Good day, and welcome to the TuSimple Q2 2022 Earnings Conference Call. All participants are now in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. Keep in mind that this call is being recorded, and there will be a replay available at ir.tusimple.com following this call. I would now like to turn the conference over to Ryan Amerman, Head of Investor Relations for TuSimple. Mr. Amerman, please go ahead. Thank you, Howard. Good afternoon, and welcome to our Q2 2022 Earnings Call. With us today are TuSimple's Co-founder and Chief Executive Officer, Xiaodi Hou, and Interim Chief Financial Officer, Eric Tapia. Xiaodi and Eric will review the operating and financial highlights, and then we'll take questions. As a reminder, TuSimple shareholder letter and a replay of this call will be available later today on the investor relations page of our website. This call is being recorded. If you object in any way, please disconnect now. Please note that TuSimple shareholder letter, press releases, and this call contain forward-looking statements that are subject to risks and uncertainties. These forward-looking statements are only predictions and may differ materially from actual future events or results due to a variety of factors. Please refer to the risk factors detailed in our SEC filings. We will also discuss non-GAAP financial measures, which are not prepared in accordance with generally accepted accounting principles. Please refer to the Safe Harbor disclaimer and non-GAAP financial measures presented in our shareholder letter for more details, including a reconciliation of the non-GAAP measures to the comparable GAAP measures. I will now turn the call over to Xiaodi to begin. Thank you, Ryan. Hello, and welcome to our Q2 Earnings Call. Today, we're excited to update you on a recently announced leadership additions, continued progress we've made with developing our proprietary IP, newly announced partnerships, and efforts we've made on the regulatory front. The next two to three3 years are all about bringing efficiency into everything that we do, and we're confident in our ability to deliver advanced autonomous trucking at a commercial scale to build a faster, more efficient, and sustainable future on the road. Before we provide an update on the company, I want to spend more time talking about safety. Yesterday, The Wall Street Journal ran an article that questioned TuSimple's commitment to safety. First, I would say that I am extremely proud of all that we have accomplished and are accomplishing at TuSimple. We are the first company in the world to execute a successful driverless test on 80-mile stretch of highway in Arizona, and we've repeated multiple times since. In the past seven years, we've had 8.1 million miles of on-the-road testing and precisely one incident that TuSimple Truck is responsible for. In this incident, an error occurred when a test driver and safety engineer tried to reenter autonomous driving mode before the system computer was primed to do so, and the truck swerved, making contact with the highway barrier. No one was hurt, and the only evidence of the accident were a few scrapes and some minor damages on our truck. I want to be very clear, while this was caused by human error, as the CEO of TuSimple, I take responsibility for it. At the end of the day, these kind of traffic accidents are what we are in the business of trying to eliminate from our roads to build a safer, more secure, and more reliable freight delivery system across America. When this incident happened, the very first thing we did was ground the entire fleet and began an independent investigation to determine what happened. After doing so and determining the cause, we upgraded all of our systems to make sure this could never happen again. There are some who have questioned how this could have happened in the first place. That's fair, but it is also important keeping this perspective. Collectively, our engineers have spent millions of hours building a system that has caused one incident in all seven years of operation. No one was hurt, no property damaged, and we reported to the appropriate government agencies as we should have. Considering that NHTSA reported 500,000 large truck accidents every year, I think we have a pretty good average, and that our technology is working. With all of this in mind, we are a company in transition as we scale up from the research and development to commercialization. This also caused some questions, the changes I've started making as a CEO and whether we are prioritizing safety. Here's my commitment to all of you, the stakeholders of TuSimple. We will not achieve commercialization until we are sure we can do so safely. Every decision I make starts and ends with evaluating the safety of our technology. We encourage our incredibly talented team to raise concerns if they have them and come forward with ideas of how to do it better. We have a strong safety record, and we will continue to make it as strong as possible. Now, moving on to the quarter. In June, we announced several leadership changes. First, Pat Dillon, our former CFO, decided to leave the company to pursue other opportunities. He had played an instrumental role in setting up TuSimple to succeed, and I wanted to personally thank him for his contributions. Eric Tapia, who you will hear from later in the call, has taken over the role as interim CFO. Eric has been serving as our global controller and principal accounting officer over the past year, and came to us from Grainger, and prior to