Tesla self-driving truck rival TuSimple raises more than $1 billion in IPO valuing it at $8.5 billion

TuSimple’s hotly-anticipated initial public offering bucked recent trends by not going public through a merger with a blank-check, special-purpose acquisition company. The group says that its self-driving trucking technology makes it well-positioned to disrupt the $4 trillion global freight market.

It has 5,700 reservations for self-driving trucks built by Navistar NAV, +0.02% using its artificial-intelligence platform, scheduled to go into production in 2024, with 70 trucks already on the road in the U.S. and China.

But it will face stiff competition on the way to AI trucking dominance, including from electric-car maker Tesla’s TSLA, +0.10% Semi truck as well as projects from Chinese-based manufacturer XPeng XPEV, -5.82% and Waymo, the self-driving arm of Google parent Alphabet GOOGL, +1.40%.  

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A total of 33.8 million TuSimple shares are set to begin trading on the Nasdaq Global Select Market today under the symbol “TSP,” with 27 million shares offered by TuSimple and 6.8 million from Chinese backer Sun Dream, the group’s single largest shareholder.

The offering is being led by underwriters Morgan Stanley MS, -0.74%, Citigroup C, -1.36%, and JPMorgan JPM, -0.63%, and should make a fortune for its two co-founders, Mo Chen and Xiaodi Hou. Chen and Hou are each set to own around 12% of the company’s shares outstanding, worth more than $1 billion.

Based on a share price of $37, the company said in its filings with the U.S. Securities and Exchange Commission that it expected to raise $985.7 million from the public offering and a $35 million private placement, accounting for underwriting costs and other expenses. The $40 share price brings the total amount raised to $1.08 billion, the company said on Thursday.

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TuSimple’s backers include car maker Volkswagen VOW, +2.35%, through a partnership with trucking subsidiaries Traton 8TRA, +0.17% and Navistar, which also owns more than 6% of the Class A shares. The company, which also counts the venture arm of logistics group UPS UPS, +1.16% among its backers, said it would use the proceeds of the IPO for working capital, including funding operating needs, and may use a portion to acquire or invest in complementary products, technologies, or businesses.

TuSimple’s revenues have remained relatively minimal while its losses have mounted during rapid growth. The group reported a net loss of $198.8 million on revenue of $1.8 million in 2020, building on a loss of $145 million on revenue of $710,000 in 2019.

TuSimple listed stiff competition from rivals in an industry still in its early stages among the key risk factors in its filings. The company also highlighted a regulatory risk involving its large backer Sun Dream, tied to Chinese tech giant Sina, which owns social media network Weibo WB, -1.38%.  

Sun Dream, which is set to own 13% of the outstanding share capital following the IPO, is ultimately controlled by Charles Chao, the chair of Sina and one of TuSimple’s directors. Sun Dream’s involvement with TuSimple sparked a probe by the Committee on Foreign Investment in the United States in March.