A Canadian living in China has confessed to stealing trade secrets related to Tesla’s electric-vehicle battery manufacturing. On Thursday, Klaus Pflugbeil, 58, admitted guilt in a New York federal court to charges of conspiracy to sell these secrets to undercover U.S. government agents, according to a statement by the U.S. Department of Justice (DOJ).
Pflugbeil, who operated a China-based business selling technology for electric vehicles, faces a potential prison sentence of up to 10 years. He was accused of collaborating with his business partner, Yilong Shao, to sell Tesla’s confidential information to FBI agents posing as Long Island entrepreneurs.
“With his guilty plea, Pflugbeil is now being held accountable for this unlawful conduct that jeopardized our national security,” stated U.S. Assistant Attorney General Matthew Olsen.
“The defendant brazenly took what did not belong to him and used stolen trade secrets for his own personal profit knowing those valuable trade secrets were rightfully owned by an American company,” said U.S. Attorney Breon Peace for the Eastern District of New York.
Charged in New York this March, Pflugbeil and Shao allegedly built their electric vehicle battery business on trade secrets from a “leading U.S.-based electric vehicle company.” While the company was not named, the description aligns with Tesla’s acquisition of the Canadian battery-assembly line manufacturer Hibar in 2019.
In July 2020, Klaus Pflugbeil joined a company established by Yilong Shao, referred to as Business-1, which has since expanded to China, Canada, Germany, and Brazil. Business-1 manufactures precision dispensing pumps and battery assembly lines similar to those developed by a Canadian manufacturer acquired by a leading U.S. electric vehicle company, believed to be Tesla.
Pflugbeil aggressively marketed Business-1 as an alternative source for products based on stolen trade secrets. He ran Google ads that touted, “[Business-1] | Replacing [Canadian Manufacturer] Pumps & Parts | [Canadian Manufacturer] Identical Spare Parts. We manufacture precision metering pumps and fill tubes. | Contact Us for your [Canadian Manufacturer] replacement pumps and parts.” These ads were displayed tens of thousands of times each week.
Additionally, Pflugbeil reached out to potential clients via LinkedIn, stating, “Hello [name], I used to work at [Canadian Manufacturer], and after [Victim Company-1] purchased and closed the company, I am now part of a company providing similar products and services.” His LinkedIn profile further emphasized this message.
On September 11, 2023, undercover FBI agents attended a trade show in Las Vegas, posing as businesspeople interested in purchasing a battery assembly line for a facility in Long Island, New York. The agents were introduced to Shao at the trade show and later connected with Pflugbeil via email.
On November 17, 2023, Pflugbeil sent a 66-page technical documentation proposal to an undercover agent (UC-1), falsely labeling it as Business-1’s proprietary information. In reality, the proposal contained trade secrets belonging to the victim company, including multiple drawings directly sourced from the stolen data.
Pflugbeil has pleaded guilty to conspiring to steal and share trade secrets and is set to be sentenced on October 9. He faces a maximum penalty of 10 years in prison, with the final sentence to be determined by a federal district court judge considering the U.S. Sentencing Guidelines and other relevant factors.