Ex-employee sentenced to prison for stealing U.S. electric vehicle trade secrets
A Tesla vehicle produced by the leading U.S. electric vehicle company whose trade secrets were likely at the center of a recent criminal case. Photo: Richard Vogel/AP
A China-based businessman was sentenced on Tuesday to 24 months in federal prison for conspiring to send trade secrets belonging to a leading U.S. electric vehicle company, prosecutors announced.
The defendant, Klaus Pflugbeil, admitted to using the stolen technology to build a business that marketed itself as a direct competitor to the American company.
While prosecutors did not name the victim company, details in court filings align with Tesla, the leading U.S. electric vehicle manufacturer.
Tesla acquired Hibar Systems, a Canada-based battery technology company, in 2019. The proprietary technology at the center of the case — known as continuous motion battery assembly — was developed by Hibar and provided a significant competitive advantage in the production of lithium-ion batteries.
Prosecutors said Pflugbeil and his co-defendant, Yilong Shao, who remains at large, took the technology from Hibar, their former employer, before Tesla’s acquisition. By 2020, Pflugbeil joined a company started by Shao that sold products derived from the stolen trade secrets. The business, operating in China, Germany, Canada and Brazil, marketed itself online as an alternative to Tesla’s products, targeting major manufacturers while falsely claiming no intellectual property had been infringed.
“The defendant built a business in China to sell sensitive technology that belongs to a U.S. company,” said Breon Peace, the U.S. attorney for the Eastern District of New York. “His actions were bold — he even advertised that he was selling the victim’s products — because he thought, incorrectly, that he was outside the reach of U.S. prosecutors.”
“Today’s sentencing sends a clear message to would-be offenders: My Office will do everything it can to protect American innovation and national security no matter where you try to hide,” Peace added.
The scheme unraveled in September 2023 when undercover federal agents posing as buyers attended a trade show in Las Vegas. After expressing interest in purchasing a $15 million battery assembly line, the agents received a 66-page technical proposal from Pflugbeil that contained detailed blueprints of the stolen technology.
The Justice Department said the theft not only caused financial harm but posed national security risks, as Chinese automakers using such technology could flood the global market with competitive electric vehicles.
The case was prosecuted as part of the Justice Department’s Disruptive Technology Strike Force, a coordinated effort to prevent the transfer of critical technology to foreign adversaries.
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