that, KPMG. Eric's skill set fits very well with where TuSimple is in our life cycle, and we're fortunate to have him step into the CFO role. We also announced a few additions to our leadership team. Isabella Zhou was promoted to Chief HR Officer. In this role, Isabella Zhou will be responsible for organizational planning and ensuring that we identify, develop, and retain top talents. Ersin Yumer was promoted to Executive Vice President for Operations. In this newly created position, Ersin will oversee our AFN, working closely with both our technical and operational teams to ultimately support driver-out operations and continue our journey towards commercialization. Ersin joined as a Senior Director of Machine Learning and was most recently Vice President of Algorithms. This, as well as his years of experience in AV industry, make him the perfect fit for this expanded role. Lei Wang was promoted to Executive Vice President for Technology. This is also a newly created position. In this position, Lei will take over many of the responsibilities I had as a CTO, thus freeing me up to spend more time on the overall strategy of the company. We are fortunate to have such talented individuals within the organization. These organizational changes are designed to help us achieve the vision that we have for TuSimple. At our Investor Day in May, we discussed that we are in the process of expanding our operational design domain from Arizona to Texas, and from nighttime to daytime. A critical component of this is building out our physical infrastructure in Texas. Last quarter, we announced additional terminals in the Texas Triangle, and our team is busy executing on our plans to continue the build-out. What is critical as we migrate to Texas is to ensure we have the ability to create density and scale in our network. This requires a continued investment in our physical infrastructure, trucks and technology, and further developing strong partnerships. We intend to further validate the commercialization opportunity by utilizing real-world commercial routes to continuously improve our cost per mile metrics and continue our journey towards commercialization. Next, I'd like to talk about our continuous success in building a valuable patent portfolio. During this past quarter, we expanded our portfolio with 37 new patents. As you have heard me say, and as I will continue to emphasize, the next two to three years is all about bringing efficiency into everything that we do. Let me provide you a few examples of how we're doing that with our patent portfolio. The first example I'd like to highlight is a patent that covers automatic traversal of routes that lower fuel consumption to reduce costs. Fuel is a major cost of trucking operation, accounting for roughly one-quarter of a truck operating cost. We've already shown our AV technology is over 10% more fuel- efficient than a human driver. Route optimization on top of improved fuel efficiency has the potential to lower fuel costs even more for our customers. Next, we were issued two patents dealing with sensors. The first patent covers technology to calibrate sensors while the truck is moving down the road. The second patent covers sensor cleaning techniques for frozen solids. It is hard to overstate how critical sensors are to any AV platform. Technology that improves the reliability and reduces maintenance costs is critical in reducing the overall operating cost of TuSimple's AV platform. We will continue to invest in further expanding our IP portfolio. In July, we announced our partnership with Hegelmann Group. Hegelmann is a major European transport and logistic provider, and we're excited to be part of their expansion plans in the United States. We believe that this additional partnership is another validation point of the value our purpose-built Level 4 truck will bring to the trucking and logistics market. We look forward to work with Hegelmann and our many other partners in the logistics ecosystem as we develop and commercialize our technology. Last but not least, I'd like to spend some time on a regulatory update. We're happy to announce that Tom Jensen has joined the company as the Vice President of Governmental Affairs to lead our efforts in this very important area. Tom comes to us from UPS, where he spent more than 20 years lobbying at both the federal and state level on various issues impacting the transportation industry. We're happy to have Tom on board. Welcome. While we are on the regulatory topic, in Q2, we continue to work on building out a state legislative and regulatory environment favorable to commercial AV operations. With Kansas and West Virginia enacting legislation granting Level 4 truck authority, this increases the number of states that permits driver-out deployment to 28, while 44 states allow driver-in operations. Additionally, I am proud to be the signatory on a recent letter sent to Governor Gavin Newsom of California from leaders in the autonomous trucking industry. As you know, California, TuSimple's home state, currently does not allow for AV truck testing despite a 2012 bill that was signed into law intended to begin the rulemaking process. We are pushing for a common sense regulation so that California joins the other 44 states in the country that allow for AV testing. With that, I will turn the call over to Eric to discuss our financial results and updated guidance. Thank you, Xiaodi. Beginning with our reservation program. This quarter, we added 10 new truck reservations ordered by a long-time partner. We're excited