Klaus Pfligbeil, 58, was arrested in New York after arranging to meet with an undercover officer posing as a potential client
The Tesla company logo is shown in Littleton, Colo. Photo by David Zalubowski /THE ASSOCIATED PRESS
A Canadian man and a Chinese national are accused of trying to sell a battery manufacturing method belonging to Tesla and stealing it for their company’s use.
Klaus Pflugbeil, a 58-year-old Canadian citizen, was arrested in Long Island, N.Y., after arranging to meet with an undercover officer posing as a potential client. His business partner and alleged co-conspirator, Yilong Shao, 47, is still at large.
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The pair started a company that used “sensitive and proprietary information” belonging to Tesla and marketed their company as a replacement for its products, according to an indictment filed in the Eastern District of New York. Pfligbeil and Shao are charged with conspiracy to transmit trade secrets, which carries a possible 10-year sentence.
Pflugbeil allegedly acquired Tesla’s method of manufacturing batteries used in their vehicles and marketed their company as a replacement for Tesla’s products, the indictment says.
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In 2019, Tesla acquired a Canadian manufacturer of “automated, precision dispensing pumps” used to manufacture alkaline and lithium-ion batteries, the lawsuit says. Pflugbeil and Shao were reportedly employees at this company.
Pflugbeil had access to “drawing and diagrams” outlining a high-speed battery manufacturing process, the lawsuit alleges. The technology, owned solely by Tesla, could “produce five to ten times more parts per minute” than by conventional means, it adds.
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“On or about Oct. 22, 2019, the same month that (Tesla) purchased the Canadian Manufacturer, Shao sent Pflugbeil an email with an attachment that appears to be a business proposal about setting up a business together,” the indictment says. The pair then communicated about setting up a business using Tesla’s trade secrets, prosecutors allege.
“I wanted to mentioned (sic) that I do have a lot of original documents, but of course only from before 2009, including a lot. What is our plan, do we have access to some original drawings … If yes, list which ones, so we can see where we have a lower risk. On this we should talk in person,” Pflugbeil wrote in an email Shao a few days later, documents show.
Pflugbeil was head of the Canadian manufacturer’s China location until 2009. Shao worked for the company from Jan. 2010 to Aug. 2020, spending some of that time in China.
Pflugbeil and Shao started a business around mid-2020 with entities in China, Canada, Germany and Brazil, marketing the company as a new source of Tesla’s battery assembly technology.
Tesla acquired Hibar Systems, a Richmond Hill, Ont. based battery manufacturing company in late 2019, according to media reports during that time. Neither company is named in the lawsuit.
“As alleged, the defendants set up a company in China, blatantly stole trade secrets from an American company that are important to manufacturing electric vehicles, and which cost many millions of dollars in research and development, and sold products developed with the stolen trade secrets,” Breon Peace, U.S. attorney with the Eastern District of New York, said in a media statement.
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