58-year-old Canadian stole Tesla trade secrets and tried to sell them on YouTube, authorities say

A Canadian citizen living in China pleaded guilty Thursday to conspiring to sell secrets he stole from Tesla to commercialize battery assembly technology vital for electric vehicles, authorities say. He became ensnared in a sting operation after undercover agents posed as Long Island businessmen looking to buy an assembly line at a trade show in Las Vegas.

Klaus Pflugbeil, 58, now faces a maximum sentence of 10 years in prison and will be sentenced in October. His co-defendant, Yilong Shao, remains at large. Prosecutors said Pflugbeil and Shao were employees of a Canada-based manufacturing company that made and sold battery assembly lines for customers needing alkaline and lithium-ion batteries. The Canadian manufacturing company was bought by a company, identified in reports as Tesla, giving the Elon Musk-led electric vehicle maker an advantage in manufacturing continuous-motion batteries.

“Despite Pflugbeil’s agreement to protect what he knew was proprietary and sensitive technology, he chose to abscond with these trade secrets to China, where he sought an unfair and illegal advantage in critical industries such as electric vehicle manufacturing,” the attorney general said. Deputy Matthew Olsen of the Department of Justice’s National Security Division said in a statement. The conduct endangered national security, Olsen said.

The assembly lines allow manufacturers to run battery production at high speeds without pauses and can produce five to 10 times more parts per minute than competitors who don’t have access to them, court documents claim. Between 2004 and 2017, Tesla spent around $13 million on research and development to bring battery technology to life.

Because it was top secret and valuable to competitors, information about the battery assembly, such as drawings and diagrams, was stored on a particular server under the direct control of a dedicated in-house IT team. Few employees had access to the unit with information about battery assembly, according to the indictment, and Pflugbeil was one of them, authorities said. He worked for the Canadian manufacturer for 12 years, from January 1997 to June 2009, including two years as director of its China office. Around the time Tesla bought the Canadian manufacturing company, Shao sent Pflugbeil a proposal to set up a business together, court documents say.

Pflugbeil and Shao knew that information about the assembly of the continuous motion battery was secret and that Pflugbeil took the original documents from the company when he left in 2009, according to the Justice Department. The duo set about copying the battery manufacturer’s documents and drawings and marketing their business as an alternative source of products that rely on battery assembly.

Between 2019 and 2022, authorities say Pflugbeil sent dozens of direct messages on LinkedIn claiming to sell precision pumps and parts. Pflugbeil also created a YouTube account for the company, and when a commenter on a video asked about assembly, Pflugbeil responded that his new company provided direct sales and technical support for pumps and mounting parts. The duo also purchased Google ads for their business, which were displayed tens of thousands of times, authorities said.

The two were caught when, in 2023, undercover law enforcement agents went to a trade show in Las Vegas and posed as Long Island business owners interested in purchasing a battery assembly line. Pflugbeil wasn’t there, but Shao was and said the company was interested. Pflugbeil then sent a 66-page document to undercover agents, the indictment says, containing at least a half-dozen drawings that belonged to Tesla.

Pflugbeil flew to New York in 2024 to seal what he thought was a deal to sell an assembly line, but instead met with undercover agents on Long Island.

“This brazen theft of advanced trade secrets related to battery components and assemblies weakens America’s technological advantage, and the Department of Justice will hold accountable those who attempt to cheat our country of its economic potential and threaten our national security,” Olsen said.

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