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Tesla founders end bitter legal fight

September 22, 2009|Ken Bensinger

Good news, alternative vehicle fans. The Hatfields and McCoys of the electric propulsion world have settled their feud over who can be called a founder of the company.

After months of legal wrangling, Tesla Motors Inc. Chief Executive Elon Musk and former Chief Executive Martin Eberhard have agreed that they, along with three others, are officially equals and co-founders of the company that makes the $109,000 Tesla roadster.

A spokesman for the San Carlos, Calif., automaker confirmed Monday that a defamation suit filed by Eberhard in May against Musk had been settled out of court. The litigation had largely revolved around the right of Musk to call himself the founder of the firm.

Neither side disclosed details of the agreement. But a statement released by Tesla about the confidential settlement referred to the men as "two of the co-founders of Tesla." (The others, according to reports, are Chief Technology Officer J.B. Straubel, as well as departed executives Marc Tarpenning and Ian Wright.)

It's an unexpected happy ending for two men who had taken to blaming each other for the company's numerous missteps and delays. Musk, who made hundreds of millions of dollars as the largest shareholder in PayPal when it was bought by EBay Inc., took the reins at Tesla in October. Eberhard left the company late in 2007, shortly after being relieved of his executive duties.

Eberhard, who has bashed Musk publicly on his blog and accused him of sundry errors in leadership at Tesla in the lawsuit, is singing a different tune.

"Elon's contributions to Tesla have been extraordinary," Eberhard said in a statement.

Musk, who has fired off a few biting ripostes about Eberhard of his own, also seems to have found forgiveness in his soul.

"Without Martin's indispensable efforts, Tesla Motors would not be here today," Musk said.

Electric cars are proving to be an awfully litigious technology. The first automaker to sell an electric vehicle, Tesla appears to have an early lead on lawsuits as well.

Last year, Tesla sued Henrik Fisker, head of Irvine-based rival Fisker Automotive Inc., for allegedly stealing trade secrets. That suit ultimately was thrown out.

Tesla is developing its second vehicle, the four-door Model S, and plans to build it in California. This summer the federal government awarded Tesla $465 million in low-cost loans to finance development of the sedan and its battery. A final site for Model S production has not been announced.

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ken.bensinger@latimes.com

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