Sentencing of German-Canadian Man for Stealing Trade Secrets

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:TSLA) 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, 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." While the Justice Department did not name the company, they described it as having acquired a Canada-based manufacturer of battery-assembly lines in 2019, matching Tesla's acquisition of Canadian company Hibar.

The Justice Department noted that Pflugbeil and Shao worked for the Canadian company before Pflugbeil joined Shao's business in 2020. Their venture reportedly includes locations in China, Canada, Germany, and Brazil that manufacture the same battery assembly equipment as their previous employer.

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