China's Self-Driving Trucking Hopes

TuSimple, Inceptio, Plus, DeepRoute in good company.

I’m pretty interested in Venture Capital and innovation broadly, especially as it relates to China.

China has a lot of companies in truth related to the AV and AV trucking and logistics space. Recently, Trucking startup TuSimple Holdings Inc. reached an agreement with U.S. authorities to resolve security concerns around its self-driving truck operations and the company’s ties with China. They were founded in 2015, but have Chinese leadership.

Ticker $TSP is one of the leaders in the AV space around Trucks. But there’s also the startup Plus and Inceptio Technology, who had $200 million and $188 million funding rounds respectively.

TuSimple’s agreement includes giving some oversight to the U.S. government related to the technology behind TuSimple’s self-driving truck operations, the company announced Feb. 22. Two board members will also step down after their terms end later this year.

The Inceptio funding News was announced today on February 28th, 2022. Inceptio has a vision to build the most trustworthy autonomous freight service network. They want to make logistics graceful. You don’t have to be graceful when you have money though, they have raised $490 million to date, according to Crunchbase.

Also today there was another curious announcement regarding DeepRoute.

DeepRoute’s autonomous trucks help deliver anti-epidemic supplies

Two autonomous light trucks developed by DeepRoute, a Chinese L4 full stack self-driving solution provider, have been used to deliver anti-epidemic supplies in the designated control areas for COVID-19 in Shatou Subdistrict, Futian District.

A single self-driving light truck transported more than 500 boxes of materials, including nearly 3,000 pieces of protective clothing and nearly 10,000 bottles of alcohol, 10,000 face shields, over 30,000 medical gloves, over 80,000 masks, and more than 10,000 other anti-epidemic supplies.

It seem there’s a lot of China based companies that followed TuSimple on its heels.

Getting back to the PR around Inceptio, so who raised the money? It makes sense, it seems even Meitaun was involved.

Sequoia Capital, Legend Capital co-led a US$188 million round in Inceptio

Inceptio, a Chinese autonomous trucking technology company, announced that it has completed a US$188 million series B+ round financing, which was co-led by Sequoia Capital China and Legend Capital. Chow Tai Fook Enterprises Co., Ltd., Cedarlake Capital, an international equity fund, WZ Group, and existing investors Meituan, NIO Capital, Eight Roads, Broad Vision Funds also participated. Previously, Inceptio has raised a total of US$500 million.

America Isn’t ready for the EV Revolution but China Is

These are just the four Chinese Trucking AV related companies that come to mind. Not to be outdone by EV battery startups either like Sunwoda. Chinese leading lithium-ion battery maker Sunwoda announced that its wholly owned subsidiary, Sunwoda Electric Vehicle Battery Co., Ltd. (Sunwoda EVB), received an investment worth 2.43 billion yuan ($380 million) from a total of 19 separate investors for valuation of $2 Billion.

Li Auto and Nio were in on the deal and In addition, Chinese media outlet 36Kr learned that XPeng Motors is actually behind Sky Top LLC, the second investor in this round of financing, which contributed 400 million yuan and obtained 3.21% of shares overall. This all suggests Chinese EV market is just so much more dynamic and innovative with how it will intersect with the AV market.

For its own share, Self-driving truck technology developer Plus has completed its Series B funding round, pulling in $200 million from returning backers and new investors from China. In total, Plus has raised nearly $400 million.

The new investors include Hong Kong-listed Guotai Junan International, China’s leading securities firm, and Wanxiang, a top Chinese automotive components supplier. SAIC, China’s largest carmaker; and Full Truck Alliance, the world’s largest trucking platform serving more than 10 million truckers and 5 million shippers, also bought in. Existing investors including Sequoia Capital, Lightspeed Venture Partners and GSR Ventures also participated.

Meanwhile I think we should also note:

Chinese EV maker BYD has chosen Baidu as its intelligent driving intelligent, according to sources. Baidu provides BYD with its intelligent driving solution ANP(Apollo Navigation Pilot) and human-vehicle co-driving maps. Baidu’s intelligent driving team has entered the field ahead of schedule to cooperate with BYD for development, and will soon realize mass production of cooperative models.

Many of the winners of autonomous truckers are likely to come from China it would appear. For the future of automation, smart cities and the Great Automation we’ll have to look at China for the future.

As for TuSimple, it’s more successful in just seven years than many dreampt possible. With the agreement, TuSimple said the U.S. government determined that “there are no unresolved national security concerns” at the startup.

The company will “limit access to certain data and adopt a technology control plan,” according to a Securities and Exchange Commission filing. The measures involve restricting some information, including source code and algorithms for its autonomous trucking operations, from the company’s China division, Jim Mullen, the company’s chief administrative and legal officer, said in an interview. It’s pretty far-fetched. How do you keep some IP secret from the other part of the company not located in the U.S.? Uber couldn’t even keep its IP with the company, even though it was stolen from Waymo back in the day, if you can recall.

TuSimple already raised $1.35 billion in an April 2021 public offering and appears an early front runner in the AV of trucking and logistics. TuSimple have raised $650 million to date and have burned almost as much cash in the last year. With over 1,400 employees you bet they are up to something.

It’s maybe the prototype for what a Self-driving truck startup looks like. Kodiak Robotics, for example, has only begun driver-out testing on closed tracks. Embark is not currently testing on public roads without a human safety driver, but is planning a pilot for 2023 and is targeting commercial driver-out operations by 2024. Waymo Via is currently not testing in “rider only” mode, but is testing with two autonomous specialists in the cab of the vehicle, one in the driver’s seat and the other acting as a software technician. In Sweden you have Einride which is quite advanced.

TuSimple is a self-driving truck company developing technology that allows them to drive from depot-to-depot without human intervention. If they fail there’s easily a few dozen companies that can take their place, many of which are in China or have strong affiliate ties to China.

TuSimple is headquartered in San Diego, CA and has 7 office locations across 4 countries. Xiaodi Hou co-founded TuSimple in 2015 and serves as the company's Chief Technology Officer. Dr. Xiaodi Hou is an internationally renowned expert in artificial intelligence, machine learning and computer vision.

Cheng Lu is the President and Chief Executive Officer of TuSimple. He has over 13 years of experience in strategy and corporate finance in the U.S. and Asia. Prior to TuSimple, Cheng Lu co-founded and was a Partner and Chief Operating Officer of KCA Capital Partners, a Pan-Asian growth equity investment fund.

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