to continue working to bring our world-class AV technology to our partners. Our reservation total at quarter end stands at just under 7,500 trucks. We continue to see significant interest from our fleet partners and continue to hold our standards for reservations. We only work with partners capable of implementing our AV technology and those that are ready to make a financial commitment alongside their reservation. Now, shifting gears to our financial results for the Q2 2022. We reported $2.6 million of revenue in the quarter, an increase of 70% year-over-year and 13% sequentially. Compared to last quarter, we have kept our revenue fleet relatively flat as new trucks are prioritized and deployed for driver route testing operations. The year-over-year growth was driven by revenue miles as well as pricing. Sequentially, though, revenue was primarily driven by better utilization of our existing fleet, while pricing was flat. We expect to keep our leased and owned revenue fleet flat over the course of 2022 and will continue to improve utilization as needed. That said, I think it's important to share our view on revenue miles for the next couple of years. As we gradually transition to driver-out commercialization, revenue miles will be generated as we support our technology needs. This will essentially validate and advance our technology as we support our customers through either pilot or revenue-generating programs that showcase the benefits of our Level 4 technology. Moving to expenses. We spent $86 million on total R&D this quarter, including $22 million of stock-based compensation. This compares to $76 million in the same period last year and $78 million in the Q1 2022, or up 9% sequentially. Excluding the impact of stock-based compensation, R&D increased 4% sequentially as we continue to invest in our technology, R&D assets, and core tech talent. We will continue investing in commercialization of our world-leading technology and key talent while managing our R&D dollars as efficiently as possible. On the SG&A front, we spent $22 million during the period, including $3 million of stock-based compensation. This compares to $44 million in the same period last year and $32 million in the Q1 2022, or down 32% sequentially. As a reminder, this quarter we lapped the impact of stock-based compensation related to our IPO last year, which explains some of these deltas. Excluding the impact of stock-based compensation, SG&A was down 19% sequentially. During the first and Q2 2022, we had some favorable non-cash accounting true-ups in SG&A of approximately $2.6 million and $4.4 million, respectively, which we do not expect to repeat in future quarters. Excluding these items, SG&A was down 10% sequentially from improved cost leverage. We continue to be highly disciplined in controlling our SG&A spend and prioritizing the spend that really contributes to our technology and commercialization objectives. Our loss from operations was $111 million in the Q2 2022, compared to a loss of $121 million in the same period last year and $112 million last quarter. Our adjusted EBITDA loss in the Q2 2022 was $83 million, which compares to $66 million in the same period last year and $80 million last quarter. In the Q2 of 2022, we had $3.8 million of CapEx, primarily related to equipment and facility investments. We ended the Q2 2022 with a cash balance of approximately $1.16 billion, a decline of $81 million versus the previous quarter. Now turning to guidance for 2022. We are updating our full year guidance. While our revenue guidance remains unchanged, we have updated our guidance for adjusted EBITDA, stock-based compensation, CapEx, and ending cash balance. This was done to reflect our increased focus on expense control and disciplined capital deployment. We now expect to finish the year as follows. Our adjusted EBITDA loss to be between $360 million and $380 million, versus the prior guidance of $400 million to $420 million. Our stock-based compensation to be between $100 million and $120 million, versus prior guidance of $155 million to $175 million. This is a result of hiring slowdowns and stock price impacts. We're also reducing our CapEx guidance by $10 million. This is primarily driven by a reduction of our investment in administrative facilities. Lastly, we expect to end the year with approximately $950 million of cash on the balance sheet, versus the previous guidance of approximately $900 million. While we do not intend to issue our 2023 guidance until we report our Q4 results, I think it's worth pointing out a few important items as we move through the H2 2022 and into 2023. First, we are in the process of upgrading most of our older trucks to the newest AV hardware technology. This process will continue through 2023, and together with the physical infrastructure and our partners, will help us create the network density that Xiaodi was referring to earlier. Second, while we plan to introduce some new trucks into the fleet, our ability to add a significant number of trucks is difficult given the challenges in purchasing new or even slightly used trucks. Lastly, we plan to continue to invest and add terminals to the AFN, primarily in and around the Texas Triangle. Our intention is to do this in a capital-light manner, partnering when possible. We look forward to updating you on our efforts in the coming quarters. I'll now hand it back to Xiaodi for a few last remarks. Thank you, Eric. The progress we have made over the last two years is significant. We have built a first-class team from