China resident who stole Tesla trade secrets gets 2-year US sentence

By Blake Brittain

(Reuters) – A German-Canadian resident of China was sentenced to 24 months in prison in the U.S. for stealing electric vehicle trade secrets from Tesla (NASDAQ:) for his competing EV battery business, the U.S. Department of Justice said on Monday.

Klaus Pflugbeil, 59, pleaded guilty in June to conspiring with business partner Yilong Shao to sell Tesla’s battery manufacturing secrets to undercover FBI agents posing as Long Island businesspeople. 

Pflugbeil’s attorney and spokespeople for Tesla did not immediately respond to requests for comment on the sentencing. Shao, who was also charged but remains at large, could not be reached for comment.

“In stealing trade secrets from an American electric vehicle manufacturer to use in his own China-based company, Pflugbeil’s actions stood to benefit the (People’s Republic of China) in a critical industry with national security implications,”  U.S. Assistant Attorney General Matthew Olsen said in a statement.

Pflugbeil, who is a citizen of Germany and Canada, was charged in New York in March.

Prosecutors said he and Shao built their EV battery business on trade secrets from a “leading U.S.-based electric vehicle company.” Prosecutors did not name the company, but said it acquired a Canada-based manufacturer of battery-assembly lines in 2019, which matches the description of Tesla’s acquisition of Canadian company Hibar.

The Justice Department said Pflugbeil and Shao worked for the Canadian company before Pflugbeil joined Shao’s business in 2020. Prosecutors said that Pflugbeil and Shao’s venture has locations in China, Canada, Germany and Brazil that make the same battery assembly equipment as their previous employer.

Shao met the undercover agents at a trade show in Las Vegas last year, according to prosecutors, after which Pflugbeil sent them a business proposal containing Tesla’s trade secrets.