Tesla Founder Drops Lawsuit Against Tesla & CEO

tesla-logoUpdated: Of all the twists and turns we might have expected to follow last month’s court decision that enabled ousted Tesla founder Martin Eberhard’s lawsuit against the electric car startup and CEO Elon Musk to proceed, this one has caught us by surprise: Eberhard has dropped the suit in which he made allegations of libel, slander and breach of contract against his former employer.


According to the San Jose Business Journal, which broke the story, Eberhard “voluntarily requested that the suit be dropped” on Aug. 7, just a week and a half after the court rejected Tesla’s motion to have it thrown out altogether.

We first got a copy of the 146-page complaint that Eberhard filed in late May. The document offered Eberhard’s blow-by-blow account of how his relationship with Musk went south, as well as how he eventually left the company and then suffered from (among other things) what he considered untrue statements from Musk.

Much of the complaint, and the response from Tesla (which declined to comment for this story), centered on the question of who should get credit for founding the startup that has by now survived several lawsuits, a series of delays and serious financial troubles — and emerged with a major investment from Daimler AG (s DAI), as well as a long-sought $465 million loan (and vote of confidence) from the Department of Energy to help build its planned Model S electric sedan.

Eberhard’s lawyer, Yosef Peretz, tells the San Jose Business Journal that more information about the suit may become public late next month. We’ve contacted Peretz to find out what changed in that week between our conversation about the San Mateo court ruling in July (he indicated to us that Eberhard had every intention to proceed) and the Aug. 7 request to have the suit dismissed. We’ll keep you posted as we get more details. In the meantime — any ideas? Update: We heard back from Peretz — he also declined to comment.