Autonomous Truck Scaling: Is TuSimple Competing With Its Freight Customers?

TUCSON, Ariz. — Autonomous trucking startup TuSimple Holdings doesn't see itself competing with customers who will buy trucks equipped with its autonomous software. Still, it is growing its own fleet to more than 200 trucks, putting it in the top 20% of freight haulers.  

"It's not our business model that's driving this," TuSimple CEO Cheng Lu told FreightWaves during a visit to the company's operations about 15 miles east of Tucson in the Sonoran Desert. 

"We are almost by default the first users of this technology. We have to show that the solution works. Along the way, we have to make the solution more robust to where we can sell it to a third party," he said. "No one likes to be sold a product that still has a lot of bandages."

TuSimple TSP, which went public in April via a traditional initial public offering, has a market capitalization of about $7.5 billion.

Leading autonomous scaling

It leads competitors in scaling autonomous trucking with 58 Class 8 trucks, mostly International LTs and Peterbilt Model 579s retrofitted with its software; 67 safety drivers trained to take over in an emergency; and 80 trailers used on revenue-generating routes to three Southwestern states. It has 20 more trucks being tested in China and a few TuSimple software-equipped Scania trucks in Europe.

"We are almost by default the first users of this technology. We have to show that the solution works. Along the way, we have to make the solution more robust to where we can sell it to a third party."

Cheng Lu, CEO, TuSimple Holdings

A purpose-built autonomous International LT with TuSimple's system is planned for sale in 2024. 

Only Daimler Truck subsidiary Torc Robotics is building a similar ground-up driverless truck. Others are creating plug-and-play systems to integrate autonomous functions into existing trucks.

Peterbilt, which is running an autonomous test in Texas with Aurora Innovation and FedEx FDX, is a willing donor chassis to any serious AV maker. 

"Companies like Aurora that are creating the driver itself integrate well to our platform, and our platform could be used with another autonomous driver as well," said Preston Feight, CEO of Peterbilt parent company Paccar Inc.

Nonbinding reservations

TuSimple has grown to 1,500 employees and counts 6,775 nonbinding reservations for the long-haul autonomous LT model. Those trucks will travel routes for which TuSimple has created high-definition maps criss-crossing the southern U.S. Level 4 high-autonomy trucking is allowed in 26 states.

TuSimple Holdings CEO Cheng Lu at the autonomous trucking startup's operations center near Tucson, Arizona. (Photo: Alan Adler/FreightWaves)

"We can help these carriers and shippers enable their business," Lu said. "There's still plenty left over for someone like TuSimple to offer freight capacity as well."

TuSimple booked about $1.5 million in revenue from hauling freight in the second quarter. Some of that was depot-to-depot shipping from Phoenix to El Paso, Texas, and Phoenix to Tucson for UPS, whose former director of engineering and transportation systems technology, Lee White, joined the company as vice president of strategy in April 2020.

"If you look at what the pandemic has done, it has created incredible pressure on one-day territory and two-day territory," White said. "How do you move the product further? I think autonomous trucking is going to be a big part of that solution."

TuSimple will use some of the more than 500 Ryder System Inc. maintenance terminals to stretch its supervised autonomous freight network from Arizona to Florida by the end of the year.

TuSimple doesn't disclose the identities of most of its freight customers, though several are investors and part of an advisory group that includes Goodyear Tire & Rubber Co. and chip maker Nvidia.

One early high-profile trial was hauling mail for the U.S. Postal Service from Phoenix to Dallas. TuSimple is working with Los Angeles-based produce broker Giumarra Cos. to see how autonomous trucking can get fruits and vegetables to consumers faster and fresher.

Ghost Rider route nears

TuSimple is closing in on its first driverless runs on a route named Ghost Rider for the Marvel Comics antihero. The runs are scheduled by the end of the year in Arizona, but timing is hush-hush. TuSimple is more concerned with being able to demonstrate safe autonomous trucking than it is with how the company is characterized.

"Are we a broker? Are we not a broker? We're just trying to get this technology on the road in the fastest way possible," Lu said. "You have to have a very robust Level 4 driving system for autonomous trucks. You have to integrate that into an OEM-produced vehicle. Otherwise, it's not reliable. And lastly, you have to have, in our case, an autonomous freight network."

The AFN is how TuSimple will make money. By charging a per-mile fee for autonomous shipping, whether it owns the truck or hires TuSimple to move the freight, it books revenue by targeting routes with the greatest freight density and repetition.

Part of TuSimple's U.S. fleet of 58 Class 8 trucks in the operations facility near Tucson, Arizona. (Photo: Alan Adler/FreightWaves)

The subscription includes route mapping, terminal support and an oversight system that keeps tabs and sends suggestions to the driverless trucks when they are unsure what to do.

"We're not in the business of selling autonomous trucks," Lu said. "We're in the business of enabling autonomous lanes.

"To really scale this thing nationwide — and there's 2.3 million Class 8 trucks on the road — you have to include partners. How you enable this to work with more partners is you have to have terminal-to-terminal operations. UPS doesn't want to go to a drayage yard 30 minutes away. They're too big for that."

That means mapping surface streets to get freight from the middle mile, where driverless trucks would rack up time and fuel savings because of 20-hour-a-day operation, to stage freight for distribution.

"We think that initially, we have to offer more trucks — a few hundred, not a few thousand — because you have to get the solution stable," Lu said. "And then you want to sell to more third parties because that's how you get scale."

Safer solution

Because they never tire and would presumably be exempt from federal hours-of-service regulations, robot trucks could run nearly around the clock with downtime for maintenance. Tires and other parts would wear more quickly because of heavy use.

An early safety study commissioned by TuSimple and Geotab strongly suggests robots would be safer than human drivers.

Selected human versus robot driver data commissioned by TuSimple. A more complete report is pending. (Source: TuSimple)

"If you look at impairment, fatigue [and] distraction, L4 isn't in a hurry. It doesn't get sick. It's not trying to prove a point on the road," said Jim Mullen, TuSimple's chief administrative officer, and a former Federal Motor Carrier Safety Administration acting administrator. "Slow and steady is the way to go. If you [ask] successful million milers, that's what they're going to tell you."

A driver shortage, now pegged by the American Truck Associations at 80,000, is a catalyst to fleet acceptance and planning for the rise of the robots.

"You have the biggest truckload fleets all saying they are in the game, and we're three years from commercialization? What that means to me is the appetite is across the board," Mullen said. "The initial evidence on the driver shortage is that the Drug & Alcohol Clearinghouse is going to continue to drive people out.

"We'll see what this administration does with the vaccine mandate. If that happens, you're going to see an exodus. And those [drivers] probably aren't coming back."

Related articles:

TuSimple will use Ryder terminals to expand autonomous freight network

Autonomous produce: TuSimple delivers watermelons 42% faster in pilot run

TuSimple: Autonomous freight network 6 months ahead of schedule

Click for more FreightWaves articles by Alan Adler.

Image Sourced from Pixabay