Self-Driving Truck Start-Up Might Face Espionage Investigation Over China Connection

Image: TuSimple

TuSimple develops self-driving software for trucking companies, but it might not be keeping those big-brained developments here in the good ol’ U.S. of A. Members of a U.S. national-security panel are urging the Justice Department to bring charges against two of TuSimple’s founders and the company’s current CFO for patents being improperly transferred to China-based startup, Hydron.

TuSimple is best known for taking a load of melons on a 1,200-mile journey — 950 of those miles driven autonomously — across four states in the American southwest in 2021. The company seemed to hold a lot of promise in the self-driving tech space until multiple federal organizations began to look closely at the company and, in particular, TuSimple’s founders Xiaodi Hou and Mo Chen and current Chief Executive Cheng Lu.

The feds first became concerned with TuSimple when a Chinese national and shareholder bought a huge stake in the company, controlling two board member seats. They then took a closer look at one of Chen’s other companies, centered in China, Hydron.

Members of the Committee on Foreign Investment in the United States, known as Cfius, made a recommendation for criminal charges against the company to the Justice Department. Cfius is headed by the Treasury Department and contains representatives from multiple federal agencies, including Defense and Justice departments. Cfius began investigating TuSimple in 2021 for possible economic espionage charges, the Wall Street Journal reports. The investigation honed in on a startup in China, that different stated goals than TuSimple, but many of the same officers and employees:

The Hydron review led the Cfius representatives to conclude that TuSimple’s leaders’ dealings with Hydron potentially violated U.S. laws prohibiting economic espionage and trade-secrets theft, among other possible offenses, according to the people familiar with the matter.

TuSimple’s board of directors in October fired then-Chief Executive Mr. Hou in connection with the board’s discovery that TuSimple had transferred confidential company information to Hydron and its partners, according to a filing TuSimple submitted to the SEC.

The board’s investigation found significant evidence of improper technology transfer to Hydron, according to the people familiar with the matter. The transfer included technical data, blueprints and schematics that would enable Hydron to replicate TuSimple’s technology as well as specific information about TuSimple personnel who would be valuable to Hydron, according to one of the people.

TuSimple employees who also worked for Hydron included top staff in marketing, product development, business development and government relations, according to people familiar with the matter.

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Even without the economic espionage investigation and recommendations, TuSimple is having a rough start to 2023. The company is also under investigation by the Federal Motor Carrier Safety Administration and the National Highway Traffic Administration following a crash where a truck jumped across I-80 and drove directly into a cement barrier.

The entire investigation involves a lot of corporate drama, in fighting, power grabs, federal investigations and possibly spy craft. The entire WSJ story is worth your time.