Federal prosecutors in New York announced on Tuesday that two men are accused of starting a business in China using stolen battery manufacturing technology from Tesla and attempting to market the confidential data.
Federal authorities reported the arrest of Klaus Pflugbeil, a 58-year-old Canadian living in Ningbo, China.
He was arrested on Long Island on Tuesday morning under the impression that he was meeting with businessmen to negotiate the price of the information he was selling. However, the businessmen were, in fact, undercover federal agents.
The other person named in the criminal complaint is a 47-year-old man from Ningbo, Yilong Shao, who remains at large. The two are accused of conspiring to share trade secrets, a crime that could result in up to 10 years of imprisonment if found guilty.
There was no immediate response from Pflugbeil’s lawyer to phone and email messages seeking comment on Tuesday night, and Tesla also didn’t respond promptly to a questioning email message.
The technology in question is a proprietary technology of Tesla used in high-speed battery assembly lines.
The technology was developed by a Canadian company where the two men worked. In 2019, this company was acquired by a leading US-based manufacturer of battery-powered EVs and battery energy systems, as stated in the complaint. Following this acquisition, Tesla became the sole owner of the technology.
While the prosecutors refrained from naming any of the companies, it’s known that Tesla bought Hibar Systems, a Richmond Hill, Ontario-based battery manufacturing firm, in 2019.
In a statement with the Justice Department and FBI, U.S. attorney for the Eastern District of New York, Breon Peace, said the defendants had founded a company in China, flagrantly pilfered trade secrets from an American company essential to the manufacture of electric vehicles, which had cost millions in research and development, and then sold products manufactured with the stolen trade secrets.
The prosecutors revealed that Pflugbeil and Shao started their business in China in mid-2020 and then grew it to include locations in Canada, Germany, and Brazil.
The company manufactures battery assembly lines similar to those used by Tesla, leveraging its proprietary information. It positions itself as an alternative supplier for these assembly lines, according to authorities.
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