Self-driving truck startup Plus announced on Wednesday that it has divided its Chinese and American businesses and reached an agreement under which a significant shareholder, China’s Full Truck Alliance, will concentrate on the China unit.
The corporation confirmed the split’s completion to Reuters. According to three people with direct knowledge of the situation, FTA—dubbed China’s “Uber for trucks”—and Plus were seeking to shield themselves from escalating U.S.-China tensions and Beijing’s increasingly stringent regulatory monitoring.
In response to rising geopolitical tensions between the two largest economies in the world, U.S. venture capital firms Sequoia and GGV Capital, among others, have taken similar actions as Plus has divided its businesses in China and the United States.
The company Plus, which had offices in California and Suzhou, China, divided its operations into two different businesses.
The U.S. firm, which will continue to be known as Plus, will expand in the rest of the globe, while the Chinese unit, Zhijia Technology, will concentrate on China and establish a self-driving truck fleet for the Chinese market with FTA, the company said.
The business stated that FTA expanded its interest in Zhijia Technology through a stock swap agreement that decreased its ownership in Plus.
Two of the three sources claimed that FTA, which owned more than 30% of Plus before the division, had taken control of Zhijia Technology and that the majority of Plus’ business originated from China prior to the division. Regarding the percentage of shares held by FTA in Zhijia Technology, Plus refuses to comment.
FTA, which was established in 2017 through the union of the online freight marketplaces Yunmanman and Huochebang, operates a mobile app that links customers looking to send goods within China with truck drivers. With a scarcity of truck drivers in China, the company’s efforts to establish autonomous trucking fleets will be aided by its interest in Zhijia Technology.
Despite the sizable trucking business in China, which is estimated to be worth 4 trillion yuan ($550 billion) annually, the sector is incredibly fragmented, with more than 7 million heavy vehicles expected to be in use by 2021, and profit margins are typically low.
Requests for response from FTA were not answered.
The two businesses were a part of a wave of tech firms with Chinese and Chinese-related roots that eagerly chased prospects in both nations prior to the escalation of U.S.-China hostilities.
About two weeks after FTA raised about $1.6 billion by going public on the New York Stock Exchange in June 2021, China’s cyberspace authority broadened its investigation into the company’s potential threats to national data security.