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

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Martin Eberhard chatted about
electric cars and
Elon Musk in an interview with Insider.
James Leynse/Getty Photos; Tesla; Maja Hitij/Getty Photos; Alyssa Powell/Insider
  • Martin Eberhard spoke with Insider about his views on Tesla, EVs, and Elon Musk.
  • Whereas Musk is sometimes called Tesla’s founder, Eberhard cofounded Tesla with Marc Tarpenning.
  • Tesla’s early historical past has lengthy been some extent of rivalry between Musk and Eberhard.

Whereas Elon Musk is typically known as the founding father of Tesla, his half within the carmaker’s historical past is extra sophisticated.

Martin Eberhard cofounded Tesla in 2003 together with his longtime pal Marc Tarpenning. Musk led the corporate’s $7.5 million Sequence A funding spherical and have become chairman of the board in 2004.

However Eberhard and Musk butted heads, and Musk ousted Eberhard from his CEO position in 2007. Musk mentioned that Eberhard was holding up manufacturing 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 referred to as Eberhard the worst person he’s ever worked with. Eberhard sued Musk in 2009, accusing him of libel and defamation. (The 2 males later settled the lawsuit.)

I spoke over video name in December with Eberhard, who was as soon as referred to as “Mr. Tesla” and now describes himself as a “retired entrepreneur.” The Tesla cofounder mentioned all the things from his startup’s early days to the way forward for electrical automobiles.

Tesla regrets

Eberhard mentioned that there are one million issues he would’ve completed in a different way at Tesla realizing what he is aware of now however that they are principally small regrets.

For instance, he mentioned Tesla spent an excessive amount of time debating whether or not to promote its automobiles by means of dealerships or on to clients. He additionally mentioned that whereas he would have made technical adjustments to the Roadster, general he is pleased with what the staff created.

“If in case you have hindsight, you possibly can see all of the errors you made,” he mentioned. “However I believe within the massive strokes, we received it proper. And the proof is for the primary time ever in many years we constructed a automobile firm efficiently.

“Would I take his cash if I may do it over once more?” he requested, referring to Musk’s funding. “I did not see quite a lot of different cash on the desk, you understand.”

Elon Musk said Friday he would reinstate accounts of journalists that were suspended on Twitter.
Elon Musk led Tesla’s $7.5 million Sequence A funding spherical and have become chairman of the board in 2004.
James Leynse/Corbis through Getty Photos

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

“For instance, I’d have very a lot opposed the acquisition of SolarCity,” he mentioned, calling it “a distraction” for Tesla.

Tesla acquired SolarCity, a solar-energy firm, in 2016 for $2.6 billion. Musk got here below scrutiny as a result of the corporate was run by his cousin Lyndon Rive, who was dealing with headwinds operating the enterprise. Some Tesla shareholders filed a lawsuit accusing Musk of placing stress on Tesla’s board members to purchase SolarCity and bail it out; Musk won the lawsuit final 12 months. In 2021, Tesla’s energy-generation-and-storage section generated nearly $3 billion in revenue.

Eberhard additionally mentioned he would’ve labored to create a extra constructive tradition at Tesla had he remained on the firm. “I am a believer of treating workers with respect, and I’m not into random firings and things like that,” he mentioned. “So possibly the tradition inside the corporate would have been slightly bit nicer.”

Eberhard gave the impression to be alluding to experiences suggesting that Musk could be a troublesome individual to work for, susceptible to acting out of anger and even rage-firing employees. Musk has denied such allegations and mentioned in 2021 that he gave “clear and frank” feedback to workers.

Musk didn’t reply to a number of requests from Insider for touch upon this story. Emails to Tesla’s press line weren’t returned.

Describing his personal administration fashion, Eberhard mentioned: “I attempted to maintain the corporate motivated by holding them on mission to understand that what we’re doing was actually necessary for the world. And that motivated individuals to place tons and many laborious hours into it — however not out of concern, reasonably out of that feeling of accomplishment and a sense of accountability.

“We did not do random firings,” he added. “I did have to fireplace some individuals now and again, however I hated it.”

What Musk was like at work

Eberhard mentioned that lately he is tried to keep away from information about Musk.

“Truthfully, I’ve Elon Musk blocked in my information feed,” he mentioned. “I need not learn any extra about him. It simply provides me indigestion to learn that. What occurs is that Musk will make some wild-ass declare on Twitter and abruptly a bunch of reporters wish to discuss to me. That is how I hear about it.”

However Eberhard did say he’d seen a change: He described Musk as far more hands-on together with his firms than he was at Tesla throughout Eberhard’s tenure.

Martin Eberhard and Elon Musk
Eberhard mentioned Musk was much less hands-on at Tesla within the firm’s early years.
Chris Weeks/WireImage through Getty

“Elon is a unique individual now than he was then,” Eberhard mentioned. “He was no extra concerned than some other board member. He got here to board conferences. He didn’t have an workplace on the firm. He did not come there commonly. He didn’t give path to my workers, something like that. He was a board member.”