the ground up and created a safety-first culture to develop our industry-leading technology. I am proud of our work at TuSimple and remain completely confident in our progress to deliver advanced autonomous trucking at a commercial scale to build a safer, more efficient, and sustainable future on the road. With that, we're ready to start the Q&A session. Okay. Ladies and gentlemen, if you have a question or comment at this time, please press star one one on your telephone keypad. Again, if you have a question or comment at this time, please press star one one on your telephone keypad. Please stand by while we compile the Q&A roster. Our first question or comment comes from the line of Ravi Shanker from Morgan Stanley. Your line is open. Thank you. Good afternoon, everyone. Xiaodi, thank you for the details on the accident. Can you share some more details on what changes you have implemented since? Were they on the technology side, or were they on the operating procedure side? Also, would you like to refute any details in the WSJ story that came out yesterday? Yes. First of all, we have an overhaul of our human-machine interface so that we are guaranteeing that the human error won't cause the machine error. That's on the machine side. We have also tightened up our training procedure to make sure that all of the operations are compliant. In terms of the other aspects of the article, I think there's a lot of misunderstanding of it, especially regarding to our compliance when it comes to reporting this incident to the authorities. I wanted to make several points to be clear in here. First of all, we reported the incident to the appropriate authority, and it has been in the public domain for more than a month on the NHTSA website. The second is that the truck scraped the median, resulting in no injury and no property damage. There were no requirements to contact the law enforcement. We did report the incident to the Arizona Department of Transportation and NHTSA on time. Got it. There have been no follow-up, like, there's been no changes in your ability to run your trucks or do any testing in the immediate aftermath? No. No. Neither the FMCSA nor the NHTSA has asked us to do any changes. As part of our own review process, we actually, as I said, implemented a lot of solutions to prevent this type of things from happening again. Our new fleet with the upgraded software has since then been on the road. Great. Just lastly, the follow-up question. I think this patent that you just received on the frozen sensor is an important one because I believe that was a major, if not the only obstacle to you actually running your trucks in the snow. Is that the case? Do you feel like you're ready to start commencing some snow belt tests this winter? This is a complex issue that we're facing when running in the snow and ice. We are actually developing the sensor cleaning technology, and this is gonna be part of our solution that we have received the patent for. As of today, we're still developing this full solution. Great. Thank you. Thank you. Thank you. Our next question or comment comes from the line of Scott Group from Wolfe Research. Stand by. Your line is open. Hey, thanks. Good afternoon. I was wondering, given some of the safety concerns out there, I know you guys haven't given data on disengagements in the past, but I thought maybe appropriate. Anything you can share in terms of where that trend is and where it's been? I think in the past, we don't explicitly give out the disengagement data. I don't know what exactly of the data are you referring to? No, I'm saying you I know you haven't given it in the past, but I was wondering maybe if you wanted to make some comments on, you know, just given some of the safety concerns that are out there, maybe if you wanna just give some high-level comments around where Yeah. where that metric is today, where it was, what kind of progress you're making, maybe Okay. First of all, I think the disengagement is not a very useful metric for marking the progress of technology of autonomous driving. Second, our incident specifically on April the sixth is not a disengagement. It's actually the issue happened at the engagement phase of the system where the system is not ready. Is there a better metric that you think is worth sharing with us? I would say that overall, the overall metric would be that is tangible and easy to read would be cost per mile, but that only covers part of the system. As you know, the system is very complicated. I don't think there is a good, easy to read numerical metric to cover all of the safety part of it. Okay. Just a question on the truck reservations were flat in the quarter. Are you having dialogue conversations with customers? Do you think that the truck reservation count starts rising again in the near term, or is that less of a near term focus? Thank you. That's a great question. I would say, yes, we are still engaging with our partners. You know, our pipeline for potential orders is pretty healthy and strong. W e are definitely focusing on the customers that have the capabilities, right? To introduce our technology into their network, in their fleets. That in and of itself tends to be the filter. You know, just as a reminder, some of these orders for purpose-built Level 4 trucks won't hit the market until several years from now, right? Again, to answer your original question, yes, we're still seeing momentum. We're still engaging partners, and there's interest, and the pipeline is healthy. Okay. Thanks for the time, guys. Thank