TuSimple Data Transfer to China: National Security Concerns

Data Transfer Concerns Surround CreateAI (Formerly TuSimple)

According to reports from The Wall Street Journal, self-driving truck technology firm CreateAI – previously known as TuSimple – transferred a substantial amount of sensitive data to a company based in Beijing. This data essentially represented the core design of an American-developed autonomous vehicle system.

Agreement and Subsequent Transfers

The transfer occurred despite a prior commitment made to the U.S. government. TuSimple had pledged to halt such data transfers as part of a national security agreement. The recipient of this information was Foton, a Chinese truck manufacturer.

These data transmissions took place around February 2022, shortly after TuSimple formally signed the agreement with U.S. regulators. This agreement mandated the separation of the company’s U.S. operations and technology from Chinese-based personnel and partners through the implementation of robust firewalls and governance protocols.

Hundreds of pages of correspondence reviewed by the Journal indicate that the data sharing persisted until TuSimple’s deadline for full compliance with the agreement, which was six months later.

Investigation and Settlement

An investigation conducted by the Committee on Foreign Investment in the U.S. (CFIUS) determined that the data sharing did not constitute a direct violation of the agreement’s terms. However, TuSimple was penalized for other infractions and reached a $6 million settlement without admitting any wrongdoing.

TechCrunch’s attempts to obtain a comment from TuSimple, now operating as CreateAI, were unsuccessful.

Broader Implications and Ongoing Issues

The situation with TuSimple’s data transfers to China highlights the challenges inherent in safeguarding U.S. national security while simultaneously encouraging foreign investment.

This revelation follows earlier reports concerning attempts by some of TuSimple’s shareholders to prevent the transfer of approximately $450 million in U.S. funds to the company’s Chinese subsidiary. The intended purpose of this transfer was to support a strategic shift towards AI animation and content creation.

This financial dispute remains unresolved, with co-founder Xiaodi Hou currently engaged in a legal battle to gain control of his voting shares. His aim is to advocate for the company’s liquidation.

Company History and Rebranding

In December 2024, TuSimple underwent a rebranding initiative and officially became CreateAI.

The company has faced considerable controversy since its initial public offering (IPO) in 2021. Founded in 2015 by Xiaodi Hou and Lu Chen, TuSimple initially attracted significant investment – around $2 billion – from both Chinese and U.S. investors.

It quickly established itself as a prominent player in the autonomous vehicle sector, achieving a fully driverless run on public highways.

Operational Shifts and Delisting

Internal conflicts and federal investigations into the company’s connections with China led to TuSimple’s decision to cease U.S. operations and voluntarily delist from the stock market in January 2024.

The company’s stated goal was to resume self-driving operations in China, but the CFIUS agreement and court orders restricting asset transfers – both financial and technological – presented significant obstacles.

Connections to Hydron and Foton

The Journal’s reporting provides further detail regarding a previously reported issue involving Hydron, a Chinese hydrogen trucking startup founded by Lu Chen. Hydron shared office space with TuSimple China.

The relationship between Hydron and TuSimple was a focal point of the 2022 CFIUS investigation. During this probe, TuSimple disclosed that its employees had dedicated paid work hours to Hydron in 2021 and had shared confidential information with the startup.

In 2021, TuSimple facilitated an agreement between Hydron and Foton to collaborate on the development of autonomous trucks. Foton, a subsidiary of the state-owned BAIC Group, maintains a collaborative agreement with a Chinese military university focused on autonomous vehicle technology.

Specific Data Transferred

Through various communication channels – including emails, Slack messages, and video conferences – TuSimple transmitted technical specifications to its partners. These included details regarding server dimensions, brake systems, sensors, steering mechanisms, power supplies, and integrated chips.

Furthermore, employees routinely downloaded the source code for autonomous driving systems developed by their American colleagues.

Policy Implications

As geopolitical tensions with China escalate, TuSimple’s case serves as a cautionary example for Washington. It has contributed to a shift in U.S. policy, resulting in stricter regulations governing tech deals involving Chinese entities and a broader effort to block transactions deemed high-risk.