The leading EV manufacturer, Tesla, has been rattled after a man with Chinese residency stole company trade secrets. How will this affect Tesla and where do they go from here?
Trade Secrets Taken
One of the leaders in electric car manufacturing has experienced one of the worst kinds of breaches in their company. Some of the company’s trade secrets have become known to outsiders.
Who Is the Perpetrator?
The person responsible for stealing Tesla’s trade secrets has residency in China and dual citizenship in Germany and Canada. Klaus Pfugbeil pleaded guilty at his trial for taking trade secrets without company knowledge.
The Battery Manufacturer and Supplier
A Canadian battery manufacturer and assembly line company was acquired by Tesla to supply parts for the company. The perpetrators had worked for the company that supplied Tesla.
Closely Connected
According to court documentation, Tesla acquired the Canadian company called Hibar Systems in 2019. The perpetrators who stole the sensitive documentation worked at this company and had access to Tesla designs and insights.
Not One, but Two
Klaus Pfugbeil didn’t work alone. According to the U.S. Department of Justice—Office of Public Affairs, he had a partner working with him. Yilong Shao helped devise the plan to steal the information.
Suspect Still on the Run
While Pfugbeil was caught and will face 10 years of time for his crime, his partner Shao is still missing.
Working Closely With Tesla Opened a Door For Trouble
Both Shao and Pfugbeil worked at a supply company that supplied parts for Tesla. Because of their close working relationship with the American EV manufacturers, they had a better vantage going into the files and finding trade secrets together.
Devising Plans
According to details from the U.S. Department of Justice, the accused wanted to use company trade secrets for their purposes. Pfugbeil confided in Shao that he has trade secrets with “a lot of original documents” from the EV manufacturer.
Original Documentation
Shao and Pfugbeil’s had original sketches, assembly drawings, and details about the trademark technology used. They used this information to advance themselves.
Officially Leaving
Pfugbeil resigned from the company, now acquired by Tesla, with unauthorized information and details. He joined Shao in China. According to court details, Shao established a company here and used the same designs and protocols as the original Tesla brand.
Trade Secrets Used By Perpertrator’s Company
Reports by the Department of Justice said the accused men used designs and original technology blueprints to create their own battery assembly line. These were fashioned after the ones they’ve stolen.
Benefits From Stolen Tesla Property
Pfugbeil and Shao have successfully operated businesses in China, Canada, Germany, and Brazil using assembly-line trade secrets.
Advertising the Stolen Services
Pfugbeil had advertised “their” battery assembly and tube filling technology and services throughout social media. The U.S. Department of Justice said the accuser purchased Google ads to boost advertisements.
More Tactics from the Perpetrators
Reports from the Justice Department also noted that the Google ads read as though the new company was replacing all the “old” company’s services and products. Google ads read with the following captions “… replacing pumps and parts, identical spare parts, we manufacture metering pumps and fill tubes, contact us for your replacement pumps and parts.”
Guilty Plea
58-year-old Pfugbeil pleaded guilty when charged for his part in the case and was sentenced to ten years imprisonment. According to the Department of Justice, his partner has not been apprehended.
Sting Operation Success
The accused was caught in a sting operation run by U.S. FBI agents working undercover as businesspeople. They were operating from Long Island, NY. Pfugbeil had sold the company trade secrets to the sting agents.
Justice Is Served
“Today’s guilty plea demonstrates how this office will swiftly bring to justice those who misappropriate intellectual property belonging to American companies to safeguard our economy and national security,” said Breon Peace, a U.S. Attorney.
Catching the Other One
Shao, the other accused man in this case, remains at large.
Ongoing Action
The FBI continued working alongside the Criminal Division, Computer Crime, and Intellectual Property Section and found valuable details helping the case.
Collaborating to Catch Perpetrators
The American Department of Justice and Commerce and the Disruptive Technology Strikeforce fight to root out illicit actors. Together, they work to protect supply chains and prevent technologies from falling into the wrong hands.
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