TuSimple's internal "power struggle" has lingered on for far too long, and it's high time to bring it to a resolution.

Roughly nine years ago, Hou Xiaodi, Chen Mo, Hao Jianan, and others co-founded TuSimple with the ambition to empower the global logistics and transportation industry through L4-level autonomous truck technology. Since then, the company has secured five rounds of financing, raising over $650 million in total and successfully listing on Nasdaq in 2021, thereby becoming the world's first autonomous driving stock.

However, good times did not last. In 2023, rumors of layoffs and delisting plagued TuSimple. In January of this year, TuSimple officially announced its delisting, becoming the first autonomous driving company to voluntarily delist globally. The rapid ascent and descent were fueled by frequent executive-level changes and the company's transformation adjustments.

Recently, TuSimple's co-founder and former CEO Hou Xiaodi demanded that the board of directors immediately liquidate the company and return the remaining $450 million in funds to shareholders on a pro-rata basis. Consequently, TuSimple's shareholder meeting held on December 20 became the focus of industry attention. This meeting was not merely an ordinary shareholder vote but also concerned the control of this autonomous driving field star company in its next phase.

How did a once-glorious industry legend devolve into its current situation?

Internal Power Struggle: Extreme Conflict

Since TuSimple's listing, disputes among management have often been the media spotlight.

While there were rumors of multiple executive role changes among figures such as Chen Mo, Lv Cheng, and Hou Xiaodi, these were typical appointments and dismissals. The real internal conflict emerged when Hou Xiaodi was removed by independent directors under pressure from the Committee on Foreign Investment in the United States (CFIUS). Since then, Hou Xiaodi gave up his voting rights for two years, completely losing control over TuSimple. Subsequently, TuSimple first abandoned its L4 fully autonomous driving business, then its US operations, and finally its entire autonomous driving business altogether, shifting its focus to AIGC.

In August 2024, a shareholder document titled "Letter from Shareholders to the Board of Directors of TuSimple" pointed out that Chen Mo and Hao Jianan (CEO of TuSimple China) had invested in the field of artificial intelligence animation and video games to divert funds after TuSimple's delisting, suspected of proprietary trading.

In October 2024, TuSimple filed a lawsuit in a Texas court in the United States accusing Bot Auto TX Inc., founded by Hou Xiaodi, of stealing TuSimple Group's trade secrets. Subsequently, there were incidents where Chen Mo seized Hou Xiaodi's super voting rights, and Hou Xiaodi created the SaveTuSimple website to seek shareholder support for liquidating TuSimple. These events unfolded naturally.

This power struggle stemmed from significant disagreements among management regarding the company's future strategic direction, making it difficult to reach a consensus on technology research and development investments and market expansion priorities, leading to an inevitable split.

Hou Xiaodi insisted on pursuing autonomous driving and chose to start a new venture after leaving TuSimple, founding Bot Auto; Chen Mo, however, forgot the original intention of founding TuSimple and chose to abandon the dream of autonomous driving. Chen Mo once publicly admitted, "We are no longer willing to invest heavily in autonomous driving or assign hundreds of engineers to serve automakers like we used to. Now, we are most concerned about cash flow."

With such severe strategic differences among leadership, it is not surprising that TuSimple finds itself in its current predicament.

Huge Losses, Layoffs, and Delisting: A Heavy Burden

Strategic differences among senior executives were like thunder in a storm, shattering the solid foundation of TuSimple. Significant changes in business operations, huge losses, layoffs, and delisting all seemed reasonable yet lamentable.

The final financial report before delisting revealed that in the third quarter of 2023, TuSimple's revenue was $26.53 million, with a net loss of $113 million, and total current and long-term liabilities amounted to $1.198 billion. Additionally, TuSimple announced multiple restructuring plans to improve its cost structure, including layoffs and asset impairments.

Media reports revealed that TuSimple had laid off employees three times in a year, with a total of about 680 employees laid off in December 2022 and May 2023. In December 2023, TuSimple laid off about 150 American employees, accounting for approximately 75% of its total American workforce and 19% of its global workforce.

This series of storms suddenly pushed TuSimple to the brink of survival, with each step fraught with danger.

Firstly, due to the constantly changing market environment and unclear strategic direction, TuSimple's business focus fluctuated, and resources were scattered, making it difficult to build lasting market competitiveness.

TuSimple faced both external and internal challenges. External challenges came from CFIUS investigations and shareholder lawsuits, while internal conflicts began when independent directors expelled co-founder Hou Xiaodi from the company on unfounded charges. Subsequently, Hou Xiaodi traded two years of voting rights for internal stability at the company, but this became an opportunity for Chen Mo to cleanse the board.

