Prosecutors in the US have accused two Canadians, Klaus Pflugbeil and Yilong Shao, of stealing trade secrets from Tesla, and leveraging this stolen intellectual property to establish a competing business in China.
Klaus Pflugbeil, a 58-year-old Canadian citizen residing in Ningbo, China, was arrested in New York after setting up a meeting potential buyers, only to find himself being arrested by undercover federal agents. His accomplice, Yilong Shao, 47, also based in Ningbo, has been charged, but has not yet been arrested.
The pair is accused of leveraging their insider knowledge acquired while working at the Ontario-based company, Hibar Systems, which was purchased by Tesla in 2019. This acquisition made Tesla the sole proprietor of cutting-edge battery assembly line technology, essential for the company’s electric vehicle production.
Pflugbeil and Shao allegedly founded a business in China in 2020, later expanding into Canada, Germany, and Brazil, illegally using Tesla’s proprietary technology to create and market comparable battery assembly lines, essentially replicating the automaker’s innovations.
The pair even went so far as to directly name Tesla in their advertising materials, saying “Are you looking for [Victim Company-1] Metering pumps and spare parts? Look no further.”
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 for the Eastern District of New York (via AP)
If convicted, the charges of conspiracy to transmit trade secrets against Pflugbeil and Shao carry a penalty of up to 10 years in prison.
