On Thursday, a Canadian national residing in China entered a guilty plea, according to the authorities, for planning to market Tesla-stealing trade secrets that are essential for electric vehicle battery manufacturing. After undercover officers pretended to be Long Island businessmen wishing to purchase an assembly line at a trade fair in Las Vegas, he was apprehended in a sting operation.
The maximum punishment for Klaus Pflugbeil, 58, is currently 10 years in prison. He will be sentenced in October. Yilong Shao, his co-defendant, is still on the loose. Pflugbeil and Shao, according to the prosecution, worked for a Canadian manufacturing company that produced and marketed battery assembly lines to customers in need of lithium-ion and alkaline batteries. The Elon Musk-led electric vehicle manufacturer gained an advantage in continuous motion battery manufacturing when the Canadian manufacturing company was acquired by a corporation that has been identified as Tesla, according to sources.
Assistant attorney general Matthew Olsen of the Justice Department’s National Security Division said in a statement, “Despite Pflugbeil’s agreement to protect what he knew was proprietary, 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.” Olsen stated that the actions endangered national security.
According to court filings, manufacturers can make five to ten times more parts per minute on assembly lines than they can on other facilities when running battery production at high speeds without stopping. In order to develop battery technology, Tesla invested over $13 million in research and development between 2004 and 2017.
Information about the battery assembly, including drawings and blueprints, was kept under strict supervision by a specialized internal IT staff on a single server since it was highly secret and important to rivals. Pflugbeil was among the few personnel who, according to the indictment, had access to the drive with the battery assembly knowledge. From January 1997 until June 2009, he spent a total of 12 years working for the Canadian firm, serving as its head of its Chinese office for two of those years. According to court documents, Shao submitted Pflugbeil a proposal for establishing a joint venture around the time that Tesla acquired the Canadian manufacturing company.
As per the DOJ, Pflugbeil and Shao were aware that the information on the continuous motion battery assembly was confidential, and Pflugbeil had taken original corporate records with him when he departed in 2009. The two went about replicating the manufacturer’s paperwork and designs and positioned their company as a substitute supplier for goods that needed the battery assembly.
