Tesla lawsuit, first read: learning more about the fight between Martin Eberhard and Elon Musk
Elon Musk
There are 146 pages in the complaint filed by Tesla Motors co-founder Martin Eberhard against the company and current CEO Elon Musk (download the PDF here and read more background on the story here). It'll take a while to go through and understand the whole thing (we're not lawyers) and there will be reams more documents released as the case moves forward, but for now, here are some of the things that jumped out at us in the first skim through (all of these statements are alleged):
From the moment Musk joined the company in April 2004, he began a campaign to appropriate control of Tesla Motors and of Eberhard's legacy" and "committed a series of actions that not only resulted in the delay of the release of the Roadster to the consumer market, but also compromised Tesla Motors' financial health (page 2).
During the design process of the Roadster, Musk took a persistent and distracting interest in random details of marginal importance, such as wasting valuable resources and time on research on installing electronic door latches rather than conventional door latches (page 6).
There's more after the jump.
Martin Eberhard
Another statement in the complaint says that, "A conservative estimate of the second production Roadster's value is in the $2-3 million range" (page 20). Other interesting tidbits: Eberhard's side of the story of the delivery of Eberhard's damaged Roadster (page 3 and 20), the search for a new CEO and CFO (page 7) and taking Musk to town for his Stanford story (page 18). We should note again that the official Tesla Motors line is that "This lawsuit is a fictionalized, inaccurate account of Tesla's early years."
We want to know what you've found in the document. Anything else good in there?
Reader Comments (Page 1 of 2)
DF 12:22PM (6/12/2009)
I just hope Eberhard finally get some justice and this sc....g Must or Musk whatever he is, goes away
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smincoln 12:41PM (6/12/2009)
I agree with DF. Tesla (under Musk's direction) has a history of less-than-savory behavior. There was a blog post by Eberhard where he was praising the Chevy Volt -- Tesla threatened him with a (baseless) lawsuit so he was forced to take down. It is still available (thanks to caching) here:
http://www.gminsidenews.com/forums/f39/martin-eberhards-secret-blog-entry-volt-found-59788/
OLight 1:15PM (6/12/2009)
Does anyone want to point out the irony, that something similar happened to Nicola Tesla under Westinghouse?
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meme 1:19PM (6/12/2009)
Really, can we get more lopsided than only posting Eberhard's side of
the story here?
The guy left the company with an $80,000 car that cost $120,000 to build, left the company with a lot of huge liabilities, and in general was a disaster. He's not CEO material. He's CTO material. He's an idea guy, not a number cruncher or marketer. If it weren't for the battle of egos between those two, he should have taken the CTO position from day one and Musk should have left him alone. Neither were willing to do that, so now we have this circus going on.
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Throwback 2:24PM (6/12/2009)
I agree, sounds like sour grapes to me. This one line speaks volumes about the motivation for the lawsuit.
"From the moment Musk joined the company in April 2004, he began a campaign to appropriate control of Tesla Motors and of Eberhard's legacy"
flash 7:45PM (7/30/2009)
The only problem is -- on day one there was only Marc Tarpenning and Martin Eberhard. So Martin was CEO. That was true until the following year when Elon Musk invested. At which time Elon Musk did not assume any official leadership role. But don't be fooled, as the major stockholder, he controlled everything. The irony of the thing is that Musk claims to be a founder and the businessman in the relationship ... yet he blames Eberhard for the business problems!? Martin never claimed to be a business man on Musk's level just as Musk is not an engineer on Eberhard's level. So if the business part was a mess an Musk had controlling interest ... who's fault is that? It certainly was, and remains, a beautifuly designed and engineered car true to the vision of the company's founder (Martin Eberhard) -- and he deserves the credit for that. Musk can't have it both ways -- that he was a founder and essential in the early days because he was the big-deal business man in the beginning, and then blame all the business problems on Eberhard ... well, he can, Musk also claims he dropped out of Stanford (he never enrolled) and has a degree in physics (which has not been produced to my knowledge) -- so why not claim to be a founder but not responsible -- it fits his pattern.
meme 1:32PM (6/12/2009)
Wow, I'm only to paragraph 2 and I've already found a factual error:
"The Tesla Roadster ("Roadster") is the embodiment of Eberhard's vision, with an unsurpassable driving range of 250 miles per charge -- other available electric cars range at 50 miles per charge -- and the power to accelerate from 0-60 miles per hour in under four seconds."
