Posted by: David Welch on June 22, 2009
By some accounts, Silicon Valley’s Tesla Motors makes a pretty neat electric sports car. But even if they get the cost of that gasoline-free tire ripper down to $25,000 apiece, when it comes to grin factor the company’s car won’t hold a battery-powered Christmas candle to the drama these guys generate. Tesla Motors gives us the live-wire version of Vaudeville.
This week, Chairman and CEO Elon Musk (the largest shareholder and a self-described nano manager) fired back at his old CEO Martin Eberhard in response to his June 11 lawsuit against the company. Eberhard sued for libel and breach of contract. He blames Musk for the costly delays in bringing the roadster to market and for the company’s losses as a result. Musk, who is pictured above, has publicly laid those issues at Eberhard’s door in the past. On that score, Eberhard says Musk has damaged his reputation and made it difficult for him to get a new job.
Tesla says the company will respond to the suit in court. But why wait for the attorneys to respond when Musk can blog it up himself? He did just that today, rubbishing Eberhard’s claims that the company was stripped from him by Musk and that he was forced out purely for personal reasons. He gets into Tesla’s history and how, when he met Eberhard, the former CEO had no money to get the project off the ground. He says the company had no assets or even offices. Musk brought in cash and hired chief engineer J.B. Straubel, the brains behind Tesla’s electric drive system. He also goes into some detail about board meetings, fights over door sills and claims that the Tesla roadster cost the company $140,000 to build when Eberhard ran the show. Now the car’s cost (not including overhead) is down to $80,000. The company is en route to being profitable, Musk wrote.
Perhaps. But if Eberhard was running overboard on costs, Musk was the chairman and had a role in either approving or missing it all. Also, I once interviewed Michael Marks, one of two CEOs hired between 2007 when Eberhard was pushed out and 2008 when Musk took that title himself, and he said some of Tesla’s cost issues stemmed from the fact that parts suppliers didn’t believe they were legit. So they charged a lot more even for basics. It was tough to get anything cheaply. He did not blame Eberhard. As an aside, rarely have too men fought so much over a company making so little money.
Who is right? The courts will decide, unless of course Tesla settles out of court. But that’s not Musk’s style. He plays to win and isn’t afraid to wage a legal battle just to make a point. Eberhard may be even tougher to silence. He has taken public criticism from Musk in the past. By filing a suit that will dredge up his mistakes—real or perceived—he risks more damage to his reputation. But he has clearly had enough.
If Musk is lucky, his attorneys might get the better of him. They may convince him that further disparaging Eberhard through the constant filing of public documents and blog postings that are gobbled up by the mainstream press (like me) and the hordes of green blogs who watch Tesla’s ever move is bad P.R. If he pushes it? Musk will make a company striving for legitimacy look more like a side show than a carmaker.