The U.S. Department of Justice (DOJ) has sentenced a German-Canadian citizen to two years in prison for stealing trade secrets from Tesla to start a battery business in China, marking another development in the electric vehicle maker’s legal battles over intellectual property.
Klaus Pflugbeil, who resides in China, was sentenced this week after pleading guilty to trade secret theft in June. The DOJ said Pflugbeil used proprietary battery manufacturing information from Tesla in his new business. “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,” said U.S. Assistant Attorney General Matthew Olsen.
Prosecutors allege Pflugbeil conspired with Yilong Shao to sell Tesla’s trade secrets to undercover FBI agents posing as Long Island-based businesspeople. In Las Vegas last year, Shao met the agents while Pflugbeil shared a business proposal outlining Tesla’s battery manufacturing methods.
The trade secrets stemmed from Tesla’s 2019 acquisition of Hibar Systems, a Canadian battery production line manufacturer, though Tesla was not named in court filings. Prosecutors said Pflugbeil and Shao, who both worked at the unnamed Canadian company, established their new battery business to produce similar equipment.
While Pflugbeil received his sentence, Shao remains at large.
Tesla has taken legal action in several trade secret disputes in recent years. The automaker recently settled with Rivian over claims of stolen intellectual property. In 2022, Tesla resolved a case with Chinese EV startup Xpeng Motors involving Autopilot software theft, and it filed another lawsuit last year against Chinese chip designer Bingling, alleging theft of technical secrets.
The DOJ reiterated that trade secret theft remains a serious issue, particularly in industries central to technological innovation and national security.
