TuSimple Responds: Pivoting to AIGC Games for Survival

“A large volume of false statements and reports have recently emerged, causing significant impact on TuSimple.”

After several years, TuSimple’s senior leadership has appeared in public for the first time as a group. This includes Chen Mo, Lu Cheng, and Hao Jianan—serving respectively as Chairman, CEO, and China Region CEO. They represent the “surviving” core leadership team at TuSimple today.

Since the beginning of this year, the former No. 1 autonomous driving stock has revealed a series of developments:

• February: Lost all domestic autonomous driving partners;
• March: Reported to have halted all R&D and commercialization activities;
• May: Former CTO and founding team member Wang Naiyan was reported to have left the company to join Xiaomi Auto. At this time, TuSimple also reached a settlement agreement with North American regulators;
• August: TuSimple announced a pivot to the AIGC film and animation sector;
• September: An anonymous shareholder whistleblower letter surfaced, directly accusing the current leadership of “weaving a huge lie”;
• Upcoming November: Hou Xiaodi has regained voting rights over his equity shares—previously reported that he had entered into a voting rights agreement with Chen Mo to dissolve the board.

In response to these events, TuSimple’s senior management provided their first public response. Smart Car Reference transmitted the following details from the communication session immediately.

(The following is the latest record of communication with TuSimple’s management, edited only for necessary background supplementation and reading fluency.)

”Hou Xiaodi believes in autonomy; I believe in cash flow”

Question 1: What exactly is your relationship with Hou Xiaodi?

Chen Mo:

First, when Hou Xiaodi was fired by the previous board of directors (in October 2022), I truly did not know what specifically happened. We had not been in contact for a long time before his dismissal. The day before he was fired, he called me and asked if I could help him remove these directors first. While I was still considering it, I saw that he had already been dismissed the next day.

I neither agreed nor disagreed. However, some investors and shareholders mediated to encourage my return. At that time, I put forward two requirements: first, Lu Cheng must come back with me; second, Hou Xiaodi must authorize his voting rights to me. Because without absolute control, it would be impossible to clean up the mess.

My judgment at the time was that operations in the United States were no longer viable. We needed to cut costs exceeding $300 million annually and practice “cutting off an arm to save the body.” However, on this point, I never communicated with Hou Xiaodi.

I do not know why Hou Xiaodi was dismissed by the board at that time, nor do I know today. Why did he resign to start a new company? To be honest, I don’t know either. I only state objectively that he resigned and started a new company. My guess is that it might be because we decided to lay off TuSimple’s entire U.S. operation.

Of course, we first tried to sell the business; if it couldn’t be sold, we had no choice but to reduce costs.

Hou Xiaodi may feel that autonomous driving is the only path, but I believe company cash flow is the only thing that matters. My goal was to balance revenue as quickly as possible.

Question 2: For two long years, why did you not communicate directly with Hou Xiaodi?

Chen Mo:

He established his new company very early (December 2022) and competed directly with TuSimple. Isn’t that a direct harm to the interests of TuSimple shareholders? So, how do you suggest we communicate?

Question 3: What is the essence of Hou Xiaodi’s style of conduct?

Chen Mo:

Everyone has different beliefs. My personal belief is fiduciary duty. This matter requires real, tangible profits; telling stories is useless. Everyone makes different choices, and I think that is fine.

Lu Cheng:

This isn’t about idealism vs. realism, or tech-focused vs. business-focused factions—that’s all nonsense. Look at the facts: In March 2022, Chen Mo and I left; in May, the CFO left; in July, the General Counsel left. Then Hou Xiaodi was dismissed by the board, which is a very abnormal occurrence—regardless of what faction you belong to.

Secondly, after Chen Mo and I returned, he allowed us to take over. Yet, within such a short period, he founded a company that directly competed with TuSimple. This is extremely irresponsible toward TuSimple shareholders—it has nothing to do with belief; it is an issue of professional ethics.

Question 4: TuSimple will hold a shareholder meeting at the end of December. Is there any possibility that Hou Xiaodi will take back control?

Chen Mo:

Hou Xiaodi and I each hold 12 million Class B shares (with identical voting weight). They are equal.

The voting rights authorized by Hou Xiaodi to me this November will expire. Our opinions are clearly divergent, so the outcome depends on how Class A shareholders vote.

Question 5: Reports say that Chen Mo was “pushed out” in March 2022 by Hou Xiaodi? Is that true?

Chen Mo:

At that time, Hou Xiaodi told me I had to choose between two options. Therefore, considering Hou Xiaodi’s technical leadership, I persuaded Lu Cheng to leave the company.

Shortly after, Hou Xiaodi informed me that Independent Director Brad proposed I should resign as Chairman and leave the board to focus on managing Turing Truck, also for better future cooperation with TuSimple. I accepted this.

