Canadian accused of using Tesla tech to start China-based company released on bail in U.S.

Drivers charge their Teslas in Santa Ana, Calif., on March 20, 2024. (Jeff Gritchen / The Orange County Register via AP)

A Canadian entrepreneur in China accused of stealing battery manufacturing technology from Tesla has been released on bail in the United States.

Klaus Pflugbeil, a Canadian citizen living in Ningbo, China, had a bond hearing on March 22 and was released on bail March 28, according to information provided by Danielle Hass, spokesperson for the United States Attorney's Office for the Eastern District of New York, in an email to CTVNews.ca on Monday.

The court set the bond at US$1 million, with two properties posted and US$150,000 cash deposited with the clerk of the court.

"The defendants set up a company in China, blatantly stole trade secrets from an American company that are important to manufacturing electric vehicles, and which cost many millions of dollars in research and development, and sold products developed with the stolen trade secrets," Breon Peace, U.S. attorney for the Eastern District of New York, said in a statement last month.

Pflugbeil was arrested on March 19 on Long Island, N.Y., after he allegedly sent multiple trade secrets to an undercover agent. He is accused of travelling to Nassau County, N.Y., believing he would meet with businesspeople who were actually undercover federal law enforcement agents, according to U.S. prosecutors in a press release that day.

Pflugbeil and Yilong Shao, a Chinese national, were charged with conspiring to send trade secrets that belonged to a "leading U.S.-based electric vehicle company," wrote the United States Attorney's Office for the Eastern District of New York. They face up to 10 years in prison if convicted.

Shao of Ningbo, remains at large, U.S. authorities said.

U.S. prosecutors did not name the company but The Associated Press reported it was Tesla. When asked to confirm whether it was Tesla, Hass said she "cannot confirm or deny anything outside of the indictment and public record." She said no trial date is set yet.

Pflugbeil and Shao operated a China-based business that sold technology used to make batteries, including for electric vehicles, according to court documents.

They built their business using a U.S. electric vehicle company's "sensitive and proprietary information," marketing it as a replacement for the products, according to the release from prosecutors.

Before starting their own business in China, the two men worked at a Canadian company that created the technology, read the release. That company was bought by a leading U.S. maker of battery-powered electric vehicles and battery energy systems in 2019, according to prosecutors.

Although prosecutors didn't name the companies, Tesla bought Hibar Systems, a battery manufacturing firm in Richmond Hill, Ont., in 2019. Electric Autonomy Canada first reported the deal.

Tesla didn't immediately return CTVNews.ca's request for comment.

With files from The Associated Press