Federal prosecutors in New York have brought forth allegations against two individuals for allegedly initiating a business venture in China that hinges on stolen battery manufacturing technology from Tesla, with intentions to peddle the proprietary information. Klaus Pflugbeil, 58, a Canadian residing in Ningbo, China, was apprehended on Long Island during a purported meeting with prospective buyers to negotiate the sale of the pilfered data, unbeknownst to him, with the attendees being undercover federal agents, according to federal authorities. The other suspect implicated in the criminal complaint is Yilong Shao, 47, also of Ningbo, who remains at large. Both individuals face charges of conspiracy to transmit trade secrets, carrying a potential sentence of up to 10 years imprisonment upon conviction.
Pflugbeil’s legal representative has yet to respond to requests for comment, while Tesla has not immediately provided a statement. The technology in question pertains to high-speed battery assembly lines utilizing proprietary technology owned by Tesla, renowned for its electric vehicles. The accused individuals had previously been employed by a Canadian company involved in developing the technology, which was subsequently acquired by a prominent U.S.-based manufacturer of battery-powered electric vehicles and battery energy systems in 2019, as per authorities.
Although the companies involved were not explicitly named in the complaint, it is noted that in 2019, Tesla acquired Hibar Systems, a battery manufacturing entity in Richmond Hill, Ontario, as initially reported by Electric Autonomy Canada. According to Breon Peace, U.S. attorney for the Eastern District of New York, along with officials from the Justice Department and FBI, the defendants established a company in China where they purportedly misappropriated trade secrets from an American entity, crucial for electric vehicle manufacturing, worth millions in research and development costs. Subsequently, products developed using the stolen trade secrets were allegedly sold.
During mid-2020, Pflugbeil and Shao purportedly launched their business in China, subsequently expanding operations to include branches in Canada, Germany, and Brazil, according to prosecutors. The enterprise reportedly specializes in manufacturing battery assembly lines mirroring those utilized by Tesla, claiming to be an alternative source for such technology.