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

Tesla’s early historical past is some extent of rivalry between Musk and Eberhard. In a tweet in November, Musk mentioned he “was head of product and led the design of the unique Roadster.” Eberhard pushed again on that characterization.

Eberhard mentioned that whereas he was the CEO and Musk was the chairman of the board, Musk got here to board conferences month-to-month however did not commonly work on the firm. “So, you understand, the thought of him, like, sitting round engaged on the automobile or one thing is just not true,” Eberhard mentioned. “He was not there.”

Eberhard mentioned he realized friction was rising between him and Musk when Tesla began getting extra media consideration.

“His conduct modified dramatically as quickly as we began having press about Tesla,” Eberhard mentioned. “He received mad if something was ever written about Tesla and it did not characteristic his title prominently. And that is after I realized that there was an ego concerned right here that I hadn’t acknowledged earlier than.”

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

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

Elon Musk looks at his phone with a display of a space capsule entering orbit behind him.
Eberhard mentioned he despatched Musk a congratulatory word in 2008 when SpaceX despatched its first rocket to area.
Steve Nesius/Reuters

Eberhard filed a defamation lawsuit against Musk in 2009, after Musk began calling himself a Tesla founder and made adverse feedback about Eberhard. The lawsuit was settled the same year for an undisclosed quantity, with the situation that Musk and two different Tesla executives, JB Straubel and Ian Wright, may additionally declare the title of Tesla founder. Musk and Eberhard additionally signed a nondisparagement settlement.

Eberhard mentioned that was the final time he spoke with Musk. He added that he’d despatched Musk a congratulatory message in 2008 when Musk despatched his first rocket into area however that he by no means obtained a reply.

Musk has sometimes tweeted about Eberhard. Eberhard mentioned that whereas he is undecided why, he has a concept.

“My guess is as a result of he tried for years to set the narrative that he was the founder and folks know that is not true now. It is below his pores and skin,” Eberhard mentioned. “What my therapist instructed me is that ‘what you possibly can learn from all that’s you are still below his pores and skin, so if he is below yours not less than you are even.’

“Like I mentioned, I am comparatively powerless, and there is not a lot I can do. I simply take it.”

How the EV market has developed

Eberhard mentioned that when he and Tarpenning based Tesla in 2003, everyone knew it was “not possible” to show a revenue by making electric vehicles. Tesla was the one startup attempting after legacy automakers like Ford had largely given up on electrical automobiles.

The Worldwide Vitality Company has estimated that 13% of automobiles sold globally in 2022 had been electrical. “I see it as we gained, mainly,” Eberhard mentioned. “The revolution that we got down to begin — we succeeded.”

Eberhard mentioned he had one piece of recommendation for startups and legacy automakers alike becoming a member of the EV business: “Don’t try to compete head-on with Tesla.”


Martin Eberhard says EV startups need to stop trying to be like Tesla and find their own market.
Eberhard mentioned the automotive business is not a “winner-take-all business.”

“Not like so many Silicon Valley firms, the auto business shouldn’t be a winner-take-all business,” he mentioned. “There’s completely different sorts of automobiles for various market segments.”

The Tesla cofounder mentioned he was dissatisfied by sure firms, like Lucid. He mentioned Lucid is attempting to compete immediately in opposition to the Model S with an identical electrical sedan, the Lucid Air. (Eberhard mentioned he labored for the corporate when it was nonetheless often known as Atieva in 2015 however was “not a giant fan” of its CEO and left after six weeks.)

Lucid confirmed that Eberhard labored on the firm for a brief interval in 2015 however declined to touch upon his departure. A consultant for the startup pushed again on Eberhard’s characterization of the Lucid Air, calling it a “new benchmark for EV sports sedans.”

Eberhard mentioned he was extra impressed by firms like Rivian. “Rivian has appeared on the market and mentioned, ‘You already know, the No. 1-selling automobile in North America is the F-150 truck. So if we wish to discover a new market, that is a profitable place to work,'” Eberhard mentioned.

Whereas Tesla dominates the US EV market, Ford has taken the No. 2 spot. Ford offered just over 41,000 EVs within the first three quarters of 2022, whereas Tesla delivered over 900,000 in the identical interval.

Eberhard mentioned that Tesla has been ready for different firms to catch up however that he does not see firms like Ford as a menace. “The world has supported greater than a dozen profitable massive automobile firms for generations,” Eberhard mentioned. “I do not see that altering.”

Tesla’s Autopilot and the rise of auto tech

Eberhard may not assume Tesla is threatened by different automakers, however he mentioned he sees a larger menace coming from throughout the firm: self-driving expertise.

“For my part, we have to get out of the behavior of serious about all of this autonomous stuff as being related to EVs,” Eberhard mentioned, including, “I might wish to see individuals serious about making automobiles that individuals can drive.”