you. Thank you. Our next question or comment comes from the line of Ken Hoexter from Bank of America. Mr. Hoexter, your line is open. Hey, great. Good afternoon. Thanks. Xiaodi, maybe just take a step back and talk to us big picture. What's the status of commercial operations? I t seems like you're expanding from Arizona to Texas. What is changing in the base case here? Is there a timeframe? You had talked about, getting more trucks and operating retrofit and getting that up and running before the fully built, purpose-built by Navistar, which you had pushed out from 2024 to maybe 2025- 2026. Maybe just take a step. What is the status of rolling out that commercial capability in 2023- 2024? What are we waiting for now? Yes. The team is not waiting for anything. The team is super busy every day. We have actually several aspects of it. First, the safety. We're actually having a higher target when it comes to everything about, like, the safety design and the system engineering side. We're basically having a more tightened safety standard and the validation process that goes through every corner of the system engineering part. The second is hardware. We are actually introducing new components, for example, the new type of sensors and the more reliable next generation actuation components. We're rebuilding the next version, which is getting closer to the production truck. But still it's a like a prototype type of chassis. On the hardware team is building on that. Third is that the software and algorithm team is trying to on one hand, meet the safety standards set forth by the system engineering team and on the other hand, utilize the new sensors, the new capability brought by the new OEM and tier ones. Sorry, no new tier ones components, to run. On the other hand, the operational side, we are actually seeing a lot of little issues. Not really issues, like a little opportunities here and there for improving the fleet efficiency. That is exactly what I said earlier, by intensifying the scale or intensifying the routes and populating more trucks into a smaller network operation, we have a long to-do list to do. That's the thing that we are doing right now, and now we're targeting at the end of next year so that you will see some strong results in Texas. It sounds like you have to rebuild or you are rebuilding your entire truck specs now. Did I hear that right? As far as getting new upgraded sensors on each part of the truck, is that why we should not expect any change in trucks and service? I mean, it seems like you're getting some capabilities. Oh, sorry. It's more like an upgrade considering all of the tier one hardware they have new versions and the new kind of lidar and the new type of cameras. It's all like an upgrade. Upgrade of existing versions. I thought you had to start handing in your final specs to Navistar at this point to be able to get that commercialization, or is that pushed out as well? No. This is the different thing. We actually have a lot of older trucks that we purchased several years ago, right? We have to upgrade them so that they can be aligned with the newest version of the hardware and software. All right. My last one, if I can sneak one more in, is you lowered your spend targets. I just wanna understand, we are getting no more additional miles in the interim. Like, what's the process? Again, I'm gonna go back to the first question. What's the process between here? Is it just waiting for Navistar to get the commercial built or Is there a reason why you don't wanna put more trucks on the road? You don't need more, you're getting enough info maybe? Round this out there. I think as long as we can mobilize all of our truck assets, our older version of the truck that is purchased like three years ago and with pretty old hardware, and we upgrade them, and then we have a decent fleet. All of them are running the cutting-edge software version. We're happy with the testing volume of this fleet. Yeah. Just to chime in, I'm gonna refer to some of my remarks. W e are also transitioning our entire fleet. When I say entire, when you think about our trucks, we have revenue trucks, revenue-generating trucks, hauling freight, but we also have testing trucks that are solely used in our testing facility. What happens from now through the end of the year and beginning of next year is we're leveraging the entire fleet, right? To certainly not necessarily to optimize revenue models, but really to focus on the efficiency, scale, and bringing, true cost per mile reductions by testing the technology in real-world scenarios. I think that for me is a pretty strong proof point of our industry. If we can really show true economic scale with trucks that we control and trucks that are really hauling freight in the real world, that will be, a pretty impactful event. So for me, that's the focus. Even though, yes, we reduced our targets, we are definitely investing in our fleet. We're investing in our technology, certainly in our talent as well. We've been very frugal in other aspects of our business, like administrative facilities. When it comes down to the core assets that will again show that commercialization opportunity, we're definitely investing the dollars. Xiaodi, Eric, thank you. I guess one last thing, somebody just brought up to you the China sale update. There's no update on the sale process, is there, just 'cause there was no mention of it? There's nothing I can share right now. Okay. Thank you. Great. Thank you for the time. Thank you. Our next question or comment comes