Ousted Tesla cofounder Martin Eberhard sounds off in wide-ranging interview

• Martin Eberhard spoke with Insider about his perspectives on Tesla, EVs, and Elon Musk.
• While Musk is also known as Tesla’s founder, Eberhard cofounded Tesla with Marc Tarpenning.
• Tesla’s early history has long been some extent of contention between Musk and Eberhard.

While Elon Musk is usually known as the founding father of Tesla, his part within the carmaker’s history is more complicated.

Martin Eberhard cofounded Tesla in 2003 along with his longtime friend Marc Tarpenning. Musk led the corporate’s $7.5 million Series A funding round and have become chairman of the board in 2004.

But Eberhard and Musk butted heads, and Musk ousted Eberhard from his CEO role in 2007. Musk said that Eberhard was holding up production of Tesla’s first automobile, the Roadster, and that Eberhard was liable for other operational issues.

Musk, who took over as CEO in 2008, has called Eberhard the worst person he’s ever worked with. Eberhard sued Musk in 2009, accusing him of libel and defamation. (The 2 men later settled the lawsuit.)

I spoke over video call in December with Eberhard, who was once called “Mr. Tesla” and now describes himself as a “retired entrepreneur.” The Tesla cofounder discussed every little thing from his startup’s early days to the long run of electrical cars.

Tesla regrets

Eberhard said that there are one million things he would’ve done in another way at Tesla knowing what he knows now but that they are mostly small regrets.

For instance, he said Tesla spent an excessive amount of time debating whether to sell its cars through dealerships or on to customers. He also said that while he would have made technical changes to the Roadster, overall he’s happy with what the team created.

“If you might have hindsight, you’ll be able to see all of the mistakes you made,” he said. “But I believe in the massive strokes, we got it right. And the proof is for the primary time ever in many years we built a automobile company successfully.

“Would I take his money if I could do it once again?” he asked, referring to Musk’s investment. “I didn’t see plenty of other money on the table, you recognize.”

Eberhard said that had he stayed, he would’ve made some different selections than Musk.

“For instance, I might have very much opposed the acquisition of SolarCity,” he said, calling it “a distraction” for Tesla.

Tesla acquired SolarCity, a solar-energy company, in 2016 for $2.6 billion. Musk got here under scrutiny because the corporate was run by his cousin Lyndon Rive, who was facing headwinds running the business. Some Tesla shareholders filed a lawsuit accusing Musk of putting pressure on Tesla’s board members to purchase SolarCity and bail it out; Musk won the lawsuit last yr. In 2021, Tesla’s energy-generation-and-storage segment generated nearly $3 billion in revenue.

Eberhard also said he would’ve worked to create a more positive culture at Tesla had he remained at the corporate. “I’m a believer of treating employees with respect, and I’m not into random firings and things like that,” he said. “So perhaps the culture contained in the company would have been just a little bit nicer.”

Eberhard seemed to be alluding to reports suggesting that Musk generally is a difficult person to work for, susceptible to acting out of anger and even rage-firing employees. Musk has denied such allegations and said in 2021 that he gave “clear and frank” feedback to employees.

Musk didn’t reply to several requests from Insider for comment on this story. Emails to Tesla’s press line weren’t returned.

Describing his own management style, Eberhard said: “I attempted to maintain the corporate motivated by keeping them on mission to appreciate that what we’re doing was really essential for the world. And that motivated people to place lots and a number of hard hours into it — but not out of fear, somewhat out of that feeling of accomplishment and a sense of responsibility.

“We didn’t do random firings,” he added. “I did have to fireplace some people infrequently, but I hated it.”

What Musk was like at work

Eberhard said that in recent times he’s tried to avoid news about Musk.

“Truthfully, I actually have Elon Musk blocked in my news feed,” he said. “I needn’t read any more about him. It just gives me indigestion to read that. What happens is that Musk will make some wild-ass claim on Twitter and suddenly a bunch of reporters wish to consult with me. That is how I hear about it.”

But Eberhard did say he’d noticed a change: He described Musk as far more hands-on along with his firms than he was at Tesla during Eberhard’s tenure.

“Elon is a unique person now than he was then,” Eberhard said. “He was no more involved than some other board member. He got here to board meetings. He didn’t have an office at the corporate. He didn’t come there usually. He didn’t give direction to my employees, anything like that. He was a board member.”