That wasn't "Eberhard's vision". As we learned from the previous fight between Eberhard and Musk, Musk was the one insisting that they couldn't sacrifice range and performance for expediency, while Eberhard was the one pushing expediency at the cost of range and performance. Eberhard wanted to release the car without it meeting those specs. Musk didn't. Both of them admitted as much.
Musk was worried about the Tesla Roadster's image -- that they only had one shot to establish the image for their company (and for electric vehicles in general) and to put out a product that was a solid competitor to gasoline supercars. Eberhard was convinced that people would buy it anyways because it was electric and wasn't so concerned with the image; he thought its stats would still be good enough to garner it a good image.
Looking ahead to paragraph 5, that, too, is inaccurate. As we all know here at ABG, Eberhard started talking bad about Tesla long before Tesla started talking bad about him. Musk was famously silent about Eberhard's claims for a long time before he gave a series of ticked off interviews to "correct the record".
Oh, and I love the direct insinuation that they deliberately wrecked his Roadster.
If this is the quality of the suit, I don't expect much to come of it.
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Serge 6:40PM (6/17/2009)
"That wasn't 'Eberhard's vision.' As we learned from the previous fight between Eberhard and Musk, Musk was the one insisting that they couldn't sacrifice range and performance for expediency, while Eberhard was the one pushing expediency at the cost of range and performance"
meme, your posts are normally well researched, so I would like to know what sources do you you draw such a conclusion from. The last time we have discussed this topic in comments to Elon Musk interview by ABG's Sam Abuelsamid:
http://www.autobloggreen.com/2008/06/23/autobloggreen-qanda-tesla-motors-chairman-elon-musk-pt-1-in-th/
It is pretty clear from the comments posted that Eberhard attacked the transmission problem from the right angle. Go with single-speed design and improve as you go. The current production drivetrain 1.5 is an evolution of his approach; the two-speed transmission was a diversion. The dirty-little secret about current production drive-train? It doesn't hit advertised specs either: http://www.teslamotorsclub.com/technical-discussion/1551-drivetrain-1-0-1-5-2-0-specs-plans-5.html
To answer your earlier question:
"Really, can we get more lopsided than only posting Eberhard's side of
the story here?"
I will answer that posting the side of the story that is supported by publicly available information is not lopsided.
meme 7:13PM (6/17/2009)
"t is pretty clear from the comments posted that Eberhard attacked the transmission problem from the right angle. Go with single-speed design and improve as you go."
That's not what your link says at all.
Elon: "The path that I actually wanted to take is the path we're currently taking, which is, upgrade the motor power and have a single speed so that the upgraded motor with a single speed encompasses the performance that we promised people, the 3.9 second 0 to 60, 125-mile an hour top speed. That's the path that we're on right now. That's the path that I always wanted to be on."
Martin: "He [Musk] did, very early on, push us to make the 2-speed transmission that I had proposed as a model year 2 improvement become a part of the model year 1 spec."
Summary: Elon insisted that it have high performance from the beginning and wanted a single gear transmission with Powertrain 1.5. Martin wanted to ship it with the old powertrain and a single gear transmission, and then give it a two gear transmission in the second year. They compromised and took Martin's idea of a two gear transmission but Elon's schedule. And yes, it *was* Martin's idea. I'll quote:
"The current production drivetrain 1.5 is an evolution of his approach; the two-speed transmission was a diversion."
Proposed by Martin, by his own words: "the 2-speed transmission that I had proposed as a model year 2 improvement". Martin did not want Powertrain 1.5. He wanted Powertrain 1 and a single gear the first year, and Powertrain 1 and the 2-speed transmission the second. By his own words.
Martin's lawsuit is quite obviously a distortion of the facts, just within the first couple paragraphs alone.
""Really, can we get more lopsided than only posting Eberhard's side of
the story here?"
I will answer that posting the side of the story that is supported by publicly available information is not lopsided."
Oh come on. Whether or not you (IMHO, incorrectly) think Martin is right, posting only his side *IS* lopsided, period, end of story. That's the very definition of bias. You don't post one person's side and not give the other side a chance to counter. I bet you'd be calling bias in a heartbeat if they only posted Elon's POV.