Musk has made self-driving expertise a key a part of Tesla’s future. Final 12 months he described the carmaker’s self-driving software program because the distinction between Tesla being worth a lot of money or almost nothing. Musk has mentioned the corporate “is as a lot a software company as it is a hardware company.” However Eberhard says it is not that straightforward.

The Tesla Model Y.
Eberhard mentioned he is not a fan of Tesla’s Full Self-Driving software program.
Tim Levin/Insider

“I believe it is a mistake to think about a automobile as a software program platform — you understand, like an iPhone or one thing. It isn’t the identical,” he mentioned.

“I’ve an iPhone, and each time I get a software program replace there’s bugs in there,” Eberhard added. “These bugs imply, for instance, that sometimes my news-feed app crashes. That is not a giant deal, as a result of it is simply an annoyance on iPhone. However that form of a bug exhibits up within the software program that controls, for instance, my brakes or the steering, it may well kill you.”

Eberhard mentioned that whereas he appreciated “safety-oriented methods” like driver-assist options, he is “not a giant fan” of autonomous driving. He mentioned Musk gave the impression to be preoccupied with autonomous cars, and he described that as one in every of his greatest considerations for Tesla below Musk’s management.

“I believe the expertise is manner too immature to be laying on the street,” he mentioned, referring to Tesla’s Full Self-Driving beta software program. “I imply, that is my cautious nature, however I’d have had a very laborious time releasing software program that’s as buggy as that onto the roads.”

Musk has mentioned previously that some bugs are to be expected with beta software program and has encouraged drivers to report points with the software program.

For years Musk has been promising that Tesla will quickly have absolutely autonomous automobiles on the street. And whereas the automaker equips new Teslas with its Autopilot driver-assist program and sells its Full Self-Driving beta characteristic for $15,000 or for $200 a month, the corporate is way from reaching absolutely autonomous driving. Its software program requires a licensed operator to watch the automobile always.

The corporate can also be dealing with scrutiny from a number of regulators over the expertise. The National Highway Traffic Safety Administration is investigating Tesla’s Autopilot software and its Full Self-Driving add-on. Final month, Tesla disclosed an investigation by the Division of Justice into its self-driving claims. And the Securities and Change Fee is investigating whether Tesla made deceptive statements about its software program’s capabilities.

Eberhard mentioned that when he was Tesla’s CEO, none of that “Autopilot crap” existed. “I did not have the finances to do an honest infotainment system within the automobile, not to mention ponder one thing like Autopilot,” he mentioned.

Life after Tesla

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

“Just about on the day that point interval expired, Volkswagen employed me,” Eberhard mentioned.

He joined VW within the fall of 2009 because the director of EV growth on the carmaker’s Electronics Analysis Laboratory. He left in 2011. He mentioned that attempting to make EVs occur on the firm was “rather a lot like pushing strings.”

“I believe they received bored with me, and I left,” he mentioned.

He went on to work briefly with a number of different startups, together with Lucid and SF Motors, and he launched two EV-battery startups, Inevit and Tiveni.

At the same time as he is bounced round, Eberhard hasn’t strayed removed from his Tesla roots. He mentioned he nonetheless drives his Roadster on daily basis, whereas his spouse drives a Mannequin S.

Martin Eberhard in his Tesla Roadster.
Eberhard mentioned he owns the second
Tesla Roadster ever produced.
Courtesy of Martin Eberhard

He mentioned that in 2008 he purchased the second Roadster ever produced however that he stopped driving it about six or seven years in the past, although he sometimes takes it to car shows; the custom-painted automobile has a conceit plate that claims “Mr. Tesla.” Now he drives a used Roadster.

Eberhard mentioned he is maintained a “small stake” in Tesla. Although he declined to touch upon the dimensions, he mentioned he is stored his stake longer than anybody — he received it two minutes earlier than Tarpenning received his stake. Eberhard owned less than 5% of Tesla’s inventory when he left in 2007.

“I had a bigger stake, and I offered a bunch of my inventory early, which, you understand, in hindsight was possibly not the best factor to do, however that is what I did,” he mentioned.

In the present day, Eberhard and Tarpenning work collectively on a small personal funding agency. They meet for espresso each Wednesday — one thing they have been doing since 1988.

“If one in every of us is out of city that week we transfer it to a Tuesday or Thursday, or typically it turns into lunch — however sure, even by means of COVID instances we did digital espresso,” he mentioned. “It was over such espresso the place we dreamed up Nuvomedia, the rocket book, and it is also the place we dreamed up Tesla.”

Do you’re employed for Tesla or have some perception to share? Attain out to the reporter through e mail at gkay@insider.com, on the safe messaging app Sign at 248-894-6012, or by means of Twitter DM at @graceihle. Attain out utilizing a nonwork gadget.

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