Two men have been accused of starting a business in China by stealing trade secrets from electric car manufacturer Tesla and conspiring to sell them to undercover law enforcement officers, US federal prosecutors said on Tuesday.

A 58-year-old Canadian citizen who lives in Ningbo, China, was arrested in New York's Long Island, where he had traveled for a meeting with undercover agents whom he had believed were businesspeople, prosecutors said.

According to media reports, the second business partner remains at large.

The man along with his partner built their business using trade secrets belonging to "a leading US-based electric vehicle company," prosecutors said.

The prosecutors did not name the US-based company, but said it had acquired a Canada-based manufacturer of battery assembly lines in 2019 and both men are former employees of the Canadian company. Tesla then was the sole owner of the technology.

The description also matches Tesla's 2019 purchase of Hibar Systems, a battery manufacturing company in Richmond Hill, Ontario.

The charge of conspiracy to transmit trade secrets carries up to 10 years in prison in the US in case of a conviction.

"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, US attorney for the Eastern District of New York, said in a statement with Justice Department and FBI officials.