Elon Musk's Tesla Inc was founded by others and he was credited as co-founder through a lawsuit settlement
Today, Tesla Inc. (earlier known as Tesla Motors) is one of the biggest car companies in the world -- electric or otherwise. Tesla's CEO has gotten into some hot water recently over his tweets during the coronavirus pandemic, and while most credit Tesla to be Musk's baby, the real history of the company is far murkier than that.
Recently, Musk threatened to move Tesla's factory and headquarters from Fremont, California to either Texas or Nevada after Alameda County officials first stated that they had not given the green light to the company to open. Nevertheless, after a lawsuit from Tesla, the county officials gave in to Musk's demands and allowed Tesla to reopen its Fremont assembly plant as long as it adhered to certain safety guidelines.
Many on social media would have come to Elon Musk's support, after all, he is credited as the co-founder. However, it is wrongly assumed that Musk was behind the idea of Tesla Motors and electric vehicles. That credit belongs to Martin Eberhard and Marc Tarpenning who originally started the company in 2003 and Musk's recent news prompted one user to tweet, "I still find it darkly amusing that the actual creator of a company named after Nikola Tesla is constantly erased from history, with all credit being given to some rich bully instead."
Eberhard wanted a sports car with high mileage, but could not find one. "I was thinking that I should do what every guy does and buy a sports car," he told Business Insider, but "I couldn't bring myself to buy a car that got 18 miles to the gallon at a time when wars in the Middle East seemed to somehow involve oil and the arguments for global warming were becoming undeniable."
He and Tarpenning had created the Rocket eBook, a handheld digital book reader that came to market in the late ’90s and this inspired him to create an electric car -- thus was born the idea for the Tesla Roadster.
Eberhard did not reinvent the battery necessary for the Roadster. He simply adopted the lithium-ion technology used in laptops and harnessed the momentum of the computer industry.
When Eberhard and Tarpenning started looking for venture capital in early 2004, they met Elon Musk, who back then was known as PayPal's co-founder. By then, Musk was already deeply invested in SpaceX, the company he had founded with the goal of colonizing the planet Mars.
After Eberhard met Musk, he realized that Musk was the first guy he had met who shared his vision for electric cars, to make a vastly superior car, not just a car that sucks less -- and so Musk joined the party -- he invested $6.5 million during the Series A funding. But since the beginning, Musk had been skeptical about what the production and the design of the car would cost.
During the Roadster's debut party, it was Eberhard who was branded "Mr Tesla" after making a bigger impression than Musk for the guests of the party. All the attention on Eberhard by the media in the following days left Musk feeling neglected.
In an email to Mike Harrigan, who was brought in as VP of customer service and support, Musk wrote that he would "like to talk with every major publication within reason." He added, "The way that my role as been portrayed to date, where I am referred to merely as 'an early investor' is outrageous. That would be like Martin [Eberhard] being called an 'early employee."
When the New York Times wrote about Tesla's Signature One Hundred event, Musk felt slighted again. "I was incredibly insulted and embarrassed by the NY Times article" — he wrote in an email cc'd to Eberhard and Harrigan on July 20, 2006 — "where I am not merely unmentioned, but where Martin is actually referred to as the chairman. If anything like this happens again, please consider the PCGC [public relations firm] relationship with Tesla to end immediately upon publication of such a piece. Please ensure that the NYT publishes a correction as soon as possible."
Still, the media ignored Musk. Then, Musk took Harrigan aside, letting him know that if he wanted to keep his job with Tesla, he'd have to start getting him some recognition.
Problems started appearing for Eberhard when it became clear Tesla could not get the Roadster shipping by 2006 -- that came about in 2008. Eberhard also wrote to Musk about his cost concerns and complications began piling for the company.
When Musk traveled to Lotus Engineering headquarters to check on the progress of the Roadster, he found that they were three months behind schedule. Moreover, Musk's frequent suggestions often caused disruptions to the workflow.
By November 2007, Eberhard transitioned to the advisory board, and according to the Tesla Motor Clubs Forum, he was asked to leave. In January 2008, Eberhard confirmed that he was no longer employed in Tesla Motors and was only a shareholder in the company. He said he planned to start another company entirely in the green tech field.
In 2009, Eberhard sued the company and then-CEO Elon Musk for libel and breach of contract alleging 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 lawsuit was later dropped and a settlement was reached, which led to Elon Musk being credited as a co-founder.
Since then, there has been no love lost between Musk and Eberhard. Last year, Musk tweeted, "Tesla is alive in spite of Eberhard, but he seeks credit constantly & fools give it [to] him," but later deleted the tweet. Before that, Eberhard had said in an interview with Economic Times, that he was "not a huge fan" of Musk. Earlier this year, in an episode of The Third Row Tesla Podcast, Musk said that Eberhard was "literally the worst person I've ever worked with."
And while Eberhard was ousted from the company he founded, he is nevertheless proud of how the company is doing today. In the interview with Economic Times, he said, "I watch Tesla succeed and it makes me very happy because it is my baby. No matter who my baby married, I am happy to see her succeed."