Now, Eberhard added, Musk is “a super-active type of guy.” He pointed to the layoffs at Twitter in November shortly after Musk took over that company.

Tesla’s early history is some extent of contention between Musk and Eberhard. In a tweet in November, Musk said he “was head of product and led the design of the unique Roadster.” Eberhard pushed back on that characterization.

Eberhard said that while he was the CEO and Musk was the chairman of the board, Musk got here to board meetings monthly but didn’t usually work at the corporate. “So, you recognize, the concept of him, like, sitting around working on the automobile or something is solely not true,” Eberhard said. “He was not there.”

Eberhard said he realized friction was growing between him and Musk when Tesla began getting more media attention.

“His behavior modified dramatically as soon as we began having press about Tesla,” Eberhard said. “He got mad if anything was ever written about Tesla and it didn’t feature his name prominently. And that is when I noticed that there was an ego involved here that I hadn’t recognized before.”

Eberhard, who on the time had the nickname “Mr. Tesla,” said that anytime Musk wasn’t mentioned in an article concerning the company, Musk would call him and “scream” at him.

Musk ousted Eberhard in 2007 and have become CEO shortly after. But that wasn’t the top of their contact.

Eberhard filed a defamation lawsuit against Musk in 2009, after Musk began calling himself a Tesla founder and made negative comments about Eberhard. The lawsuit was settled the identical yr for an undisclosed amount, with the condition that Musk and two other Tesla executives, JB Straubel and Ian Wright, could also claim the title of Tesla founder. Musk and Eberhard also signed a nondisparagement agreement.

Eberhard said that was the last time he spoke with Musk. He added that he’d sent Musk a congratulatory message in 2008 when Musk sent his first rocket into space but that he never received a reply.

Musk has occasionally tweeted about Eberhard. Eberhard said that while he isn’t sure why, he has a theory.

“My guess is because he tried for years to set the narrative that he was the founder and folks know that is not true now. It’s under his skin,” Eberhard said. “What my therapist told me is that ‘what you’ll be able to read from all that’s you are still under his skin, so if he’s under yours a minimum of you are even.’

“Like I said, I’m relatively powerless, and there is not much I can do. I just take it.”

How the EV market has evolved

Eberhard said that when he and Tarpenning founded Tesla in 2003, everybody knew it was “unimaginable” to show a profit by making electric vehicles. Tesla was the one startup trying after legacy automakers like Ford had largely given up on electric cars.

The International Energy Agency has estimated that 13% of automobiles sold globally in 2022 were electric. “I see it as we won, mainly,” Eberhard said. “The revolution that we set out to start out — we succeeded.”

Eberhard said he had one piece of recommendation for startups and legacy automakers alike joining the EV industry: “Don’t attempt to compete head-on with Tesla.”

 

“Unlike so many Silicon Valley firms, the auto industry isn’t a winner-take-all industry,” he said. “There’s different sorts of cars for various market segments.”

The Tesla cofounder said he was disillusioned by certain firms, like Lucid. He said Lucid is attempting to compete directly against the Model S with an identical electric sedan, the Lucid Air. (Eberhard said he worked for the corporate when it was still referred to as Atieva in 2015 but was “not an enormous fan” of its CEO and left after six weeks.)

Lucid confirmed that Eberhard worked at the corporate for a brief period in 2015 but declined to comment on his departure. A representative for the startup pushed back on Eberhard’s characterization of the Lucid Air, calling it a “recent benchmark for EV sports sedans.”

Eberhard said he was more impressed by firms like Rivian. “Rivian has looked on the market and said, ‘, the No. 1-selling vehicle in North America is the F-150 truck. So if we would like to seek out a brand new market, that is a lucrative place to work,'” Eberhard said.

While Tesla dominates the US EV market, Ford has taken the No. 2 spot. Ford sold just over 41,000 EVs in the primary three quarters of 2022, while Tesla delivered over 900,000 in the identical period.

Eberhard said that Tesla has been waiting for other firms to catch up but that he doesn’t see firms like Ford as a threat. “The world has supported greater than a dozen successful large automobile firms for generations,” Eberhard said. “I do not see that changing.”

Tesla’s Autopilot and the rise of auto tech

Eberhard won’t think Tesla is threatened by other automakers, but he said he sees a greater threat coming from inside the company: self-driving technology.

“In my view, we want to get out of the habit of fascinated about all of this autonomous stuff as being connected to EVs,” Eberhard said, adding, “I’d wish to see people fascinated about making cars that folks can drive.”

