TuSimple’s Fast Lane For Financing: How The Autonomous Truck Firm’s IPO Plans to Overcome its Hurdle

TuSimple Holdings, which is currently a global leader in developing autonomous driving technology for freight purposes, has recently announced the terms for its IPO, which is set to go live over the coming days. 

The San Diego-based company intends to raise $1.2 billion by offering 33.8 million shares at a price range of between $35 and $39. At the midpoint of this proposed range, TuSimple would be looking at a market value of around $8 billion. 

Significantly, for investors, TuSimple has developed a fully integrated software and hardware solution, which the company believes is the world’s most advanced Level 4 (driver-out) autonomous semi-truck technology. 

Some of the more significant features of TuSimple’s technology include a 1,000-meter perception range, a 35-second planning horizon, high definition maps with a five-centimeter margin for error, and an integrated Level 4 autonomous semi-truck design that comprises a fully redundant sensor suite and components. 

As can be expected from a company that’s largely dealing in products that are some years away from being ready for release, TuSumple hasn’t yet achieved consistent revenue and intends to find sustainability in all of its revenue from its Autonomous Freight Network - which is still in the early stages of its conception and commercialization. 

The company itself is in its early stages of development, too, having been founded in 2015. TuSimple plans to list on the Nasdaq with the ticker symbol ‘TSP.’ Meanwhile, Morgan Stanley, Citi and JP Morgan are the joint bookrunners on the listing. 

But how can TuSimple expect to perform when entering the market? And what regulatory hurdles stand in the company’s way? Let’s take a deeper look into one of 2021’s most curious IPOs:

Exploring the Autonomous Freight Industry

Although TuSimple’s technology sounds like something from the pages of science fiction, it’s not the only company working to make fully autonomous shipping a reality. Other companies like Aurora, Daimler, and Embark Trucks are all looking to build towards a self-driving future. 

Strategically, the fact that TuSimple’s plans for growth are more concrete than many of its competitors is a good advantage for the company’s IPO. TuSimple is already expanding its existing shipments with UPS - an early investor in the company - and the food delivery service McLane. Shipping giants US Xpress are also planning on shipping goods through TuSimple - which now has as many as 22 contracted customers. 

As Statista data shows, autonomous trucks can bring significant levels of savings when it comes to long-haul operating costs - with average annual operating costs falling by €32,800 per operator. 

TuSimple plans to continue its expansion plans over the coming four years, beginning with an additional delivery service based across Texas before implementing self-driving trucks on routes between Los Angeles and Jacksonville, Florida while shipping nationwide by 2024. 

Addressing Regulatory Hurdles

One of the biggest threats to TuSimple’s development comes in the form of regulatory hurdles. While it’s a great time for investors to buy into advanced technology IPOs, the governmental technological decoupling of the US and China is contributing to a tricky landscape for the company to navigate. 

When it comes to autonomous vehicles, it’s relatively common to see Chinese startups or startups with strong Chinese links branch out to new countries to seek funding - but as these companies grow, their ties to China can come under heavier scrutiny.

The TuSimple prospectus has flagged a regulatory risk due to possessing a Chinese funding source. In March 2021, the Committee on Foreign Investment in the United States requested a written notice from TuSimple about an investment from Sun Dream, an affiliate of Sina Corporation, which runs China’s largest microblogging platform in Sina Weibo. Currently, Sun Dream is TuSimple’s biggest shareholder - with 20% Class A shares. 

If the US government decides that Sun Dream’s investment is a threat to national security, the investor may be instructed to divest from the company, according to TuSimple’s filing notes. 

Although there have been many China-based autonomous driving startups that have secured regulatory permits in the use, very few have as significant commercial plans in the US as TuSimple. 

However, once this question mark over the funding of the company will be interpreted by regulatory bodies has been addressed, TuSimple may come out of its IPO period with a strong network of backers, investor confidence, and a clear run at a developing driverless trucking market thanks to the advanced state of its technology. 

Buying into TuSimple’s Potential

TuSimple’s IPO comes at a time of great interest in autonomous vehicle stocks and tech-driven companies with bags of potential. Although the company has some key hurdles to navigate, its arrival on the New York Stock Exchange will be a timely one as TuSimple looks to ramp up its driverless routes by 2024. 

This initial public offering may be appetizing to retail investors looking to take a chance on a company with big potential, but it can be tricky for individuals to buy into IPOs. This is predominantly down to companies favouring institutional investors that have the financial prowess to buy large volumes of shares in one transaction. 

However, there are still opportunities out there for the public to take part in initial public offerings. One prospect is through Freedom24. Additionally, more traditional brokers like Fidelity also allow individuals to buy into IPOs, although a much larger financial threshold is generally required and account balances of over $100,000 or $250,000 may be required. 

TuSimple’s decision to go public has come at a time when investors are beginning to recognise the potential of autonomous technology and advanced AI applications. Although there may be some regulatory bumps in the road to navigate, TuSimple’s IPO could put the company in the fundraising fast lane.