Chen Mo's heavy blow not only pushed TuSimple's internal strife into a deeper abyss but also shattered its formidable fortress. More crucially, the autonomous driving field has entered a stage of fierce competition, and the battle for customers is intense. Due to internal "disunity," TuSimple has clearly exposed cracks and vulnerabilities.

Secondly, TuSimple was mired in huge losses and had to resort to layoffs to survive, but this move was like drinking poison to quench thirst, significantly weakening its R&D capabilities and market competitiveness, leading to a vicious cycle.

Although "burning money quickly, difficult to profit, and prolonged losses" are common problems in the autonomous driving industry, and TuSimple is not an exception. For example, WeRide suffered cumulative losses exceeding RMB 5.1 billion from 2021 to the first half of 2024; Black Sesame Technology suffered cumulative losses of up to RMB 10.568 billion in the first half of each year from 2021 to 2024.

However, R&D capabilities are the core competitiveness of autonomous driving companies. Layoffs at TuSimple led to a reduction in the R&D team, severely impacting the R&D progress and innovation capabilities, thereby weakening its performance in product quality, market response speed, and other areas. Its former glory seems to be fading away. It is rumored in the market that in 2023, TuSimple had the opportunity to sell its US business to a well-known OEM, but after due diligence, the other party was extremely disappointed with TuSimple's technical team at that time. Ultimately, the deal fell through, causing widespread concern.

Thirdly, TuSimple's delisting resulted in a cliff-like drop in its share price, instant evaporation of its market value, and a plunge into a financial crisis, significantly increasing development uncertainties.

It is understood that after TuSimple announced its delisting, its share price plummeted by more than 50%, from 72 cents to 35 cents. At its peak, the company's share price was $62.58, representing a nearly 99% decrease. Its market value peaked at over $12 billion but was only $113 million before delisting, a loss of over $11.9 billion.

For TuSimple, the financial pressure from delisting is undoubtedly huge, but it is not entirely negative. At that time, the Southern California court had just issued a temporary restraining order and began an in-depth investigation into TuSimple. At this time, the voluntary delisting seemed somewhat suspicious of "evading regulation." Crucially, delisting is beneficial for the leadership in charge of cash management as it reduces financial and operational information disclosure, lowering transparency and providing greater flexibility and maneuverability in cash management and financial planning.

It can be said that TuSimple's glory has faded away.

All-in on AIGC: A High-Risk Gamble

After delisting, TuSimple, once the pride of the autonomous driving industry, faces urgent challenges: how to build a better business model in the short term, effectively utilize existing technology, and achieve profitability?

In response, current managers Chen Mo and Lv Cheng reached a consensus to anchor TuSimple's development direction in using AIGC technology to empower the entertainment industry, including movies and games, in the hope of finding new growth points for the company.

On December 19, TuSimple officially launched its new brand, CreateAI, and announced that it had obtained the official license for the renowned martial arts IP "Legend of the Condor Heroes," planning to develop a large-scale martial arts open-world RPG game. It also released a large model product called "Ruyi," with plans to create multiple AI-generated tools for game and animation production based on "Ruyi" in the future.

However, the transformation of autonomous driving companies is not easy, and most end up failing.

For example, Embark, an American autonomous trucking company once known alongside TuSimple as a "double hero," announced layoffs of 70% of its workforce and ceased operations. Similarly, Locomation, an autonomous trucking startup, also voluntarily laid off employees and shut down its main business. Domestically, the autonomous trucking startup AutoX also underwent bankruptcy liquidation... This reflects the bleak outlook for the transformation of autonomous driving companies.

The AIGC field is fraught with both opportunities and challenges. TuSimple's transformation into the AI sector will undoubtedly face unprecedented difficulties and obstacles.

On the one hand, TuSimple lacks a solid technical foundation in the AIGC field. Coupled with the fact that video generation technology in the market is not yet fully mature, the path to large-scale commercialization is long and arduous.

TuSimple's foray into the AIGC field relies on its valuable experience in developing large models and generative AI applications in the autonomous driving field. It believes that there is a strong technical correlation between autonomous driving and video models, allowing it to convert the large model technology accumulated in the autonomous driving field into an advantage in the AIGC field.

However, this is not the case. There are significant differences between the two in terms of technical principles, application scenarios, and business models. The CTO of a video model company stated, "There is not much relationship between video models and autonomous driving in terms of technology or experience reuse. The model that TuSimple hyped up recently is based on Tencent's 'Hunyuan' DiT, which is essentially a shell over an open-source model, trained with some data collected by themselves. The threshold is not high."