Musk has made self-driving technology a key a part of Tesla’s future. Last yr he described the carmaker’s self-driving software because the difference between Tesla being value plenty of money or almost nothing. Musk has said the corporate “is as much a software company because it is a hardware company.” But Eberhard says it is not that easy.

“I believe it is a mistake to consider a automobile as a software platform — you recognize, like an iPhone or something. It isn’t the identical,” he said.

“I actually have an iPhone, and each time I get a software update there’s bugs in there,” Eberhard added. “These bugs mean, for instance, that occasionally my news-feed app crashes. That is not an enormous deal, since it’s just an annoyance on iPhone. But that type of a bug shows up within the software that controls, for instance, my brakes or the steering, it might kill you.”

Eberhard said that while he appreciated “safety-oriented systems” like driver-assist features, he’s “not an enormous fan” of autonomous driving. He said Musk seemed to be preoccupied with autonomous cars, and he described that as considered one of his biggest concerns for Tesla under Musk’s leadership.

“I believe the technology is way too immature to be laying on the road,” he said, referring to Tesla’s Full Self-Driving beta software. “I mean, that is my cautious nature, but I might have had a extremely hard time releasing software that’s as buggy as that onto the roads.”

Musk has said up to now that some bugs are to be expected with beta software and has encouraged drivers to report issues with the software.

For years Musk has been promising that Tesla will soon have fully autonomous cars on the road. And while the automaker equips recent Teslas with its Autopilot driver-assist program and sells its Full Self-Driving beta feature for $15,000 or for $200 a month, the corporate is much from achieving fully autonomous driving. Its software requires a licensed operator to watch the vehicle in any respect times.

The corporate can be facing scrutiny from several regulators over the technology. The National Highway Traffic Safety Administration is investigating Tesla’s Autopilot software and its Full Self-Driving add-on. Last month, Tesla disclosed an investigation by the Department of Justice into its self-driving claims. And the Securities and Exchange Commission is investigating whether Tesla made misleading statements about its software’s capabilities.

Eberhard said that when he was Tesla’s CEO, none of that “Autopilot crap” existed. “I did not have the budget to do an honest infotainment system within the automobile, let alone contemplate something like Autopilot,” he said.

Life after Tesla

It wasn’t easy after Eberhard left Tesla. He said he was “mainly unemployable” for 2 years due to an intellectual-property agreement with Tesla, which he said left him largely out of cash and work until the agreement expired.

“Just about on the day that point period expired, Volkswagen hired me,” Eberhard said.

He joined VW in the autumn of 2009 because the director of EV development on the carmaker’s Electronics Research Laboratory. He left in 2011. He said that attempting to make EVs occur at the corporate was “lots like pushing strings.”

“I believe they got uninterested in me, and I left,” he said.

He went on to work briefly with several other startups, including Lucid and SF Motors, and he launched two EV-battery startups, Inevit and Tiveni.

Whilst he’s bounced around, Eberhard hasn’t strayed removed from his Tesla roots. He said he still drives his Roadster day-after-day, while his wife drives a Model S.

He said that in 2008 he bought the second Roadster ever produced but that he stopped driving it about six or seven years ago, though he occasionally takes it to automobile shows; the custom-painted automobile has a conceit plate that claims “Mr. Tesla.” Now he drives a used Roadster.

Eberhard said he’s maintained a “small stake” in Tesla. Though he declined to comment on the dimensions, he said he’s kept his stake longer than anyone — he got it two minutes before Tarpenning got his stake. Eberhard owned lower than 5% of Tesla’s stock when he left in 2007.

“I had a bigger stake, and I sold a bunch of my stock early, which, you recognize, in hindsight was perhaps not the best thing to do, but that is what I did,” he said.

Today, Eberhard and Tarpenning work together on a small private investment firm. They meet for coffee every Wednesday — something they have been doing since 1988.

“If considered one of us is out of town that week we move it to a Tuesday or Thursday, or sometimes it turns into lunch — but yes, even through COVID times we did virtual coffee,” he said. “It was over such coffee where we dreamed up Nuvomedia, the rocket book, and it is also where we dreamed up Tesla.”

Do you’re employed for Tesla or have some insight to share? Reach out to the reporter via email at gkay@insider.com, on the secure messaging app Signal at 248-894-6012, or through Twitter DM at @graceihle. Reach out using a nonwork device.