from the line of Colin Rusch from Oppenheimer & Company. Mr. Rusch, your line is open. Thanks so much, guys. I'm curious about, talent acquisition here. You put together a high quality team that's pretty robust. You know, in terms of attracting talent and maybe upgrading certain areas, I'm curious, you know, what those prospects look like for you at this point. First of all, I think we are pretty proud that we do not currently have a hiring freeze. However, we have slowed down hiring from what we have planned at the beginning of this year. We are very judicious when it comes to backfill of the vacant positions. Overall, we are becoming more careful given the general economic situation right now. We're not shy in hiring the top talents. Okay. You know, in terms of some of the vendors that you guys are working with, there's certainly some technology development that's still going on in terms of, sensor fusion. Can you just give us an update in terms of, how you're seeing that progress relative to time frames and commercialization that you guys are targeting with some of those elements that maybe aren't completely finished at this point? Yeah. I think the most exciting thing that I see from the sensor development is actually not about the sensor capability development, but rather the sensor reliability development. This is something that we need exactly to conduct more driver ops runs and is in the very end, commercialization of the system. This is very encouraging. You see many of the components are maturing from A-samples to B-samples. The timeline of these suppliers, they actually getting pretty clear and they stick with their timeline, which is also encouraging to us. Perfect. Thanks so much. Thank you. Thank you. Our next question or comment comes from the line of Todd Fowler from KeyBanc. Mr. Fowler, your line is open. Great. Thanks, and good evening. Xiaodi, you know, on the path to commercialization by the end of 2023, you kind of have five, you know, milestones laid out in the newsletter tonight. C an you give us a sense, as we sit here kinda looking at the H2 2022 and then into 2023, what's realistic here, for the rest of this year and then what we should expect into 2023? Sure. Yeah. You know, from all of those metrics, I would say that removing the support vehicles are the biggest two. In order to be able to remove the support vehicle, we need to upgrade our hardware so that we can improve the reliability, as what I have just said, that you know, the sensors are getting more reliable, and we're very happy to see this happens as we planned. We're currently building this new type of trucks. That is taking. Normally it's taking a very long time, but we're doing our best to shorten the time. We do not anticipate, therefore, we do not anticipate to reduce or remove the support vehicle in this year because probably by the end of the year we're barely finished the build-up of the hardware. While at the same time, the system engineering team working with the algorithm team are working on strengthening the system from every corner. This is what we're doing right now. This is also what you will see later on the plan, the Union Pacific driver-out commercialization run. That is something that we will be basically having shown as intermediate stop of our strengthened software for this year. Is it fair to ask about, I mean, what% of the fleet needs to be upgraded and what% of the fleet has been upgraded? Because when I square kind of the comments that you made to Ken and Eric, your comments at the end of the prepared remarks, it really sounds like that this is very critical for 2023. Is that something that you plan on sharing where you're at with the fleet upgrade? Or how can we kind of track where the progress is with that? Sure thing. Let me chime in. Just to put numbers behind that response. We have 100 trucks globally, right? Of which 75 of them are in the U.S., and those 75, they're split between revenue and testing. A number of trucks that need to be upgraded, it's in the 35-38 unit range. And from incremental CapEx, incremental OpEx, it's definitely reflected on the updated guidance. You know, these are amounts that certainly they're not immaterial, but they're, they were primarily funded through savings in other areas. We feel very comfortable supporting and completing those upgrades by the end of the year for again, that testing and revenue fleet. In 2023, we'll continue that upgrade and the investment on the trucks, again, to ensure that they are running real commercial routes. We don't expect to start seeing cost per mile improvements likely until the H2 of next year, which for me, that's the biggest metric that we'll use to show progress, right? We can show and share updates as we go, but for me, quantitatively, we'll need that true cost per mile improvements to show that the improvements are paying off. Yeah. Okay. That makes a lot of sense. Thanks for the time. I'll turn it over. Thank you. Thank you. Again, ladies and gentlemen, if you have a question or comment at this time, please press star one one on your telephone keypad. Our next question or comment comes from the line of Brian Ossenbeck from JP Morgan. Mr. Ossenbeck, your line is open. All right, thanks for taking the question. Xiaodi, you mentioned you did all the steps, as required and even some that are maybe not required when reporting the accident or the incident. Is there, you know, as a leader of the industry, do you think or maybe the industry in general has to be more proactive as there are more