Tesla Vigorously Defends Cofounder's Lawsuit

Martin Eberhard in happier days. (Photo: Nicki Dugan [CC BY SA-2.0]/Wikimedia Commons)

That knock on Tesla Motors’ front door? It was the process server, handing over a lawsuit filed by company cofounder Martin Eberhard. He alleges, among many other things in a 146-page document (including many attachments), that onetime Tesla investor and now CEO Elon Musk (who was named along with the company) is guilty of slandering him, erasing his role in the company’s history and even wrecking his car (Tesla Roadster #2).

Eberhard’s attorney, San Francisco-based Yosef Peretz, did not return phone calls about the case, but Tesla itself was plenty vocal:

“This lawsuit is certainly an unfair personal attack and, more importantly, paints an inaccurate picture of Tesla’s history,” the company 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. As the media have already covered exhaustively, Tesla’s full board of directors unanimously fired Martin shortly after discovering that the cost of the car was more than twice what Martin portrayed it to be at the time. Incidentally, Tesla will likely be filing counterclaims and in the process present an accurate account of the company’s history.”

Eberhard is an interesting character: Like many electric car startup guys, he comes from a Silicon Valley tech background. By his own account, he co-founded Network Computing Devices and NuvoMedia, selling the latter and then taking jobs as, variously, senior vice president of TV Guide and vice president of engineering at Packet Design.

In 2002, according to the lawsuit, Eberhard “formulated the idea for a fully electric sports car,” inspired by “ever-rising gas prices and the increasing threat of global warming.” He claims to have “led the development of the Roadster from its inception and design through the safety and performance testing that validated the Roadster’s ability to achieve zero to 60 mph in less than four seconds, as well as its breakthrough 250-mile range per charge.” He was video interviewed by Plenty magazine in 2006:

Elon Musk came aboard as an early investor in 2004, and his interest (and investment) soon deepened. Eberhard, who wanted to spend more time working on the car itself, was initially moved into a position as president of technology and then, in October of 2007, let go with a $100,000 severance agreement that also included other perks. That deal allegedly was rescinded when Eberhard started a blog early the next year and posted a screed about the many employees he said had been unfairly terminated.

There’s more, of course: Eberhard’s suit is accompanied by a blizzard of bylined stories that identify Musk as the “founder” of Tesla. Eberhard also says that Musk has made “defamatory, disparaging, negative and harmful statements” about him.

And the wrecked car? Eberhard claims he had a signed agreement to take delivery of the second Roadster off the production line, which he claims would be worth “as high as several million dollars because of its historical value.” He did get a car, but he alleges that it wasn’t the second one and that it had been “smashed into the back of a truck” by an employee during endurance testing, requiring replacement of “no less than 75 parts.”

The lawsuit certainly makes lurid reading, but it has to be pointed out that many of Tesla’s most significant achievements have been since Eberhard left. A growing number of Teslas are now on the road, and Daimler has taken a nearly 10 percent stake. The company has also introduced a second model, the Model S sedan, which should get a wider audience than the Roadster. When it appears in late 2011 it will sell for $49,900 (when a $7,500 federal tax credit is factored in).

Tesla will undoubtedly have more to say about Eberhard’s charges.