Tesla turns up heat on Chinese startup over alleged theft of Autopilot secrets

Copying designs of popular cars is quite a common allegation made against several Chinese automakers. Corporate espionage has often also involved illegally transferring technological know-how.
By : Bloomberg
| Updated on: 25 Apr 2020, 10:38 AM
(File photo) Tesla is in a legal battle with a China-based startup over alleged theft of its Autopilot secrets. (REUTERS)
(File photo) Tesla is in a legal battle with a China-based startup over alleged theft of its Autopilot secrets. (REUTERS)
(File photo) Tesla is in a legal battle with a China-based startup over alleged theft of its Autopilot secrets. (REUTERS)
(File photo) Tesla is in a legal battle with a China-based startup over alleged theft of its Autopilot secrets.

More than a year after the billionaire chairman of Xpeng Motors labeled as “questionable" Tesla Inc.’s allegations that an engineer stole Autopilot secrets before bolting to the Chinese startup, the questions from Elon Musk’s company keep coming.

As Tesla tries to amass proof in its lawsuit portraying the engineer as a traitor, it’s asking a judge to force the Guangzhou, China-based maker of Tesla look-alike electric cars to disclose its autonomous-driving source code, turn over images of computer hard drives and even make an employee available for an interview.

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Tesla is also demanding information from an ex-Apple employee criminally charged in 2018 with trying to take secrets for a new job with Xpeng. Tesla claims it’s significant that both engineers sought jobs with Xpeng around the same time and allegedly used the same “difficult-to-trace" method -- Apple Airdrop -- to take sensitive files from their American employers.

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Xpeng, which isn’t a defendant in the suit, and the two engineers all have denied wrongdoing. Xpeng and the former Apple engineer are resisting Tesla’s demands for more information, calling them improper intrusions in court filings.

“Tesla’s latest demands crossed the line, seeking to rummage through our IP on Tesla’s terms -- and smearing us along the way with misrepresentations and innuendo," a spokesperson for Xpeng’s U.S. research arm, XMotors, said in a statement. Tesla’s attempt to tie the two Chinese engineers together is “peddling speculation and stereotypes," according to the statement.

Hearings on Tesla’s subpoenas are set for May in San Francisco federal court.

Xpeng, which is backed by Alibaba Group Holding Ltd., is among the startups in China competing with Tesla on autonomous-driving development in the world’s most populous country. Tesla last year opened a multibillion-dollar plant near Shanghai -- its first outside the U.S. -- and plans to open a design and engineering center in the country.

(Also read: Tesla Autopilot blamed for Florida crash in US road safety watchdog report)

‘Flow of Talent’

Tesla says at least five of its former employees have gone to Xpeng, whose full name is Guangzhou Xiaopeng Motors Technology Co. Ltd. One was hired in 2017 by the startup as vice president for autonomous driving and supervised the self-driving research-and-development team through 2018 and 2019. When Xpeng’s chairman, He Xiaopeng, reacted in March 2019 to Tesla’s lawsuit, he said Xpeng and Tesla are innovators and that the “flow of talent" between companies is normal.

Tesla argues the parallels between the defection of its engineer and Apple’s are close enough that it’s entitled to an explanation as to whether they worked with the same recruiters at Xpeng, met with the same executives at the Chinese company and received similar compensation.

“The greater the similarity between the two cases, the less likely that those similarities can be dismissed as mere coincidences, and the more likely that they are the result of planning and coordination," Tesla said in the filing.

Questionable Narrative

But at least one part of the narrative laid out by Tesla raises questions about how it’s portraying the evidence.

Tesla said its former employee, Guangzhi Cao, was paying attention in July 2018 when news broke that the former Apple engineer, Zhang Xiaolang, was arrested in the San Jose, California, airport as he was about to board a one-way flight to China. In an April 17 court filing, Tesla quotes Cao texting to a friend about the arrest that Xpeng and Zhang must have “agreed on the price before to get the documents."

However, according to a log of Cao’s texts that was filed as a court exhibit, it was the friend who initiated the conversation about the arrest and who sent the quoted text message.

Cao wrote in one text that the Apple engineer’s arrest “has made a bad impression for all Chinese people" and in another “Glad I did not go to Xiaopeng, so risky," according to the log.

Tesla didn’t immediately respond to an email seeking comment.

Denying Misconduct

Cao has acknowledged he downloaded some of Tesla’s source code on his iCloud account and his personal devices, but said he deleted those files before he left the company and maintains he didn’t commit misconduct, according to court filings. Cao’s attorney couldn’t immediately be reached for comment.

Zhang, who has pleaded not guilty to charges that could send him to prison if he’s convicted, contends that forcing him to turn over the documents that Tesla seeks would undermine his constitutional right against self-incrimination. An attorney for Zhang declined to comment.

Xpeng said in a filing that it’s already assisted Tesla voluntarily and in response to a prior subpoena served on XMotors, including by turning over a forensic image of Cao’s laptop and more than 12,000 documents. The U.S. carmaker’s latest demand for information doesn’t change the fact that there’s no evidence that any Tesla trade secrets were passed on to Xpeng, the company said.

“Tesla’s overreach and distortions confirm this is just a fishing expedition meant to bully and disrupt a young competitor," the XMotors spokesperson said.

First Published Date: 25 Apr 2020, 08:33 AM IST
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