miles and more, you know, potential incidents that happen, rather than, you know, relying on the government and posting on that website? Do you think there's room for you to do more, you know, to kind of disclose those more, well, not upfront, but I guess not waiting for the government to, put it on their website and for something like this to happen again? Just wanna get your thoughts on that. Yeah. I would say that there's a kind of a general dynamics. If there are certain regulations or like certain common practice for every player in this field to be more open and transparent, definitely we're all for that. I would say that there is a recent change from the NHTSA website that we were getting everything publicized. First of all, I think we were not shy of being transparent, and we actually reported to all of that. You know what, in this call, we also share even more information to that. For example, we told you our total miles, which by the way, is not included in the NHTSA report. On the other side, I think we strive to keep our partners and stakeholders informed as possible about our progress. With this was an incident with a correctable flaw, not a material change to our business model. Okay. Understood. Then on the UNP process with the driver-out run, can you just give us an update on that? Sounds like that's gonna be something going on later this year. Just, I guess, more broadly speaking now that the first wave of Ghost Rider is done, can you just comment on driver-out applications at this point in time and what's planned for the rest of the year? Sure. Yeah. The overall framework of the safety case is there, but we're actually substantiating it with a lot more stronger requirement that makes the on-road behavior for all of the operational aspects even more safer. That's what keeps us busy. In terms of specific, the Union Pacific driver-out run, we unfortunately have encountered a complete road closure in front of the distribution center at our destination point. We are actually actively looking for adequate solutions, but that means that the complete road closure delayed us for a couple of weeks. Not months, but couple of weeks. Right. Within that, the Union Pacific run, we actually not only strengthened our system, but also we adopt a new type of trailer with unknown load, and this is actually adding quite a bit of the new elements into our safety case that we have to validate through the unknown ways of a unknown new type of trailer. We have actually conquered that part of the test. We're still finalizing the tests. You will hear us in the near future about the run. Okay. Just maybe to touch on the comments made earlier to the previous questions. It sounds like, you know, all in, there's clearly some other challenges that maybe have popped up in the supply chain, it sounds like, in terms of the upgrading the trucks, not getting as many as perhaps you might have thought. Is it still safe to assume that you're on track for the wider commercial rollout at the end of 2023? Or maybe some of that buffer has since been impacted by these events? If you could just clarify that, please. Thank you. Sure. Yeah, of course. There are challenges here and there, but I think when we do the design, we are very cognizant of all of the changes, and the team is doing a terrific job in keeping our timeline still on track. We're still confident of all of the promise that we have made on the Analyst Day. Okay. Appreciate it. Thank you. Thank you. Thank you. Our next question or comment comes from the line of Joseph Spak from RBC Capital Markets. Stand by. Thanks everyone. Just to, I mean, quickly follow up on that timeline comment also goes for the production truck timeline in 2025, or is there any change there? So far, there's no changes on that. Okay. One, I guess, quick clarification and then, I guess one bigger picture question. You mentioned the truck reservations, which I think, you had at 10, but then you also sort of detailed the Hegelmann partnership. It sounds like there were some initial reservations, but that happened after the quarter closed, so that's not in that number. Is that the right interpretation? Yeah. Hegelmann is in our backlog. It is. Okay. 'Cause you report an end of quarter, and that happened. I thought that came out in July, so I just wanted to understand that, but okay. Okay. I guess, you know, going back to the accident, and again, this is understandably a big question. Look, I think even you would acknowledge, even when the system is quote-unquote ready, accidents are going to occur. How are you going to communicate to your partners and to your stakeholders, like what is the definition of safety you're striving for? Like, how do we know when it's, you know, safe enough for you, safe enough for your partners and safe enough for regulators, all sort of constituents? What should we really be looking for? I think we will. Like, basically, by definition, no one is omnipotent. We're able to have a like, a strong, clear 100% statement about safety. It's more like we show transparency and we show our methodology, and we have evidence to prove to our customers and our OEMs about our safety principles and concepts. The thing is that for driverless, we do have that thing very well prepared. Unfortunately, the incident that's shown up here is more of the operational safety. Nevertheless, I think, as I said in the beginning, I take the responsibility of this incident. I think the company needs to be more putting more effort in the operational safety aspect, especially