Wall Street Sees 182% Upside for TuSimple Stock

TuSimple Holdings Inc Set to Transform Global Autonomous Trucking Industry

As the world’s only “driver-out” autonomous semi-truck company, TuSimple Holdings Inc (NASDAQ: TSP) is in the envious position of taking a stronghold in the global $4.0-trillion freight market.

The company only went public in April 2021, but Wall Street says TSP stock is poised to be a leader in its industry. Of the analysts providing a 12-month share-price target for TuSimple stock, their average estimate is $53.25 and their high estimate is $78.70. This points to a potential upside of 91.5% and 182%, respectively.

There’s more than enough reason to believe TuSimple’s autonomous driving technology could disrupt the global freight market.

There’s a huge demand for trucking due to the increase in e-commerce (including same-day or next-day shipping). Meanwhile, there’s a shortage of truck drivers.

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The truck driver shortage hit a historic high of more than 80,000 in 2021, with driver turnover exceeding 100% for some carriers. (Source: “Company Overview: January 2022,” TuSimple Holdings Inc, last accessed January 12, 2022.)

There are also safety concerns. There was a 40% increase in fatalities involving semi-trucks from 2009 to 2019. Moreover, insurance premiums have been rising fast, expanding at a compound annual growth rate (CAGR) of five percent.

While some might believe autonomous trucking is still science fiction, its eventual adoption is a given. In the U.S., 44 states allow autonomous semi-truck testing, and 26 states allow autonomous semi-truck commercial deployment.

The U.S. freight trucking market is worth $800.0 billion, with 70% of all freight in the U.S. transported by trucks. TuSimple Holdings Inc expects to launch commercial production to meet this demand in 2024.

In addition to the U.S., there’s a massive global total addressable market at TuSimple Holdings Inc’s disposal.

In Europe, autonomous driving is regulated at the national level to allow testing and commercial operations. Europe’s total addressable market for autonomous driving is $400.0 billion. TuSimple expects to launch in the continent in 2025.

In China, government regulations support the pilot testing of autonomous driving. China and Greater Asia’s total addressable market for autonomous driving is an eye-watering $1.7 trillion. TuSimple expects to launch commercial production in this region in 2025.

About TuSimple Stock

TuSimple Holdings Inc develops proprietary artificial intelligence (AI) specifically for semi-trucks. The company has 357 patents and intends to produce a line of purpose-built Level 4 (L4) autonomous semi-trucks for the North American market. 

TuSimple’s vehicles are characterized by:

  • 1,000-meter perception capability
  • Access to 5.4 million miles of surface streets and highways that allow speeds of up to 75 miles per hour
  • Camera-centric architecture with multi-sensor fusion (Radar and LiDAR)
  • 600 trillion operations per second
  • Safe, stable, high-speed driving up to 75 miles per hour
  • About 10% better fuel efficiency
  • Adaptive control to optimize for different loads
  • Very high accuracy

TuSimple Holdings Inc has already mapped out about 10,000 miles of routes. In its third-quarter alone, the company mapped 1,400 new unique miles, expanding its autonomous freight network east from Dallas, TX to Charlotte, NC.

Future expansion plans include the rest of the country, from San Francisco to Seattle, Salt Lake City, Denver, Chicago, Minneapolis, Philadelphia, New York City, and Boston.

The company’s mapped-out miles in the U.S. should increase over the coming months. High-definition (HD) maps that previously took weeks to update are now being updated in one to two days. TuSimple Holdings Inc expects its updating time to be reduced to minutes over the long term.

Concurrent with its expansion in the U.S, TuSimple has initiated efforts in Europe and Asia,. It has been testing its autonomous trucks on public roads in Sweden and at a deep-water port in China.

TuSimple First to Successfully Operate Fully Autonomous Semi Truck on Open Road

On December 22, 2021, TuSimple became the first company to successfully operate a fully autonomous semi-truck on the open road. (Source: “TuSimple Becomes First to Successfully Operate Driver Out, Fully Autonomous Semi-Truck on Open Public Roads,” TuSimple Holdings Inc, December 29, 2021.)

The run took place with an upfitted autonomous semi-truck driving from a railyard in Tucson, AZ to the Phoenix metro area.

The one-hour and 20-minute drive was the first time a Class 8 autonomous truck has operated on open public roads without a human in the vehicle and without human intervention. The run was part of an ongoing test program that will continue this year. 

TuSimple Holdings Inc’s customers were happy to hear about this. The company currently has 6,875 reservations for its fully autonomous international “LT” series trucks.

Some of the first companies to place reservations were Penske Automotive Group, Inc. (NYSE: PAG), Schneider National Inc (NYSE: SNDR), and US Xpress Enterprise Inc (NYSE: USX).

Furthermore, TuSimple has a partnership with Navistar International Corporation. Navistar’s self-driving trucks, which it will start manufacturing in 2024, will be equipped with TuSimple’s autonomous driving system.

TuSimple Holdings Inc also recently announced a partnership with DHL Supply Chain to adopt, integrate, and scale TuSimple’s autonomous trucking technology into DHL’s operations.

TuSimple hasn’t officially launched its autonomous freight network technology, so it has been burning through cash. In the third quarter of 2021, the company reported a net loss of $116.0 million and an adjusted earnings loss of $81.0 million. (Source: “Q3 2001 TuSimple Letter to Shareholders,” TuSimple Holdings Inc, November 3, 2021.)

It has a strong cash position, however, with $1.4 billion in cash and equivalents.

Over the last two and a half years, TuSimple has completed more than 160,000 autonomous miles and performed more than 1,800 trips of paid freight haulage in real-world conditions for UPS North American Freight.

Over that distance, the company’s autonomous-driver technology delivered more than 13% in fuel savings compared to human drivers.

Analyst Take

TuSimple Holdings Inc is an autonomous technology company that’s poised to transform the $800.0-billion U.S. and $4.0-trillion global freight truck market.

Its proprietary AI technology has been successfully tested, and the number of reservations for its trucks has been growing fast as the company moves toward a 2024 launch date for its products.