Tesla Motors Co-Founder Sues CEO For Libel
This lawsuit is a fictionalized, inaccurate account of Tesla's early years — it's twisted and wrong, and we welcome the opportunity to set the record straight. Incidentally, Tesla will also be filing counterclaims and in the process present an accurate account of the company's history.
On the official Tesla blog, here are some choice lines:
"The facts are that when I requested through AC Propulsion to meet Eberhard, he had no technology of his own, he did not have a prototype car and he owned no intellectual property relating to electric cars.
"At the time [early 2004], "Tesla Motors, Inc." consisted of Eberhard, Tarpenning and Wright, plus an unfunded business plan and they were looking for an initial round of funding to create a more advanced prototype than the AC Propulsion Tzero. While there was a basic corporation in place, Tesla hadn't even registered or obtained the trademark to its name and had no formal offices or assets." Source: Elon Musk / Tesla Motors]
From Elon Musk:
"To save legal fees, we just copied the SpaceX articles of incorporation and bylaws for Tesla and I invested $6.35M (98%) of the initial closing of $6.5M in Series A funding. Eberhard invested $75k (approximately 1%). In another crossover, I had the same people who created the SpaceX logo also create the Tesla logo.
"For the first few years of Tesla's existence, I trusted Eberhard to execute on the operational task of taking the Tzero concept and creating a commercial electric sports car. My involvement was primarily focused on the body design, technical specifications and building the Tesla brand.
"Eberhard has simultaneously implied that I had nothing to do with the creation of the Roadster and that I micromanaged the design and thus caused the cost overruns. Obviously, those claims are mutually exclusive.
"The real reason that Roadster development cost so much more than can be accounted for by typical entrepreneurial hubris is that we essentially had to spend the development money twice. After Eberhard was asked to step down from the CEO role two years ago, almost every major system on the car, including the body, HVAC, motor, power electronics, transmission and battery pack, had to be redesigned, retooled or switched to a new supplier. With the release of the Roadster 2 this month, we are finally at the point where Tesla has a solid supply chain and a unit cost that allows us to operate the Roadster business line profitably.
"This point is so trivial that I'm nearly inclined to skip it. However, in the absence of an explanation, it may sound as though I was being petty in giving Eberhard the third production car rather than the second production car. The reason for the delayed delivery was that there was considerable debate at the board level as to whether Eberhard should receive a car at all or whether he should be refunded his money."
06/13/09 The co-founder of luxury electric automaker Tesla Motors has sued the company and its chief executive for libel and slander, claiming he was falsely accused of being responsible for the company's financial instability.
Martin Eberhard is also accusing CEO Elon Musk and the company of breach of contract in a 146-page lawsuit filed last month in Superior Court in San Mateo County, Calif. The lawsuit, which auto blogs started reporting on late Wednesday, is seeking compensation for damages, but does not list an amount.
Eberhard claims that, after he was ousted from the company in November 2007 by then-chairman Musk, a co-founder of PayPal and a major Tesla investor, Musk "began a pattern and practice of defaming and disparaging Eberhard in various widely distributed media outlets, including National Public Radio, USA Today, Newsweek, and The New York Times."
Eberhard also claims in the suit that Musk tried to "rewrite history" by falsely claiming that Eberhard was principally responsible for production delays of the Tesla Roadster, the company's original all-electric sports car, and the company's financial instability. In addition, Musk claimed Eberhard "deceived and made misrepresentations" to the board while he was head of Tesla.
"These actions are remarkable, but they are also part of Musk's broader personal history of misrepresentation — his educational degrees and professional affiliations being symbolic examples — and of the extent of his involvement with other companies, such as PayPal," the lawsuit said.
In a statement sent to the media late Wednesday, a Tesla spokeswoman said the company planned to file a counterclaim against Eberhard.
"This lawsuit is an unfair personal attack and, more importantly, paints an inaccurate picture of Tesla's history," the statement said. ''This lawsuit is a fictionalized account of Tesla's early years — it's twisted and wrong, and we welcome the opportunity to set the record straight.
"Martin was unanimously fired by the board, largely over the fact that the cost of the car was more than twice what Martin portrayed it to be at the time. Incidentally, Tesla will also be filing counterclaims and in the process present an accurate account of the company's history." More at InformationWeek