Tesla founder sues company, CEO Elon Musk

June 11, 2009 | Camille Ricketts | Comments | |

Martin Eberhard, founder of Tesla Motors, the anointed darling of the electric vehicle industry, has filed suit against the company and its current leader, Elon Musk (right), who he accuses of slander, mismanagement, and, bizarrely, giving him a damaged Tesla roadster (the firm’s first product).

Hostility between Eberhard and Musk is nothing new. The co-founder departed in 2007 after losing too many boardroom skirmishes to Musk (at that time the company’s lead investor). But when he left, it was agreed that he would receive one of the first roadsters produced — a special “founder’s series” model worth “as high as several million dollars.” Instead, he claims he not only received a regular model but a dented one at that (even though Tesla reportedly fixed it, and he graciously accepted).

Shortly thereafter, Musk made the rounds in the media, blaming him for the company’s financial woes and production delays, says Eberhard, who insists that Musk’s persnickety attention to detail and penchant for micromanagement derailed timelines and spending again and again. For these offenses, Eberhard is seeking both costs and damages (and of course hopes to restore his reputation).

This is not the first time Tesla has made an appearance in the California courts. Last April, the company unsuccessfully sued one of its former designers, Henrik Fisker, and his business partner Bernard Koehler, for allegedly stealing proprietary information for their new hybrid-electric vehicle firm Fisker Automotive (maker of the luxurious Karma sports car). Before that, Tesla was hauled into court by Magna Powertrain, the company that built the roadster’s two-speed transmission. It accused the car maker of failing to pay for the design. All this, on Musk’s watch.

But Musk, who is known as a colorful and controversial character in Silicon Valley circles, seems to be forging ahead undeterred. Tesla announced the delivery of its 500th roadster recently and is in the middle of developing its new, supposedly more affordable sedan, the Model S, after receiving a sizable chunk of funding from Daimler. In the meantime, Musk — who made the bulk of his wealth as an early investor in PayPal — is devoting more attention to his SpaceX rocket company, which is working on cheapening space travel.

As for the company, Tesla has responded to the suit with this statement: “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.” Its spokeswoman, Rachel Konrad, also said the company intends to counter sue in order to clear its name.

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About the Author, Camille Ricketts

Camille is the lead writer for GreenBeat. She came to VentureBeat from Google where she worked on its traditional platforms team, particularly in TV. Before that, she was a reporter for the Wall Street Journal in New York and London. Follow her on Twitter at @camillericketts, and follow VentureBeat on Twitter at @venturebeat.

With GreenBeat 2009, VentureBeat's all-star conference on all things Smart Grid, coming up in November, Camille will be expanding coverage of this exciting space. Stay up to date by following @greenbeat2009 on Twitter or by becoming a fan of the event on Facebook here.

  • Peter Antypas
    Tesla's main contribution to the EV revolution will be hype. Their sales will not even make a dent to the ICE.

    It's the quiet companies that will actually deliver, as usual ...
  • Mack
    Yes, the quiet companies like ZENN, Fisker and Zap... they have done so well! (ha!)

    Tesla is the only one making a production EV, and has the financial backing of Daimler, Google, Oracle, eBay, VantagePoint Partners.

    Eberhard is a brilliant engineer, not much of a business man. Elon Musk is very successful and has been the one to drive down costs, bring in capital, etc.

    And referring to making a 'dent' to Internal Combustion Engine car sales... Tesla plans to make 20,000 Model S Sedans and 1,800 Roadster per year, even if they sold everything they make, they won't make a dent.

    In time Peter, in time. What quiet company are you referring to anyways?
  • It's a shame that egos have gotten in the way of capitalizing on an incredible market opportunity. With public sentiment, market trends and government support squarely in Tesla's corner, they should be on the cusp of being one of the next great auto companies. Here's hoping they get the focus back on building great cars.
  • Congratulation to Daimler for having bought 10% in this strangely managed company.