Truck Talk: Deal or no deal edition
Truck Talk: Deal or no deal edition
This week, we’re following TuSimple Holdings Inc.’s $1.1 billion IPO as well as merger prospects for Tula Technology, which makes cylinder-skipping engine controls that dramatically reduce planet-warming greenhouse gases.
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TuSimple’s (NASDAQ: TSP) big news this week was, of course, its initial public offering as it became the first autonomous trucking software developer to go public. With enough money in the bank to get the company to its purpose-built Level 4 high-autonomy Class 8 truck with Navistar (NYSE: NAV) in 2024, the next thing to watch is how it gets there.
If all goes as planned, TuSimple will test its trucks with no safety driver in Arizona late in the fourth quarter. We talked with Jim Mullen, the former head of the Federal Motor Carrier Safety Administration (FMCSA), who joined TuSimple as chief risk officer last October and now is chief administrative officer.
FREIGHTWAVES: How have you influenced the safety discussion at TuSimple?
MULLEN: “When [Chief Technology Officer] Xioadi [Hou] and his algorithm team go through things like disengagements and how the AI [artificial intelligence] ought to react to certain scenarios, I think that’s where I’ve brought some value to the organization.”
FREIGHTWAVES: What is the hardest thing you’ve encountered?
MULLEN: “Our AI can operate within the rules of the road and do everything that an operator of a truck ought to do very, very well. Where we’re still working on some issues is [the edge cases]. What ought we do if we’re in the right lane and another vehicle, or another tractor trailer, starts to deviate into our lane. So should we take the shoulder? Do we just bias as far as we can in the right lane? Do you get off the throttle? Do you brake?”
FREIGHTWAVES: How do you assess the competition in AV software technology?
MULLEN: “Our truthful answer is we think that we’re the leader. We think that our camera vision of a thousand meters allows us to do things that the competitors can’t. Our competitors, at least to my knowledge, haven’t shown that. I did see some of the competitors’ stuff when I was at the DOT. So, my view [is] if we’re not the leader, we’re certainly in the forefront.”
What’s next for Tula Technology?
Beside the impressive reduction in two major sources of greenhouse gas emissions, what should we make of this week’s announcement by Cummins Inc. (NYSE: CMI) and privately held Tula Technology?
First, there is the fact that 13-year-old Tula’s cylinder-deactivation engine technology has been attracting attention for more than a decade. GM Ventures was an early backer. So were Sequoia Capital, Sigma Partners and Khosla Ventures. The Tier 1 supplier formerly known as Delphi invested in 2015.
So, even if the commercial vehicle space is just learning of the company’s capabilities, Tula is well known. And now that it is talking deals for its diesel Dynamic Skip Fire (dDSF) cylinder deactivation technology with more than 20 global truck makers, the prospects of a merger are growing.
“It’s fair to say that we see exit activities from private ownership as one way where we can continue to accelerate our growth and partnership with key companies that can bring more to the party than Tula could muster on our own,” CEO Scott Bailey told me this week.
But a blank check special purpose acquisition company (SPAC) merger is unlikely, and not just because SPACs are drawing increasing scrutiny from regulators.
“We’ve been approached by SPACs,” Bailey said. “The typical SPAC model really wants to generate an opportunity for people to continue to invest hundreds of millions of dollars in the company to, for example, build a battery plant. And Tula, as a controls company, that model just really doesn’t fit.”
Just thinking out loud here. But possible suitors would have to include Cummins, which is always on the lookout for strategic acquisitions. And the Columbus, Indiana-based engine maker is going to be doing diesel powertrains for a long time because many of its customers are outsourcing diesel engines — many to Cummins — to focus on electric powertrains.
Tula is paying attention to the embracing of electrification. Half of its 60-person team is working on controls for electric motors. So there is a chance the two units could be split up in a sale.
BorgWarner Inc. (NYSE: BWA) paid $3.3 billion for the legacy businesses of Delphi, called Delphi Technologies, last year. While BorgWarner is planning to sell off some traditional internal combustion technologies, including some that came with the Delphi merger, it is keeping parts that will help it grow as an electric powertrain player.
Power management company Eaton Corp. (NYSE: ETN) also should be in the mix. It has been active in M&A and has plenty of cash. Dana Inc. (NYSE: DAN) would be a maybe because it has less financial flexibility.
But my best guess is Cummins, which just spent two years in an exclusive tie-up with Tula and knows it better than anyone with the possible exception of GM, which has Dynamic Skip Fire in more than a million vehicles. For a relatively small early investment, GM got the milk without buying the cow.
Cummins is cagey about whether and when it would adopt Tula’s dDSF after testing on its X-15 high-efficiency six-cylinder engine. Is a bigger deal coming?
If not Cummins, whom am I missing? Let me know at email@example.com.
In the personnel files this week …
Daimler Trucks North America (DTNA) CEO John O’Leary is taking Caley Edgerly off the bus. Edgerly, president and CEO of subsidiary Thomas Built Buses, takes over as general manager, operations planning and quality at the DTNA mothership. Edgerly joined Daimler in 1994 as a quality engineer at Detroit Diesel Corp.
DTNA also named Marcela Barreiro as president and CEO of Daimler Trucks Mexico, the first woman to lead the operation. A 13-year veteran of Daimler Trucks Mexico, Barreiro most recently led human resources for the 8,000-member workforce covering two truck manufacturing plants and five other locations in the country.
Travel plaza operator and fuel supplier Pilot Company is casting a wide net for its National Hiring Day on April 27. It is looking to hire 5,000 people with virtual meet-and-greets across North America. Pilot has jobs available in retail, food service, professional driving and corporate roles.
Somehow, it’s hard to imagine tough-guy actor Jason Statham trading in his BMW for Udelv’s Transporter, a role he played in a movie trilogy of the same name in the 2000s.
That’s all for this week. Thanks for reading.
16 April 2021, 17:22