given the fact that we're not going to have all of our truck driverless tomorrow. There will be always the human-machine interface out there, and there will be also the operational elements in the system. Therefore, this is the area we're definitely strengthening right now. We have done a lot of effort since the incident, and we're going to be more cautious and be more supportive in that aspect. Can you maybe share, and I understand different partners might have different requirements, but can you share anonymously, of course, like what a partner like, how are they defining safety? Like, what's gonna give them enough comfort to say, "We're ready to go"? I'm mainly talking about like the hardware-related partners. This is Level 4 autonomous driving. It's a new thing for everyone. The partners are open to us to hear about our safety case, and basically, as long as we show them the safety case at a high level, of course, if it goes to really detailed level, that's a proprietary thing that we will not share. The high level safety case, once we share with them, they're on board with the principles and the structure of it, and with the evidence that can show the overall safety. That is how we are collaborating with our partners. I guess I meant the freight partners. What gets them comfortable? What gets them over the hump? I think the spirit is the same, but the granularity is probably one or two tiers less because the freight customers are less technical than the hardware partners. Okay. Thank you. Thanks. Thank you. Our next question or comment comes from the line of Rajvindra Gill from Needham & Company. Standby. Yes. Thank you for taking my questions. An apology if this question was already asked, but just joining from another call. Just following up on that, how do you think that the National Highway Traffic Safety Administration is going to, I guess, adjust their view on what conditional automation is versus, say, a Level 4 automation? Do you anticipate that they will provide more stringent requirements between the different levels of autonomy to prevent, you know, future accidents like this in the future? I'm just wondering if you've had feedback from the NHTSA as a result of this particular accident, and what's been their feedback? Yeah, sure. First of all, I don't think I have any views of how the NHTSA would in the future modify their regulations. But what I can tell you is that FMCSA and NHTSA come to TuSimple. They did their thorough analysis of our process, of our every step that we do and our independent investigation results. There is nothing that they found anomaly or inappropriate. They gave us. So far, we implemented the solution on our own, and they do not give us any further recommendations on how to, you know, change that or alter that. Of course, the investigation is not completed. We remain confident about the investigation. Right. I think this goes to the heart of the technology and of the business model where, you know, the goal essentially is to, you know, to remove the driver in order to save cost and efficiencies and there's a, you know, an impression that a Level 4 autonomy is gonna happen in freight faster than passenger vehicles. I'm just curious if that gets pushed out or if that gets stalled in any way, you know, how would you kind of react as a publicly traded company if there are new rules or new legislation that would prevent that from happening? Yeah, I would say that at first, we don't really see any signal of that happening or about to happen. The second is that, of course, we're not going to break the law. Lastly, I think we're going to demonstrate transparency and adherence to the right protocol to demonstrate to the government agencies that basically give them confidence through our process. Has this investigation affect your rollout, your anticipated plans of future driver-out programs? Again, you might have answered this with previous questions, but you know, my sense is that this year there's gonna be several driver-out programs expanding to the Texas Triangle, for instance. Is that being delayed or pushed out because of this of this crash? Thank you. Yeah. First of all, I think the promise is about Union Pacific driver-out run. For Texas, our deadline is set for next year via a lot of other improvements, removing the support vehicles and hauling commercial runs day and night. Yeah. Those are for next year. I don't think that we have other deadlines in this year and all of the driver-out activities and preparation for driving tests are not affected by this incident. Thank you. As mentioned, I think, you know, the fact that when this event occurred, you know, we stopped our fleet and we root caused what really occurred and really applied and fixed. Now we're testing our current trucks using the fix. We feel very confident that this is an isolated event, and this has not had any impact to our plans. Again, we're same behavior and reaction that we had on previous events. You know, we take safety seriously, and we'll do that, I think, going forward. We feel confident that this issue that created the accident has been solved. Thank you. Thank you. I'm showing no additional questions in the queue at this time. I'd like to turn the conference back over to management for any closing remarks. Thank you for joining the call, and we look forward to attending many conferences this quarter and giving you another update next quarter. Thank you. Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may now disconnect. Everyone, have a wonderful day.