Tesla Global News #8

Men accused of selling Tesla battery secrets arrested in undercover sting

⚙️Two individuals accused of attempting to sell Tesla's battery manufacturing and trade secrets were apprehended in an undercover operation earlier this week.

🔊Klaus Pflugbeil and Yilong Shao, both hailing from Ningbo, China, were suspected of trying to market sensitive information, including battery manufacturing techniques and other proprietary data collected by Tesla.

Pflugbeil engaged with individuals posing as "businessmen" who were actually undercover federal agents on Tuesday morning, resulting in his arrest. Shao, however, remains at large, as reported by the Associated Press.

Notably, both Pflugbeil and Shao were former employees of Hibar Systems, a Canadian battery manufacturing firm acquired by Tesla in 2019.

After relocating to China, the two individuals established a company with the intention of selling Tesla's purportedly stolen trade secrets, which the company had amassed over its years of electric vehicle development efforts.

According to Breon Peace, U.S. Attorney for the Eastern District of New York, this endeavor "resulted in significant financial losses in research and development, and the sale of products developed with the pilfered trade secrets."

Operating internationally, Pflugbeil and Shao's company expanded to include locations in Canada, Germany, and Brazil. Despite branding itself as an alternative to conventional assembly lines, the company essentially replicated Tesla's battery assembly lines using the exclusive information it had acquired.

Notably, in the U.S. Department of Justice's press release announcing Pflugbeil's arrest, Tesla is referred to simply as "Victim Company-1."

The initial contact between undercover agents and Pflugbeil and Shao occurred around September 11, 2023, during a trade show in Las Vegas:

"At the trade show, undercover agents were introduced to Shao and subsequently to Pflugbeil via email. Later, on or about November 17, 2023, Pflugbeil emailed a detailed 66-page technical documentation proposal to an undercover agent (UC-1) while UC-1 was in the Eastern District of New York. The proposal indicated that it contained 'confidential' proprietary information from [Business-1]. However, it actually contained Battery Assembly Trade Secret information belonging to Victim Company-1: several of the drawings included in Pflugbeil's proposal and sent to UC-1 were Tesla's proprietary information related to the Battery Assembly Trade Secret."

Pflugbeil and Shao attempted to disseminate Tesla's trade secrets under the guise of confidentiality, evidently placing their trust in the undercover federal agents.

Pflugbeil faces a potential sentence of up to 10 years in prison.