'Irreparable Harm': Tesla Sues Supplier for Stealing $1 Billion Battery Secrets

Tesla is suing one of its suppliers for allegedly leaking its battery technology trade secrets.

"This case relates to a technology at the very heart of Tesla’s business, which is its world-leading battery technology," says the lawsuit, filed Friday in California and first reported by Reuters.

The strongly worded suit claims Pittsburgh-based Matthews International shared information about Tesla's dry-electrode battery manufacturing process with competitors. Tesla calls the technique "one of its most pathbreaking innovations" because it reduces cost, energy consumption, and production cycle time.

"Tesla has suffered, and will continue to suffer, irreparable harm in lost business opportunities," the suit says. The company "conservatively estimates [the damages] will exceed $1 billion."

Matthews denies any wrongdoing. "The claims stated in this threadbare complaint are utterly without merit and we intend to vigorously defend the matter," the company says in a statement shared with PCMag. "Notably, the complaint vaguely references trade secrets, but fails to identify even one trade secret that Tesla purportedly disclosed to Matthews."

Tesla alleges Matthews filed patents for its proprietary technology, amounting to "unauthorized theft and conversion." The applications also risk exposing confidential information, as they are posted online. As such, Tesla has been "working to block and/or delay publication of affected applications."

Matthews gained access to this information through frequent meetings, video calls, and emails, Tesla says. The case names Matthews CTO Gregory Babe as the main conduit of information. As a trusted supplier, Babe and other Matthews employees "agreed, in writing, that it would hold those secrets in the strictest confidence," the suit claims. "However, Matthews betrayed that trust."

Matthews says it began developing the technology "over 25 years ago, before Tesla even existed as a company." That's why Tesla approached Matthews to become a supplier in 2019.

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Tesla's second accusation is that Matthews shared the information with its competitors by selling them dry-electrode battery manufacturing equipment, which "embodied Tesla's confidential trade secrets." Tesla says it never authorized, and in fact prohibited, the sale of the technology to others.

The suit alleges these actions violate the federal Defend Trade Secrets Act, which prohibits the misappropriation of trade secrets related to a product or service, and requests the court force Matthews to hand over its patent applications and pay monetary damages.

But in response, Matthews claims that "Tesla’s lawsuit is simply a new tactic in their ongoing efforts to bully Matthews and improperly take Matthews’ valuable intellectual property.... As the complaint acknowledges, Matthews continues to work with Tesla as a trusted supplier."