (like if the company is sold), Lu gets $15 million.

Lu's compensation and severance package was agreed upon on December 14, 2022, according to filings. Lu, Hou, Chen and James Lu, an independent board member, were the only remaining board members at the time after they had previously fired everyone else. A majority vote was needed to approve the compensation package, and a source familiar with the matter told TechCrunch Hou was opposed, although he abstained from voting. The company's new board members, Wendy Hayes and Michael Mosier, joined the board the next day. We've reached out to TuSimple for comment.

Hou also said he was openly critical of TuSimple's "decision to shift the focus from level 4 autonomous driving to level 2 assisted driving."

Level 4 autonomy means the system can drive itself without requiring a human to takeover within a set of specific circumstances -- like a geofenced area. Level 2, or advanced driver assistance systems (ADAS), can perform some automated tasks like lane assist, cruise control or emergency braking, but they require the human driver to maintain most of the control over the vehicle.

TuSimple has not publicly announced any intention to shift from Level 4 to Level 2, and indeed a source familiar with the situation clarified that this is really a matter of short and long-term goals. Hou founded the company with one vision in mind: to reach L4 autonomy. Lately, the short-term goal of also developing L2 technology served to continuously push out the long-term goal of reaching L4, the source said.

In December, TuSimple's deal with Navistar to jointly develop and produce purpose-built autonomous semi trucks by 2024 fell through, leaving TuSimple without a clear direction for commercialization.

Lu denied to TechCrunch that TuSimple is planning to shift its focus away from L4. He said the company will soon announce its progress on its autonomous domain controller, which has the ability to support L2 solutions. Lu also pointed to TuSimple's May 2022 analyst day presentation, which outlined the company's goal to produce L2+ ADAS in partnership with Nvidia. He reiterated that TuSimple is still very much focusing on L4.

Update: A previous version of this story failed to include the name of a board member at the time of TuSimple CEO's compensation package agreement.

Clarification: An updated version of this article clarifies how Hou was potentially outvoted when deciding on Lu's compensation package, and how Hou felt that while TuSimple isn't shifting entirely away from L4, the company is pushing that long-term goal out farther.