TuSimple Fires CEO Xiaodi Hou Amid Federal Probes

Mr. Hou was fired in connection with a continuing investigation by members of the board, the release said. That review “led the Board to conclude that a change of Chief Executive Officer was necessary,” the company said in the release.

The securities filing said that the board’s investigation found that TuSimple this year shared confidential information with Hydron Inc., a trucking startup with operations mostly in China and funded by Chinese investors. The filing also said that TuSimple’s decision to share the confidential information with Hydron hadn’t been disclosed to the board before TuSimple entered into a business deal with Hydron.

TuSimple said it didn’t know whether Hydron shared or publicly disclosed the confidential information.

In a statement posted on LinkedIn, Mr. Hou asserted his innocence and said his firing was “without cause.”

“Unfortunately, the Board’s processes and conclusions have been questionable at best,” Mr. Hou wrote. “As the facts come to light, I am confident that my decisions as CEO and Chairman, and our vision for TuSimple, will be vindicated.”

Mr. Hou’s termination was announced the day after The Wall Street Journal reported that TuSimple and its leadership, principally Mr. Hou, faced investigations by the Federal Bureau of Investigation, Securities and Exchange Commission and Committee on Foreign Investment in the U.S., known as Cfius, into whether the company improperly financed and transferred technology to Hydron, according to people with knowledge of the matter.

TuSimple’s stock was off 45% on Monday afternoon. Shares in the company are down more than 90% for the year. 

Investigators at the FBI and SEC are looking at whether Mr. Hou breached fiduciary duties and securities laws by failing to properly disclose TuSimple’s relationship with Hydron, the China-backed startup founded in 2021 by TuSimple co-founder Mo Chen that says it is developing autonomous hydrogen-powered trucks, the Journal reported. Federal investigators are also probing whether TuSimple shared with Hydron intellectual property developed in the U.S. and whether that action defrauded TuSimple investors by sending valuable technology to an overseas adversary.

Mr. Chen didn’t immediately respond to a request for comment.

The Journal also has reported that the board in July began investigating similar issues, including whether TuSimple incubated Hydron in China without informing regulators, the TuSimple board or its shareholders. A June business presentation from Hydron viewed by the Journal named TuSimple as Hydron’s first customer, and said TuSimple would purchase from Hydron several hundred hydrogen-powered trucks equipped with self-driving technology. A TuSimple spokesman said the company has considered an agreement to buy freight trucks from Hydron but isn’t a Hydron customer. 

Mr. Hou said in his statement that he fully cooperated with the board and that “I have nothing to hide.”

“I want to be clear that I fundamentally deny any suggestions of wrongdoing,” Mr. Hou said.

TuSimple’s securities filing on Monday said that TuSimple employees worked for Hydron and were paid, earning less than $300,000. The board wasn’t aware of this nor had members approved it, the filing said. Mr. Chen, who leads Hydron, is TuSimple’s largest shareholder, owning about 11.8% of the company, according to FactSet.   

Mr. Hou said he hasn’t sold a single TuSimple share and would continue to hold on to his stake for as long as he can. He owns about 11.3% of the company, according to FactSet.

Mr. Hou’s dismissal follows months of upheaval at the company, including the departures of its chief financial officer and chief legal officer. Much of the turmoil began when Mr. Hou took over as CEO in March, said former employees. 

In April, one of TuSimple’s autonomous semi trucks crashed on an Arizona freeway. The accident revealed safety and security problems at TuSimple that former employees said leadership had dismissed, the Journal reported in August. 

TuSimple was founded in 2015 and went public in April 2021, raising more than $1 billion at an $8.5 billion valuation in the process. The company is developing autonomous-driving systems that it aims to integrate into big rigs manufactured by some of the world’s largest truck makers. Its partners include Navistar International Corp. and Traton, a publicly listed

Volkswagen AG

subsidiary that makes trucks.

TuSimple said

Ersin Yumer,

the company’s executive vice president of operations, will serve as interim CEO while the board searches for Mr. Hou’s successor. Mr. Yumer previously worked on autonomous-vehicle technology at

Aurora Innovation Inc.,

Uber Technologies Inc.

and Argo AI, the autonomous-driving venture partly owned by

Ford Motor Co.

and

Volkswagen

that was shut down recently. Independent board director

Brad Buss,

the former chief financial officer at SolarCity Corp. and Cypress Semiconductor Corp., will be chairman, TuSimple said.

Mr. Buss said Monday—in an email to TuSimple staff that was viewed by the Journal—that the company would continue to work toward its goal of having commercial self-driving trucks on U.S. highways. “We have to continue to make the hard decisions necessary to keep TuSimple moving on its trajectory toward long term success and long term stability,” Mr. Buss said.

TuSimple said it would release its third-quarter earnings on Monday after the market closes. The earnings release was previously scheduled for Tuesday. The company, ahead of the results, said it remained on track to meet the full-year guidance disclosed in August, including ending the year with a cash balance of about $950 million.

Write to Heather Somerville at heather.somerville@wsj.com and Kate O’Keeffe at kathryn.okeeffe@wsj.com