Tesla Motors Co-Founder Sues CEO For Libel - InformationWeek
IT Leadership // IT Strategy
01:50 PM
How Upwork Cut Zero-Day File Attacks by 70%
Oct 05, 2017
Upwork has millions of clients and freelancers that have to upload and download many files to and ...Read More>>

Tesla Motors Co-Founder Sues CEO For Libel

Martin Eberhard claims he was falsely accused of responsiblity for the luxury electric car maker's financial instability.

Tesla Roadster Sport

Tesla Roadster Sport
(click for larger image)

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."

On the breach-of-contract allegations, Eberhard claimed he did not receive the second Roadster off of the production line, as he was entitled to under a written contract. Instead of receiving the so-called "Founder's Series Production," he was given a "wrecked Roadster" that had been smashed into the back of a truck by a Tesla employee during an endurance test.

The Roadster he was contracted to receive was likely to be worth "several million dollars" because of its historical value, Eberhard claimed. Tesla gave the one-of-a-kind car to a friend of Musk.

Eberhard was not the only CEO removed from Tesla. In October 2008 the company replaced Ze'ev Drori with Musk. The ouster followed financial troubles and production delays of the Roadster.

Since then, the company claims to have delivered 500 Roadsters and is scheduled to begin delivery of the higher-performing Roadster Sport in Europe beginning this summer. The cars, which get more than 200 miles on a single charge, cost $109,000 and $128,000, respectively.

In late 2011, Tesla plans to start production of a more affordable sedan called the Model S, which is expected to have a starting price of $57,400.

InformationWeek has published an in-depth report on the most innovative startup technology companies. Download the report here (registration required).

Comment  | 
Print  | 
More Insights
Newest First  |  Oldest First  |  Threaded View
How Enterprises Are Attacking the IT Security Enterprise
How Enterprises Are Attacking the IT Security Enterprise
To learn more about what organizations are doing to tackle attacks and threats we surveyed a group of 300 IT and infosec professionals to find out what their biggest IT security challenges are and what they're doing to defend against today's threats. Download the report to see what they're saying.
Register for InformationWeek Newsletters
White Papers
Current Issue
2017 State of IT Report
In today's technology-driven world, "innovation" has become a basic expectation. IT leaders are tasked with making technical magic, improving customer experience, and boosting the bottom line -- yet often without any increase to the IT budget. How are organizations striking the balance between new initiatives and cost control? Download our report to learn about the biggest challenges and how savvy IT executives are overcoming them.
Twitter Feed
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.
Flash Poll