Moreover, the technical maturity of AIGC in the fields of film, television, and game development still needs to be improved, and the business model is also in a stage of incomplete maturity. TuSimple's exploration in the AIGC field is bound to encounter a tortuous and challenging path of trial and error and adjustment, making it difficult to cross the commercialization gap in the short term.

On the other hand, product competitiveness is weak. In the AIGC field, technology giants such as Baidu, Alibaba, Tencent, Meituan, iFLYTEK, and SenseTime are abundant. For TuSimple, a latecomer, to stand out is akin to pulling teeth from a tiger's mouth, facing difficulties and risks that are no less challenging than those in the autonomous driving business.

With fierce competition from powerful enemies and internal operational doubts, Chen Mo revealed in an interview that the investment in "Legend of the Condor Heroes" is significant, with an estimated investment and development cost ranging from 800 million to 1.2 billion yuan. So far, the initial investment alone has consumed about 180 million yuan.

Netizens have raised questions about this: "The cost of 'Black Myth: Wukong' is only 400 million yuan. After using large models, why is the current production cost of TuSimple as high as 1.8 billion yuan? Isn't it like money laundering that the cost of game development has increased after using AIGC?" Some netizens believe that the 1.2 billion yuan budget may be used for copyright-related expenses...

These speculations are not baseless. TuSimple's third-quarter 2024 financial report publicly disclosed that on November 18, 2024, the company passed a resolution to pay $25 million to two game development companies controlled by the Chen family trust in exchange for the development, distribution, and revenue sharing rights of "Legend of the Condor Heroes." Although this transaction was audited and approved by the audit committee, and the Chen family trust claims not to be controlled by Chen Mo himself, this seemingly "fair" large contract still inevitably sparks suspicion.

Against the backdrop of the above factors, it is easy to understand why netizens have raised questions about "money laundering" and why Hou Xiaodi demanded that the board of directors immediately liquidate the company and return the remaining $450 million in funds to shareholders on a pro-rata basis. At this point, liquidation may be the best choice for investors.

It has to be said that TuSimple needs to find a balance between technological innovation, content supply, and commercial implementation to truly achieve the transformation from an autonomous driving company to an AI game and animation company. This is undoubtedly a high-stakes gamble.

Uncertainties Swallow the Future: TuSimple is Lost in the Abyss

From a leader in autonomous driving to an explorer in the field of AI games and animations, TuSimple has lost its former core advantages. Does TuSimple have a future? The current answer is: too many uncertainties, and the future is unclear.

Uncertainty 1: How to effectively promote the expansion of the AI game and animation field while maintaining the development of the autonomous driving business will be a thorny problem for TuSimple to solve.

In Chen Mo's ambitious vision, TuSimple is evolving towards generative AI applications, prioritizing the AI game and animation sectors, while the autonomous driving business will transition to supporting others in their industrialization efforts, primarily through patent licensing and data sales. Nonetheless, this transformational journey is far from smooth.

To adapt to the unique demands and business traits of the game and animation market, significant adjustments to the organizational structure and management model are imperative, while simultaneously sustaining the autonomous driving business's growth and competitiveness to "sustain itself." Achieving both these goals is a formidable challenge.

Uncertainty 2: A string of negative news stemming from internal conflicts has eroded corporate trust, and TuSimple requires both time and resources to mend this breach.

The internal strife among TuSimple's senior executives mirrors a melodramatic tale of palace intrigue. Lately, Hou Xiaodi, the company's largest shareholder, has filed lawsuits against TuSimple in California and Delaware, accusing the company of various related-party transactions and irregularities since the beginning of this year. It remains unclear whether Hou Xiaodi's actions are fueled by personal grievances towards Chen Mo and Lv Cheng or if he genuinely possesses evidence of corporate misconduct. Nonetheless, these lawsuits have undeniably tarnished investor, partner, and public trust in the company, and rebuilding that trust is a time-consuming endeavor.

Uncertainty 3: It is still uncertain whether TuSimple can achieve breakthroughs in the AIGC field, innovate its profit model, and ultimately gain market recognition.

With the meteoric rise of AIGC applications, the market size is projected to continue expanding (to $600 billion), positioning it as a lucrative arena. However, this burgeoning sector has also attracted fierce competition from numerous technology giants and startups, rendering the market highly contested. Without robust technical prowess, innovative business models, and the establishment of core competitiveness, how can TuSimple carve out a niche in this fiercely competitive landscape?

Reflecting on the past decade, TuSimple shone brightly like a star, leaving countless dazzling moments in the vast expanse of the autonomous driving firmament. However, the ever-evolving market has propelled TuSimple to a critical juncture of transformation. As it embarks on this uncharted journey into AIGC, success hinges not solely on enthusiasm but also on the strength and quality of the cards it holds—factors that will ultimately determine its fate.