Shooting off sparks: Tesla's Elon Musk responds to co-founder's lawsuit

Tesla has delivered 500 cars, welcomed an investment from Daimler, and is even poised to make a profit. But there's still that nasty lawsuit from a company cofounder. This week, CEO Elon Musk responds to Martin Eberhard's charges.

Mon, Jun 22 2009 at 8:07 PM EST

Tesla's super-sleek Roadster Sport: Just a hair faster. (Credit: Tesla)

Last week, after wading into the muck of charges hurled at Tesla Motors by a disgruntled cofounder, I took an exhilarating drive in one of the actual cars. Wow, Tesla Roadsters are fun to drive. It’s hard to imagine that something as cool as that grew out of what was until fairly recently a rather adversarial culture.

Luckily, Tesla today is rising above all that, basking in a cash infusion from Daimler, and is even poised to make a profit with its tweaked $128,500 Roadster Sport. The company has now delivered 500 cars, and is reducing its backlog.

On June 22, Tesla Motors CEO Elon Musk—who started out as the company’s original investor—responded to co-founder Martin Eberhard’s suit with an impassioned blog post. Eberhard’s facts are “at odds with the truth,” he said, adding that the company’s next step will be in court. In Musk’s telling, the company that became Tesla was a business plan in search of funding when he brought in $6.35 million—98 percent of the initial capital.

Musk said in his blog post that a key point of conflict between him and Eberhard was the high cost of making Tesla Roadsters. Musk says Eberhard told the board in May of 2007 that Teslas could be produced profitably. “Eberhard stated [in a business plan from May of 2007] that the cost of the Roadster would be $65k after the first 25 units,” the post said. Instead, according to Musk’s post, “material cost alone” was found several months later to be $140,000.

That was kind of an issue, since Tesla had been taking advance orders with the car priced at $92,000. “This meant we had a life-threatening problem,” Musk wrote with some understatement. And how! Musk says the Tesla Roadster was completely reengineered from top to bottom with cost in mind, and he reports that by next month it will cost $80,000 (plus overhead) to build.

“My main reason for putting so much time and money into helping create Tesla is to speed up the transition to electric cars,” Musk writes. “I’m confident that Tesla will turn out to have a good return for investors, [but] building a car company has to be one of the hardest ways to make a buck.” And getting involved in distracting lawsuits probably gets in the way of enjoying the ride.