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TuSimple CEO breaks down the driverless truck company's trading debut

TuSimple is making its public debut on the Nasdaq. TuSimple CEO & President Cheng Lu joins Yahoo Finance Live to discuss.

Video Transcript

ZACK GUZMAN: TuSimple selling shares at $40 each after marketing them at 35 to 39 bucks apiece to raise quite a bit of cash here in its initial public offering to trade in their debut down at the NASDAQ. And for more on that, I want to bring on TuSimple CEO and president, Cheng Lu joins us right now on the show. And Cheng, congratulations first off on finally making the debut here. It's a big deal when we talk about the technology hitting the space. You guys are already operating routes in Texas and Arizona. But talk to me about what you see in terms of growth here as you sign up more and more customers.

CHENG LU: Sure. Zack, good morning to you. And thank you for having me on. This is a huge milestone for TuSimple. We're the first and only autonomous driving company to be publicly listed. So, really, a validation from our shareholders of our technology and our people. As you said earlier in the call, there is a driver shortage, as well as there's increasing concerns on safety and environmental. So we are building a holistic solution that can really address these pain points in what is a very large trucking industry.

As part of our expansion, this year, we're expanding actually more eastwards to the southern eastern states. We will bring on more additional partners. We'll have more reservations and really expand the size of our autonomous freight network, and at the same time, of course, continue to make very exciting developments in our level 4 autonomous technology.

ZACK GUZMAN: Yeah, this-- the IPO is bringing in, as I said, quite a bit of cash here, valuation north of $8.5 billion. When you look at it, $1.35 billion now to work with. And you mentioned your partnerships there, the big one with Navistar, talking about reservations, 5,700. Do I have that number correct in terms of reservations for people looking to leverage the technology in the trucks? I mean, what kind of impact are you looking to roll this out in terms of revenue? Because last year, you had a net loss of $178 million on revenue of $1.8 million. So how quickly are you expecting that revenue number here to jump?

CHENG LU: Sure, great question. We are still in the development phase of our technology and our go-to-market strategy. I think investors understand that this is a long development cycle. This does include quite a significant amount of investment, not only on the software side, the hardware side, and the go-to-market side. We do have 40-- 5,700 reservations today with our OEM partner Navistar.

And the reservation, the significance of this is that it-- level 4 technology is new. Our carriers and shipper reservation customers require time to understand how to use this technology, which lanes make sense to automate first. There are limitations through this analogy. The lanes that make the most sense are the long haul, where there is the most significant driver shortage, driver turnover. And so, really working hand-in-hand with our customers to be able to integrate our technology into them.

AKIKO FUJITA: Cheng, you're coming to market at a time where any sort of Chinese investment is drawing a lot of scrutiny. And on that front, you've got CFIUS looking into this investment from Sun Dream, your largest shareholder. As investors look to this IPO today, how should they be looking at that as a risk for the company?

CHENG LU: Sure, good question. Well, CFIUS reviews many transactions that are of a foreign investor into a US company. In this case, Sun Dream is a foreign entity that made an investment in TuSimple in 2017. So CFIUS is looking at the specific transaction. This is a few month process. It happens quite often. For instance, when Uber-- when SoftBank invested in Uber and so forth. So we do not see a material impact to our business. The outcomes could be either the company-- CFIUS clears this transaction. Or there could be some corporate governance changes or a divestment.

But I think what's important is when we talk about our investor base, today-- as of today, we do not have any investors whose beneficial owner is a Chinese national or a Chinese state owned enterprise. And I think that's something that we have to get the facts straight. And I just wanted to share that with the folks. And being public, of course, allows us to be very transparent. And so we do not see this being a material impact to the company.

ZACK GUZMAN: Cheng, when you dig into kind of the costs that your customers might be weighing here, in your S-1, you were walking through kind of the labor costs being the largest one for truckers out there. And you stack up how much they could be saving you, say, approximately $95,000 in annual savings per truck if they were to go with your layer 4 technology here. Is that the easiest way to sell this to people out there? And what's kind of the strategy to attack some of those other companies who might not want to go out and fully buy a Navistar truck and just use your technology there as a service?

CHENG LU: Sure, it's-- I mean, the labor cost is one issue. But it's really about the driver shortage, the increased turnover of drivers, especially over the middle mile, where our technology is-- has its first application. And actually, oftentimes, we forget to think about the safety component. If you think about there's 1,500 accidents every year that involve heavy trucks with people, and 95% of them are human-- due to human error, so that would be a significant benefit. We also have demonstrated over 10% fuel efficiency as we operate autonomous vehicles. So the ESG component, our ability to reduce carbon footprint is also a big selling point. So, really, we are focused on addressing the key challenges of long haul trucking.