Insights

Why TuSimple Stock Crashed Today

What happened

Shares of TuSimple Holdings (NASDAQ: TSP) shifted into reverse on Monday, declining by as much as 10%. As of 1:57 p.m. ET, the stock was still down by 8.8%.

The catalyst that sent the self-driving semitruck start-up tumbling was a report that federal regulators have launched an investigation into an accident involving the company’s technology.

So what

In April, a truck rigged with TuSimple’s autonomous driving system veered across multiple lanes of traffic and crashed into a concrete divider on I-10 in Tucson, Arizona. A driver and engineer with TuSimple were aboard at the time, though no one was injured in the crash.

As a result of the incident, the Federal Motor Carrier Safety Administration, a division of the Department of Transportation, has initiated a “safety compliance investigation” into TuSimple, according to a Wall Street Journal article published Monday. While the company blames the crash on human error, a regulatory filing indicates there could be additional factors at play, suggesting there are issues with TuSimple’s underlying technology.

There are also concerns that the company is rushing to deliver its self-driving technology to the market, ultimately allowing safety concerns to take a back seat, according to the article. This has some questioning the safety of testing these systems on public highways. The trucks are currently being tested on roads in Arizona, Texas, and China.

Now what

TuSimple is widely regarded as one of the leaders in developing autonomous big rigs and has attracted the attention of high-profile partners such as United Parcel Service (NYSE: UPS) and DHL.

This latest news casts a pall on TuSimple’s prospects, which ultimately depend on the wide adoption of its Autonomous Freight Network. Given the company’s as yet unproven technology and the growing chorus of concerns regarding its systems, investors might do best to steer clear of TuSimple Holdings — at least until we get further insight into the safety of its technology.

Danny Vena has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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