However, I never communicated directly with Independent Director Brad throughout the entire process.

Question 6: Regarding the settlement agreement with the U.S., what exactly did TuSimple do wrong, and why pay such a high price to settle?

Chen Mo:

Geopolitics. The United States has its own politics; China has its own.

Shareholder Anonymous Whistleblower Letter: How Does TuSimple Respond?

The anonymous shareholder letter primarily targeted TuSimple’s actions prior to the official announcement of pivoting to AIGC, accusing Chen Mo and others of using TuSimple’s funds and resources for film and game businesses long ago, thereby deceiving shareholders.

TuSimple proactively responded to these accusations and explained the current status and future plans for its autonomous driving business.

1) Regarding shareholder allegations that two newly established entities are unrelated to autonomous driving and are linked to Chen Mo’s personal companies:

Chen Mo: Because foreign-invested companies cannot directly engage in internet businesses in China, everyone uses a VIE (Variable Interest Entity) structure to connect with these companies.

In reality, they belong to companies controlled by the TuSimple Group VIE structure. This method is used by all major companies like Alibaba and Tencent.

Regarding other related companies, Shuimo Xiadao (Water Ink Bandit) is my personal company, stemming from my hobby for animation and games. To date, there has been no financial transaction, no business interaction, and no relationship between this company and TuSimple.

The registered contact information overlaps because registering a company in China requires providing an address. We simply used TuSimple’s address at the time; there is no overlap in personnel.

2) TuSimple management wove lies, claiming that TuSimple’s autonomous driving business in China was booming and urgently needed large amounts of capital, but never disclosed that the company was quietly pivoting to video games and animation production.

Chen Mo:

In February 2024, a Temporary Restraining Order (TRO) issued by a U.S. Southern California court (prohibiting cooperation with Chinese companies) had a massive impact on TuSimple’s China autonomous driving business, leading to the departure of many core R&D team members. To ensure road testing safety, we gradually reduced autonomous driving R&D and testing activities.

In March 2024, given the challenges and difficulties faced in the autonomous driving sector, the TuSenior management team began preliminary explorations into Generative AI applications and actively communicated with the board of directors; after several months of initial exploration, management believed there were significant commercialization opportunities in the AIGC field.

Therefore, according to the company’s articles of association and governance rules, the TuSimple Group held a board meeting on August 12, 2024, officially approving the establishment of new business directions in Generative AI, formally entering the anime, film, and gaming industries. On August 15, the company officially announced IP licensing and cooperation related to The Three-Body Problem universe.

There was no deception by the company management or CEO toward the board, the public, or the U.S. Federal Court, nor was there any intentional transfer of funds to China. TuSimple Group funds were not used for Chen Mo’s personal investments in video games and animation.

Hao Jianan:

Currently, the TuSimple technical team consists of approximately 200 people, which remains the core team from the autonomous driving days. This advantage can be continued after pivoting to AIGC.

Additionally, after TuSimple suspended autonomous driving-related operations, AWS cloud service costs did not decrease. This is because the annual framework contract was signed with AWS during Hou Xiaodi’s tenure, and the contract included minimum spending requirements. These related resources can be utilized for subsequent Generative AI-related businesses.

3) Is the autonomous driving business still being pursued?

Chen Mo:

In the future, TuSimple’s autonomous driving business will pivot to patent licensing. This means opening up TuSimple’s existing technology patents and data protocols for use by other commercial partners, earning licensing fees.

We have already contacted two automotive clients, with an expected cooperation scale in the tens of millions of U.S. dollars.

What is TuSimple’s thinking on entering AIGC?

Lu Cheng:

The premise for TuSimple entering AIGC is actually quite normal because executives must constantly seek more commercial opportunities.

There are several points to the specific logic. First, Generative AI is a very hot topic. Starting in March, we communicated with shareholders and the board of directors, who agreed to explore this industry first.

Content and gaming constitute a very large market, with global revenues reaching approximately $600 billion.

Second, through researching the processes of game and animation production, we believe AIGC can create significant value in this sector.

Third, from a technical perspective, TuSimple has spent years on autonomous driving technology, accumulating substantial experience in AI technologies, infrastructure, and large models. Therefore, there is great potential for technological sharing.

Fourth, from a management perspective, we have experience. Before TuSimple, Chen Mo worked in the gaming industry for many years and possesses rich expertise.

TuSimple’s strategy for AIGC is relatively simple: collaborate with famous major IPs to create high-quality global content and games.

For example, in the officially announced The Three-Body Problem IP project, we use AI technology to reduce costs and accelerate processes, resulting in higher quality content and faster time-to-market.

Above is the logic behind TuSimple’s entry into the AIGC industry.