Elon Musk strikes back at former Tesla CEO

Tesla Motors CEO Elon Musk today posted a lengthy blog in response to a lawsuit filed by Martin Eberhard, accusing the former CEO of a series of missteps that resulted in near-devastating cost overruns in the company's early days.

Eberhard served as one of the original investors and founders of Tesla but was replaced as CEO in 2007 by Ze’ev Drori (see Eberhard out, Drori in at Tesla). In a lawsuit filed in May, Eberhard sued Tesla and Musk for slander, libel and breach of contract for pushing him out of the company and subsequently denigrating his contributions (see Former CEO goes after Tesla, Musk). Eberhard also complained that Musk wrongly accusing Eberhard of being responsible for the Roadster’s production delays and for Tesla’s financial instability (see Tesla CEO says carmaker is bouncing back and Tesla Motors on an upswing?)

Musk revived those accusations today, saying Eberhard was aware of cost overruns in production that presented a "life threatening problem" to the automaker.

Musk wrote that Eberhard told the board that the production cost would be $65,000 after the first 25 cars. A cost auditor found the materials alone cost $140,000. Today, the materials cost is about $80,000, Musk wrote.

Musk critiqued Eberhard's choice of parts suppliers. Musk also said Eberhard brought no technology, prototypes or intellectual property related to electric cars to Tesla. As for the work he did at the company: "Three years later, when Eberhard was asked to leave Tesla, most of the work that he had been paid to do had to be redone," Musk wrote. 

The cost to bring the Roadster to market surpassed $140 million, in part because the work was done twice, Musk said in his 7,000-word blog post that included email exchanges with investors, employees, a blogger, and other business partners. Musk said the blog was a partial response to Eberhard's claims, but said Tesla plans to respond "fully in court soon."

As for Eberhard's complaints that he received a damaged Roadster, Musk said that during a pre-delivery inspection "a technician got into a low speed accident with the car. The fix required some new body panels, bolts and other easy repairs and was delivered as good as new."

Read the full blog here »

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