Former Tesla CEO sues company, current CEO Musk

Updated at 8:30 a.m. PT with full statement from Tesla Motors.

The founder and former CEO of Tesla Motors, Martin Eberhard, is suing the company and current CEO Elon Musk for libel and breach of contract, opening up another lawsuit at the young electric carmaker.

The lawsuit (click for PDF) alleges that Musk sought to "rewrite history" by taking credit for the accomplishments and the very idea behind Tesla Motors, resulting in a damaged reputation for Eberhard. The suit was filed in the last week of May but become public on Wednesday night.

Happy times: Tesla founder Martin Eberhard on the road with his Tesla Roadster.

(Credit: Martin Eberhard)

In addition, the suit alleges that the company did not honor its agreement with Eberhard after he was removed as CEO. In particular, the suit says that Eberhard did not receive the valuable second Tesla Roadster produced as promised and that the car he did receive was damaged in a poorly-run road test.

It's well known that there's no love lost between Musk and Eberhard. Musk, who became an investor in Tesla in 2004, ousted Eberhard from the CEO position in 2007 and eventually took over the position himself. In media interviews, Musk said that he needed to take the helm of the company after poor management resulted in production delays and technical problems.

In the complaint, Eberhard asserts that these public comments have defamed him and he is seeking damages from a jury trial.

The text of the complaint offers an inside look at the tense wrangling between the two men and the tumult within the company two years ago. Addressing Musk personally, Eberhard's complaint says that Musk misrepresented his academic accomplishments at Stanford University and the University of Pennsylvania.

Not surprisingly, Tesla Motors has a different view of the events and expects to file counter claims, a company representative said on Thursday:

"This lawsuit is a fictionalized, inaccurate account of Tesla's early years--it's twisted and wrong, and we welcome the opportunity to set the record straight. Incidentally, Tesla will also be filing counterclaims and in the process present an accurate account of the company's history," according to a statement from company representative Rachel Konrad. "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."

Separately, in his blog Eberhard said he is now working on building a mobile charging device for Tesla Roadster owners.

[Schratboy]

Another fine illustration of when you go to bed with vipers (venture capitalists) you can always count on getting bitten.

[Bill_I]

A serious misspelling, they are VULTURE capitalists.

[biffhenerson]

Boo hoo. Onward and upward.

[lonestarState]

Good point Venture Capitalists suck! They are all snakes, waiting to pocket others ideas and hardwork.

[thelemurking]

I'm unhappy with the Roadster I got as well. It's a 2008 Hot Wheels version made in Malaysia and it does not appear to be electric or contain any batteries. Can I sue as well? ;)

[esiders]

Yea besides their car really isn't a Tesla car, the true Tesla car was 1931 Pace-Arrow. Tesla was also someone who had been used by people like this.

[cp256]

Shortly after I started my business I met with a venture capitalist who was a friend of my mother. Boy was that an eye opener. I had this 50-50 idea in my head, but he wanted was for me to work 100 hour weeks in perpetuity for 5% of the profits. No thanks. I worked those 100 hour weeks and grew slowly and when I was finally making good money the government stole 60% of it and gave 95% of that to other people!

[Michichael]

/popcorn