Tesla’s electric dream faces short circuit

Tesla Motors recently launched its long-awaited electric roadster, offering drivers a tantalising combination of planet-loving fuel parsimony and supercar-style power.

The car accelerates from 0 to 60 miles per hour in 3.9 seconds, but gets the equivalent of 135 miles per gallon, making it zippier than a Porsche 911 Carrera, but more than twice as efficient as a Toyota Prius hybrid.

Early drivers of the car have praised its uncanny quietness – it whirrs, rather than roars – and its sleek design, modelled on the Lotus Elise. Tesla wants to begin exporting it to Europe next year.

But San Carlos, California-based Tesla’s dream of speed and style without guilt has been marred by a growing cloud of litigation, featuring accusations of intellectual property theft, shoddy subcontracting work, and unpaid bills.

In April Tesla filed suit against Fisker Automotive, its Irvine, California-based rival which unveiled a planned plug-in hybrid electric sports car in January.

Fisker did design work for Tesla on its upcoming electric sports saloon. Tesla says it had no idea Fisker was developing a competing car, and claims it delivered substandard work and stole ideas for its own Karma model.

Tesla scrapped Fisker’s design, and is seeking damages. Adam Belsky, its attorney, says it will seek an injunction to keep the Karma off the road if the case is not settled before the car’s launch, planned in late 2009.

“He was intentionally sabotaging their car,” Mr Belsky says of Henrik Fisker, the company’s chief executive. “He had a strong motive to provide inferior design work for Tesla.”

Fisker, whose investors include venture capital firm Kleiner Perkins describes Tesla’s lawsuit as meritless. It will file court papers in what Mr Fisker tells the FT will be a “massive response”.

Mr Fisker calls the suit “nonsense”, and his company has released photos of a prototype of the Karma to back its assertion that the car is on track to launch next year. “This is a bogus lawsuit, and it’s very sad that they’re using fake claims to divert attention away from their own problems,” he says.

Tesla is itself being sued for $5.6m in damages by supplier group Magna, which claims the carmaker failed to pay it for transmission work. Problems with the roadster’s transmission delayed its launch.

The legal scuffles have business ramifications, and will likely impact on both companies’ images. Soaring oil prices are prompting a surge of electric and plug-in car projects, and Tesla’s roadster is seen as a first mover. Fisker’s Karma has also riveted motoring circles.

Tesla’s saloon, codenamed WhiteStar, is central to its business model of beginning upmarket, then building scale with a mass-market vehicle. General Motors and Toyota each plan to launch plug-in cars in 2010.

Tesla hired Fisker in February 2007 to provide styling for WhiteStar.

Its suit claims that Fisker Coachbuild, Mr Fisker’s car design group, used “fraud and deceit” to gain access to company information and trade secrets, including its business plan and the design constraints involved in building electric cars, which require large battery packs. Fisker’s design work deteriorated as the project progressed, Tesla claims.

Mr Fisker says that Tesla approached Fisker about the design work in 2006 – not the other way around – and that it embarked on its plug-in hybrid car project in August 2007, well after its work for Tesla began.

He says the job gave Fisker no access to Tesla’s drivetrain technology, which will come from another company, Quantum Technologies. Fisker, co-founded by Mr Fisker, a Denmark-born designer who worked on Aston Martin’s DB9, will handle the styling.

Tesla has won praise for its original thinking, but many executives at car companies privately question the Silicon Valley startup’s ability to pioneer and sell vehicles in one of the world’s most competitive industries.

The lawsuits are unlikely to dispel these questions. Tesla referred questions about the lawsuit to Mr Belsky. “To have a lawsuit in this industry between the two nascent players is bad for both companies and bad for the industry,” says Martin Eberhard, Tesla’s former chief executive and co-founder, who lost his job last year.