Tesla Founder Eberhard Files Lawsuit Against Tesla, Elon Musk

Updated: Electric car maker Tesla Motors is no stranger to lawsuits, and now it’s been hit with an ugly one. In a 146-page complaint filed May 26 in San Mateo County Superior Court that we (and other news outlets) obtained yesterday, the ousted founder of Tesla Motors, Martin Eberhard, alleges that Tesla CEO Elon Musk has both libeled and slandered him, and that the company has breached several agreements with Eberhard over severance, stock options and his purchase of a Roadster vehicle.


The document is a painful play-by-play — from Eberhard’s perspective — of how the relationship between Musk and Eberhard went south, Eberhard left the company, and the aftermath. Part of Eberhard’s complaint is that Tesla and Musk have made untrue statements about him, including perpetuating the notion in the media (such as in this post we wrote) that Elon Musk is the founder of Tesla. Eberhard also alleges that Musk has disparaged him, both to the media and to Tesla employees.

Eberhard further alleges that he signed a severance agreement when he left Tesla, but that after he wrote a blog post about Tesla’s dismissal of employees, the company discontinued his severance payments, revoked his rights to vest stock options and dismissed him from the Tesla advisory board. Eberhard also alleges that Tesla breached the agreement he had in place to purchase the second Roadster in the founder series and instead sold that Roadster to Musk’s friend Antonio Gracias, and that the Roadster he eventually received (after it was crashed and repaired) was worth significantly less than the one in his agreement.

On top of all that, Eberhard makes additional claims, such as negligent infliction of emotional distress and an allegation that Musk has been inaccurately portraying his connection to Stanford University. Beyond the drama, it’s actually pretty interesting to hear Eberhard’s side of the story, given he’s been relatively quiet throughout this whole process.

Updated: Tesla’s spokesperson Rachel Konrad emailed us the company’s statement on Eberhard’s lawsuit:

This lawsuit is an unfair personal attack and, more importantly, paints an inaccurate picture of Tesla’s history. 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.