Serge 4:34PM (6/23/2009)
meme: you are quoting as counter-argument EM's words published June 23rd, 2008, a full month after engineering had a break-through with Powertrain 1.5 (http://www.teslamotors.com/blog4/?p=67). As was very well noted by Chris H. on TMC, ME was arguing for exact same approach in January of 2008 (http://www.teslamotorsclub.com/news-articles-events/2901-martin-eberhard-sues-elon-musk-tesla-motors-18.html).
Who is telling the truth? You be the judge; I only dig up things on public record.
ABG is not a very good "forum," so I welcome you to join discussion on TMC if you have interest in continuing the dialogue.
Thank you,
Tom 1:34PM (6/12/2009)
Meme, that's the point of Martin's lawsuit. He was trying to get himself replaced as CEO once the company got rolling because he was at best a placeholder in that position. His complaint is quite specific about that. Also, he was supposed to get #2, for which he paid $100,000, pre-production, not $80,000.
What amazes me is how Musk and Tesla can simply deny Martin's existence in the company at all. Musk was nowhere to be seen in Tesla's early years and was only a financial backer, not a technology person.
I'm surprised it took Martin this long to get around to this. I though Martin's comments about Musk lying about degrees received and colleges attended quite an interesting window into the ego that must drive Musk to denigrate the accomplishments of anyone else.
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Josh 3:38PM (6/12/2009)
He probably found time to get around to the lawsuit the moment he heard Tesla would be cash positive this year. Timing the lawsuit around Tesla finally experiencing some success and value (Daimler purchase) screams desperation on his part.
Tom 4:25PM (6/12/2009)
You're an expert at reading Martin's mind? I'll have to check in with you next time I talk to him to find out what he really meant.
James 1:48PM (6/12/2009)
Musk has always bugged the shit out of me and I'd like to see him (not Tesla) get a big dose of come-uppance. I've never understood how the founder of a company could get booted. Capitalism gone crazy.
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meme 2:05PM (6/12/2009)
. I've never understood how the founder of a company could get booted. Capitalism gone crazy.
If you had invested your hard-earned money in a company and you thought the person running it was doing a bad job, you'd likely have a different view.
To get money, you have to give up some equity and control. Only those who fully bankroll their companies can fully own and control them.
augustus 2:09PM (6/12/2009)
Obviously Elon had a controlling interest or was able to convince the board/stockholders/etc. There are many perfectly legal ways to get rid of a CEO, it happens all the time. The moment he traded full ownership for startup cash, it was no longer his company to control.
This has nothing to do with capitalism.
Snowdog 3:44PM (6/12/2009)
Actually this is what happens most of the time. I watched a documentary on companies going from start up to market.
The originators usually get tossed out and often they get screwed out of any financial stake as well, they need to dilute their ownership as venture capitalists pour in more and more money. Eventually they have no more real ownership.
Then they get dumped because the same type of person that gets an idea off the ground is seldom the same type of person best suited to run a company.
They would rather dump them than place them in another role because they will always have some internal loyalty that conflicts with the new leader picked by the money men.
It is a sad thing, but this how it usually plays out. Martin would likely have been out even without the conflicting egos, but obviously that makes it much worse.
augustus 2:07PM (6/12/2009)
"During the design process of the Roadster, Musk took a persistent and distracting interest in random details of marginal importance, such as wasting valuable resources and time on research on installing electronic door latches rather than conventional door latches"
How is that remotely worthy of a lawsuit? "Marginal importance" is in the eye of the beholder and wouldn't be suit worthy even if it was marginal. If this is the quality of the suit then he had better be hoping for a small cash settlement.
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Nick P. 2:31PM (6/12/2009)
I hope they settle this out of court real soon. I admire both men for what they have done. They overcame so much in such short time...
Guys, stop arguing and bring me my model S!
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km 2:31PM (6/12/2009)
Let's not trivialize Musk's accomplishments with Tesla just cause the idea guy may have been marginalized. Let's face a simple fact that idea guys often to have the drive and single mided focus to really make something shine.
I r4espect the fact that Eberhard wants and deserves some credit for Tesla, but was this the right way yo go about it? If Tesla becomes successful as a company, this will become part of the historical record. What I want to know is what is Eberhard's goal? Cash/stock? Ego satisfaction? Or simple acknowledgment of his contribution to what is shaping up to be quite an interesting enterprise?
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