Autonomous Trucking Firm TuSimple Fined $6 Million for Post-CFIUS Agreement Breaches

Autonomous vehicle technology firm TuSimple, now operating as CreateAI, has been fined $6 million in a settlement with the Committee on Foreign Investment in the United States (CFIUS). This action addresses events related to its 2022 national security agreement, specifically concerning allegations of continued sensitive data sharing with Chinese entities. A judge also recently found that former chairman Charles Chao and his allies maintained influence over the company despite U.S. efforts to prevent it.

Founded in 2015 with Chinese funding from Sina, TuSimple developed advanced autonomous driving solutions for heavy-duty trucks. The company operated with dual headquarters in San Diego and Beijing, leveraging U.S. highways for technology refinement and securing a U.S. stock market listing. This structure, and the involvement of Sina chairman Charles Chao, who also held U.S. citizenship, drew early scrutiny from U.S. authorities.

The Pentagon's CFIUS team first flagged national security concerns in 2019 regarding Chao's China connections and the technology's potential military applications. By February 2021, Treasury officials formally asserted CFIUS jurisdiction, initiating extensive discussions on necessary national security measures. This engagement aimed to establish robust guardrails to protect U.S. intellectual property.

Despite ongoing CFIUS discussions, TuSimple co-founder Mo Chen, an ally of Chao, established Hydron in China in March 2021, backed by Sina. This new venture, intended to make custom vehicles for TuSimple, sparked alarm among U.S. officials. They concluded Hydron could enable China to benefit from TuSimple's advanced technology, circumventing U.S. efforts. A judge on October 31 found that Chao and his associates maintained influence over the company after the U.S. agreement was in place.

In February 2022, TuSimple and CFIUS finalized a National Security Agreement (NSA), mandating a halt to collaboration between U.S. and China operations and strict intellectual property access controls. However, reports from The Wall Street Journal indicated TuSimple continued to transfer sensitive data to Chinese partners after the NSA was in effect. While an investigation found these transfers didn't technically violate the agreement, the company paid a $6 million settlement for other compliance infractions.

The TuSimple saga, culminating in its rebranding to CreateAI and pivot to AI animation after exiting U.S. operations in January 2024, serves as a significant cautionary tale for U.S. policymakers. Senator Josh Hawley has urged the Department of Justice to investigate TuSimple for potential export control violations. This case underscores the challenges in balancing foreign investment with national security, as one observer stated, > "The TuSimple episode 'is one of the clearest examples of predatory Chinese investment siphoning US innovation to Beijing — at the expense of our national security and American investors.'"